How Digitalization is Rewriting the Rules of Competition
Competition is greater than ever before. Even if you’re the only restaurant in town, you must compete with bars, grocery stores, cinemas, and other businesses where your prospects could choose to spend their money instead. Through the internet consumers have much more power. They can compare products and services from the comfort of their home and even on-the-go with their mobile devices.
In a world where 67% of consumers start their search for local businesses through search engines (source), it is becoming more and more vital for businesses to follow the movement to digitization.
What Exactly is Digitalization and What Does it Involve?
According to the Businesses Dictionary, digitalization is the conversion of analog information in any form to digital form so that the information can be processed, stored, and transmitted through circuits, technology, and networks (source). This involves, finding out what daily procedures can be digitized to reduce time and money (e.g. online appointment booking, customer service, up-to-date website with the service/product offering, etc.)
The three forces driving the shift to digitalization are:
- Consumer demand
- The push for new technologies
- The prospect of greater economic benefit (source)
It is Not a Matter of “Whether”, but a Matter of “When”
Going digital might be the make or break for your business, big or small. In fact, according to Accenture, 60% of organizations are already seeing positive return on investment from personalized technologies; such as CRM softwares. It is extremely important to analyze not only the present but also the future; especially when it comes to consumer behavior.
Take a look at this diagram from Booz & Company depicting the typical day of a generation C Consumer in the year 2020.
What Does this Mean for Small and Medium sized Businesses?
- Lower entry barriers: The internet has provided a new entry point for many markets, as well as enabling new firms to enter with lower set-up costs. For example, new banks are entering the market with online banking services in an industry which traditionally has had extremely high entry barriers.
- More pressure on price: Through the digitalization of firms, consumers are profiting from the availability of information on the internet. consumers are actively researching and comparing products and services; thus creating a much higher pressure on price than ever before.
- Emerging Competitors: Competitors are creeping in like never before due to the lower entry barriers. Firms are competing through Google Rankings, and online reviews and are using every force possible to speed up their daily processes through digitization (source).
How to Adapt
The best way to adapt to digitization is to accept that it is happening. Get informed! Read blog posts on best practises, research success stories on how an offline firm re-wrote its story by taking a step in the right direction with digitalization. Attend events and conferences in your industry to learn how others in your field are moving into the present and inform yourself about the do’s and dont’s of digitization. Ignoring the movement won’t do any good for yourself or your firm.
Decisions to be Made
Step One: Make a digitalization plan. Ask yourself which processes could be digitized to save time and money. Set a time frame of how long this could take.
Step Two: Think about your budget. How much are you willing to pay? Or rather, how much are you willing to invest in order to receive a potential higher monthly revenue? Try to estimate how much money and time you will save by digitizing certain processes, then you can think about how much money you are ready to invest in order to save in the long run.
Step Three: Research and choose which platforms, tools, and softwares would be helpful for your business (e.g. online booking system, a personalized website, etc.). Which ones are the most suitable for your organisation in terms of price and capability?
Step Four: Once you have a clear plan you can start the implementation process!
Benefits of Going Digital
- Increased accessiblity of information: Digitalization has enabled firms to read their competitors like an open book; well, almost! Not sure if your competition charges more or less? Or, maybe you'd like to know what other services they may offer. Digitization has made this information only a few clicks away.
- Greater efficiency: The digitalization of processes such as appointment booking, and customer management saves time and therefore allows you to work in greater efficiency; wasting less time on organizational tasks allows you to focus on your customers.
- New marketing and sales opportunities: Believe it or not, digitized marketing is often cheaper and more effective than offline marketing! For Example, newsletters allow you to inform your customers on special offers to increase sales, or on new products or services. The opportunities are endless.
- Allows small businesses to compete with large corporations: The internet is one huge playground; giving small businesses the opportunity to compete with the giants!
- Enables direct communication between business & consumer: Digitalization not only makes it possible to communicate with your consumers, but also with potential customers.
- Provides measurement & analysis You want to know if your customers enjoy your products or services? Automated Emails with surveys will do the job! You wish to know what products may be rocketing sky high, and which ones may need a push in the right direction? Digitizing your sales makes it easy to see this type of information right from the comfort of your office computer, or from your mobile device.
See how others benefited from going digital!
It’s time to take advantage of the digitization movement! In a world where many people order their clothes online, Google the “best” restaurants in town, or even find their soulmates through the internet, it is becoming more and more important to digitize processes to save time and become more efficient, as well as creating a positive and eye-capturing online presence. Go digital, or go home- it’s as simple as that.