British SMEs Come out Fighting Over State of the Economy

“DIY” attitude fuels SME optimism, but some small firms in danger of being left behind in “two-tier” SME economy

UNITED KINGDOM - UK small businesses have adopted a “fighting spirit” over the state of the economy and their prospects for the year ahead, though some risk slipping into the lower level of a “two-tier SME economy” when it comes to customer service, according to new research from Cisco.

Cisco’s Customer Kings 2010 report (1), which questioned small firms on an array of subjects including the changing nature of the way that they engage with customers, found that 63% of the 1,000 small businesses surveyed are optimistic about 2010, with 77% expecting to see an upturn in the economy within the year.

However, despite a widespread DIY attitude to success, the UK’s small business landscape is in danger of being split in two as customer-centric, flexible and modernised firms go head to head with those unable and unwilling to reshape their business to meet the changing needs of consumers.

While the majority (57%) surveyed said that they had taken steps to refocus their business on the customer to steer their business through the recession for instance, an alarming 43% had taken no such action and are likely to be in danger of losing out to their more customer savvy counterparts.

This developing rift between customer focused businesses and their less consumer-centric peers is made more alarming by the thought that customers are also more likely to shop around for new suppliers than they were even twelve months ago (31% agreed, compared to just 23% in 2009).

The report also identified five qualities that can be attributed to successful modern businesses (defined as “Customer Kings” in the report) which are seen as customer focus, flexibility of business model, implementation of e-commerce, adoption of technology and use of social media. Focus on these attributes is likely to drive a number of small business benefits according to the research:

* Customer focus: those who placed greater focus on customer service because of the recession were more likely to be dealing with more customers than a year ago (36%) than those who didn’t (31%)
* Business model: 59% said that flexibility to market change was key to running a successful business, and 61% said that they have introduced new measures to build customer relationships
* E-Commerce: 64% - the highest response - said that online retailers offer “good” or “excellent” customer service, defying the notion that only “face-to-face” businesses can offer great customer service, though just 25% are currently utilising e-commerce themselves
* Technology: 91% of businesses view technology as “very” or “quite” important in improving the customer experience. Of those who cite it as “very important”, 71% are optimistic about the year ahead, compared to those who rate it as “quite” (56%) or “not” (58%) important
* Social media: the report shows social media to be of tangible benefit to small businesses using it (40%) – 43% of those using it are dealing with more customers than last year (vs. 29% not), and 72% are optimistic about 2010 (vs. 60% not)

David Critchley, head of SME and Commercial for Cisco UK & Ireland, says that the results point to a progressive and innovative SME landscape: “What we see here is that rather than simply adapting to the pressures of the recession, a large number of our small businesses are taking matters into their own hands and making things better for themselves. Remodelling their business around the needs of their customers, embracing new technology, routes to market, and ways of communicating with their audiences, these customer kings are set to thrive in 2010.”

The research was commissioned alongside Cisco’s Customer Kings campaign, an annual search for the UK’s best customer focused firms which this year saw environmentally friendly utility company Green Energy UK crowned Winner of Winners.

For a full copy of the research report, including recommendations, please visit the Cisco Customer Kings campaign hub.
Key words:

Customer Kings, Cisco, Real Business, customer service, research, small business, SME, SMB, small and medium enterprise, small and medium business, David Critchley, commercial, Green Energy UK, customer focus, business model, e-commerce, technology, social media
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(1) Research for the Customer Kings 2010 report was conducted in January 2010. Findings are based on 1,000 online interviews with owners and senior decision makers in UK business with between 5 and 100 employees across the UK. Research was conducted by Loudhouse Research, an independent market research company