Posts Tagged ‘Charles Colby’

This is part 2 of 2 by guest poster, Charles L. Colby, Chief Methodologist, Small Business Success Index. Charles Colby is President of Rockbridge Associates, Inc., the DC-based market research firm that conducted the Small Business Success Index survey with Network Solutions and the Robert H. Smith School of Business.  He has 25 years experience researching business and consumer markets, and is an expert in service quality and technology adoption.

Exactly how does technology help small businesses become successful? The Small Business Success Index offers granularity to answer this question, and the result offers lessons to small businesses seeking to leverage technology.  Technology has the greatest impact on success in the area of marketing and innovation, which is the ability of companies to find and convert leads, position their brand and spur innovation.   Out of dozens of criteria that went into creating the Small Business Success Index, certain ones stand out as having a particularly strong association with technology deployment:

o    Positioning and promotion: “Giving the appearance of a professional organization” and “positioning the organization as having the same capabilities as big organizations in the industry”
o    Finding and Converting Leads: “Finding efficient ways to advertise and promote the business,” “Providing convenient ways for customers to buy from the organization,”  and “converting marketing leads into buyers”
o     Innovation: “Getting timely information about the market” and “coming up with ideas before competitors”

Let’s talk about each of the areas above.  First of all, the art of “positioning,” or building the image of a company, is easier to do in a virtual environment than with traditional media.  A small business can accomplish a great deal on a limited budget, while it has little chance of outcompeting large firms through mass media advertising, expensive store locations, printed brochures, or high powered sales staff.

The second items above deal with the lead machine.  A well conceived Search Engine Optimization (SEO) strategy will drive buyers to a site with minimal cost, while a properly designed site with online servicing and purchasing can efficiently convert leads or direct customers to a dedicated staff who can close the deal.

The last group of success indicators that deal with innovation suggests that businesses that use the internet to gather market information and maintain a dialogue with customers are more in tune with the latest trends and opportunities.  For example, a small construction company or consultant can research bidding opportunities, while a retailer can conduct research on consumer tastes and product ideas.

What are the hot technologies that are associated with success? Among the list of 14 covered in this study, the most critical ones augment the ability of a business to build its image, find and convert leads and gather market information.  A website alone is not a big factor, since half of small businesses already have one.   The most critical technology for marketing purposes is SEO, since this provides an efficient way to raise the profile of a small business website to prospective buyers.  Small businesses also benefit from online advertising and placement in online directories, which like SEO, are efficient ways to drive traffic.

Another technology group that correlates with competitive success relates to customer service.  This includes providing the ability to demonstrate and order products and services online.  Success also correlates with the presence of a customer area on a website.  For example, a customer should be able to place an order online and then track its status in real-time on the web (e.g., has it been shipped?  Is it on the way?  Did it arrive?).  Successful businesses also allow customers to communicate in cyberspace, including email or chat customer service.

Finally, successful businesses are more likely to have technology-based solutions for employees to communicate and share information.  This knowledge sharing probably facilitates effective selling and servicing, and may be a contributor to innovation.  To illustrate, a customer may email an inquiry to a small business about a new product, and this can easily be forwarded to employees who know about availability (by accessing a database on a network) and who can offer suggestions if the item is not available.  In the meantime, the small business owners and managers may follow the email stream and detect an emerging demand for a new product or service.

Internet business solutions give even the smallest businesses an advantage in positioning their brand, finding customers, and converting leads into sales.  Multiple solutions bring customers, employees and information together in a synergistic fashion to equalize the playing field with big business.

This is part 1 of 2 by guest poster, Charles L. Colby, Chief Methodologist, Small Business Success Index. Charles Colby is President of Rockbridge Associates, Inc., the DC-based market research firm that conducted the Small Business Success Index survey with Network Solutions and the Robert H. Smith School of Business.  He has 25 years experience researching business and consumer markets, and is an expert in service quality and technology adoption.

As one of the principal researchers for the Small Business Success Index, I examined whether technology makes small businesses more competitive.  Our hypothesis was that Internet business solutions such as web-sites and online shopping carts require less economies of scale than a purely “bricks and mortar” business model, giving small businesses an edge when they deployed these technologies.   A number of questions come to mind, including the following:  The idea of technology as an equalizer sounds great, but is it really true?  If so, how does it make small businesses successful?  And which specific technologies have the greatest impact on success?

To address the first question – whether this is true – the research team conducted a deep dive analysis of the 1,000 businesses surveyed in the baseline Small Business Success Index.  The survey cataloged usage of 14 different Internet business solutions, including web-sites, online marketing and advertising, online customer service and purchasing, security, and employee information sharing.  We classified small businesses into three categories based on the number of solutions they use:

o    Internet Tech-Powered, or uses 6 or more solutions (only 29% of all small businesses meet this threshold)
o    Moderate Tech-powered, or uses 2 to 5 solutions (38% of small businesses), and
o    Minimally Tech-powered, or uses zero or just one solution (33% of small businesses).

For example, a business that has just e-mail or just a web-site would be classified as “minimally tech-powered,” but one that uses both would be “moderately tech-powered”.  The presence of a combination of technologies is critical because the technologies should work in tandem to create synergies (e.g., a web-site should use solutions to drive traffic, such as Search Engine Optimization).

The research reveals that technology really does matter. The greater the degree to which a small business utilizes Internet business solutions, the more successful it will be.  One measure that led to this conclusion is the Small Business Success Index, an indicator of a small business’ long-term competitive health.   This measure reveals that 31% of the “Internet Tech-Powered” businesses are “highly competitive” on the index, compared to 24% of the “Moderate Tech-powered” and 19% of the “Minimally Tech-Powered” businesses.   The tech-intensive small businesses are more successful on other factors as well, including revenue growth, profitability, and achieving “soft goals” such as increasing the value of the company.

As intriguing as the technology-to-success linkage may be, does it hold up among the smallest of the small businesses? Note that larger small businesses rely more on Internet business solutions.  For example, 50% of companies with 20 to 99 employees are “Internet Tech-Powered,” compared to only 31% of those with 2 to 4 employees and 16% of those with zero or one employee.   However, when we look specifically at the smaller businesses (less than 5 employees), the relationship between technology and success is just as prevalent as with larger small businesses (5 to 99 employees).  It seems that it is worthwhile for even the smallest businesses to invest in Internet business solutions since they are more successful than their peers who rely less on technology.

IN PART 2: Charles continues his exploration of how technology can make a small business successful and what hot technologies are associated with small business success.