Helping SMEs navigate the digital world

Small and medium enterprises (SMEs) are critical to the success of any economy. In India, they account for about 45 per cent of total employment and contribute to around 30 per cent of national income.

The Covid pandemic has accelerated the growth of digital technologies adoption by SMEs. Many SME owners feel that they can relate to digital marketing much more than to other digital technologies.

This study, based on interviews with 50 SMEs, tries to understand how SMEs, both in the B2B and B2C segments, have integrated digital into their sales and marketing activities.

Based on the type of the target customer, SMEs are using digital marketing tools for four activities — brand building, lead generation, sales-force management, and sales support.

The study revealed that SMEs focussing on consumer markets are leveraging digital technologies for brand-building, more than those focussing on business markets. From furniture retailers and restaurants to textile merchants and residential builders, all were found to be using digital media extensively for brand-building.

These SMEs use digital marketing companies to help them with website design, digital advertising, social media marketing, and search engine optimisation. Since many of these SMEs have limited understanding of these activities, they rely entirely on the judgment of their digital marketing partners.

A kitchen furniture company owner has joined an online digital market course to help negotiate better.

Lead generation

SMEs focussing on consumer markets are using digital marketing more extensively for lead generation. In addition to leveraging their websites, SMEs are relying on social media platforms such as Facebook and Instagram for lead generation. Moreover, presence on directory services such as Justdial was also part of most SMEs’ digital plans.

Interestingly, LinkedIn is used as a lead source by both B2B and B2C SMEs for targeting professionals. Lead generation is an activity most understood by SMEs as the output is very measurable.

For products targeted at millennials, more than 50 per cent of new leads were being generated through digital marketing activities.

Many B2B and B2C SMEs have large sales forces that are mobile. These range from pharma distributors to textile wholesalers and auto-parts manufacturers.

The study revealed that many SMEs had implemented tools to schedule and track their sales personnel. A plastic container manufacturer has given an app to both customers and sales personnel to keep track of their meetings through GPS.

In most cases, these apps were also being used for order taking and order management, eliminating the need for cumbersome paperwork.

Sales support

Digital technologies are also being used extensively to support sales activities. This usage has been accelerated by the pandemic and the inability for SMEs to meet their customers physically.

Sales material and catalogues that were once all paper-based are transforming to digital formats. Use of video-conferencing and even virtual reality for product demonstration has increased.

A residential packer uses WhatsApp video calls where clients show him the items in their house. This helps the packer to quote a price to the clients. This has helped the packer make more customer calls in a day and also in faster closing of contracts.

The study reveals that mobile apps, customer management software, and communication tools such as WhatsApp have become common among SMEs.

Clearly, SMEs are embracing digital tools in the sales and marketing process. However, most SMEs do not understand all the potential uses of digital marketing. Given a fragmented market and the lack of scale, most large service providers are not focusing on SMEs. While digital marketing companies are certainly aiding SMEs in communication strategies, they do not focus on sales-force management.

The need of the hour is companies that can provide SMEs knowledge, planning, and implementation capabilities across all the elements of the sales and marketing value chain.

Academic institutions and incubation centres that have primarily focussed on start-ups should also be playing a role in SME development.

While both offline and online courses are available on digital marketing and technologies, the study shows that SMEs need a lot more hand-holding.

This presents a unique opportunity for digital service providers who can focus exclusively on SMEs, using innovative business models. Whoever cracks the code of SME digital marketing delivered has a winning proposition on hand.

Pingali is Professor, IIM, Udaipur; Pedada and Arunachalam are Assistant Professors of Marketing at ISB, Hyderabad