A third of New Zealand SMEs are internet virgins when it comes to promoting their businesses, according to a new study. And the lack of an online presence may be holding back their business growth.
The Yellow SME Digital Readiness Survey shows only 50% of the almost 3000 small and medium-sized companies involved had a website - and that figure hasn’t risen since late 2012.
Companies are using other online tools, including email marketing (32%), search engine optimisation (15%), video (7%), and mobile apps (5%).
But a significant number - 20% - aren’t using any online tools at all.
Most worrying, SMEs with a digital presence are making, on average, $150,000 more in revenues each year than their non-digital counterparts - and the picture is even bleaker outside Auckland.
Digital SMEs in Christchurch were $400,000 worse off than their non-digital counterparts, and the figure in Wellington was $330,000.
Steve Traplin, director of digital marketing services for Yellow says the survey told a “sober story”, particularly since Australian SMEs are doing far better than their Kiwi counterparts in terms of digital readiness.
“I was shocked that the percentage of New Zealand companies without a website hasn’t changed since our last survey. In the Aussie market, the numbers have gone from 52% to 64% over the last three years, and I was expecting it to be 52% over here as a worst case scenario.”
He says many SMEs are nervous about getting started with digital, with 71% of participants describing themselves as a beginner, or knowing nothing about digital marketing.
Ironically, ask the same SME digital virgins whether online marketing tools are effective and they are enthusiastic.
More than 60% of business owners agreed that websites were effective in promoting businesses, although only 16% of companies without one were considering getting one in the next six months.
The story was even more mis-matched with video and mobile apps. Although 52% of respondents thought video was an effective marketing tool, only 7% were actually using it. And while 51% were confident mobile apps could drive business, only 5% used them - down from 6% in the last survey.
Yellow CEO Michael Boersen says it is “hugely concerning” that there has been so little progress in digital readiness among New Zealand companies.
“What SMEs need to remember is that websites aren’t just about e-commerce - they are a vital research tool for customers. Almost half (47%) of people who researched online bought offline, and smartphone users are even more sophisticated, with 74% using their device to research a product or service.”
However, Boersen warned companies against leaping unprepared into social media. The survey showed about a quarter of businesses (26%) were thinking about using social media over the next year or so, but those already using it weren’t so enthusiastic.
“The majority (55%) weren’t confident it was effective at promoting their business, or described it as having a neutral impact.
“It seems SMEs are prioritising social, but it’s a bit of the cart before the horse. Social works best when there’s a strategy and call to action behind it. Often that’s to drive web traffic, so if there’s no website - or it’s a bad one - it’s a bit of a wasted exercise.”