(BPT) - Consumer behaviors are shifting faster than ever before, and businesses that want to succeed in this environment need to stay one step ahead of the game.
For small businesses, there's more competition than ever. According to recently released data, in 2021, 5.4 million new business applications were filed, surpassing the record set in 2020 of 4.4 million. On top of this, the pandemic forced consumers to reevaluate the way they interact with brands and businesses - according to Nielsen, 67% of consumers changed the way they shop in 2021, and this figure is poised for further growth.
But for businesses thinking one step ahead, this evolution is creating opportunities to innovate, differentiate, build new streams of revenue and grow their businesses. Here are three trends SMBs need to focus on in order to keep up with customer needs in 2022 and beyond.
1. Expanding online to meet customers where they are
Being online is no longer a nice-to-have - it's table stakes. SMBs that haven't adopted an online presence, or who have few digital channels (Facebook, Instagram etc.), should consider enhancing their online presence to be more accessible - and visible - to their customers. Customers' lives are becoming increasingly digital every day, and businesses need to expand their digital touchpoints to meet them where they are - whether that be by adopting new online marketplaces, social commerce, digital marketing tools or new, convenient payment methods for customers.
E-commerce has been increasing year-over-year for decades, and the pandemic only accelerated the move online for small businesses. According to a report by Digital.com, 77% of small retailers now have a business website, but to stay one step ahead, businesses need to be exploring options beyond their own website to generate additional sales avenues online. Commerce developments on social media platforms and new online marketplaces have created opportunities to reach and sell to customers in new ways.
Of course, one reason many small businesses aren't expanding their online footprint is the upfront expenses it takes to get started.
"Small- and medium-sized businesses are the backbone of the U.S. economy, but too often they are living 'sale by sale' without enough cash flow to innovate or evolve their business quickly," said Bernardo Martinez, Vice President of Global Merchant Lending at PayPal. "SMB owners need access to financing tools that help them quickly jump on opportunities at the earliest possible moment in order to maximize customer interactions and sales."
Flexible spending solutions are available to help SMB owners capitalize on these opportunities quickly. For example, PayPal's new Business Cashback Mastercard® credit card can enable purchasing quickly with access to a virtual card that can be used when checking out with PayPal, available immediately upon approval. Additionally, the card's activity - including employee cards - can be accessed from the business's PayPal account, making it simple to check available credit and monitor employee spending. Beyond this, the card rewards business owners with unlimited 2% cash back1 on purchases without a purchase category restriction or an annual fee2 helping SMB's earn cash back on everyday expenses that can then be applied to the card balance as a statement credit or their PayPal balance.
2. Adapting business models to customer behavior
During the pandemic, customers engaged with brands in new ways, making it necessary for SMBs to find innovative sales avenues and unique service models. Even as customers return to pre-pandemic behaviors, SMBs should continue to explore how to evolve their business model and tap into new opportunities. For example, according to DoorDash's 2022 Restaurant Online Ordering Trends, 86% of customers surveyed said they ordered pickup or takeout as much or more than they did last year. While many restaurants and retail stores established curbside pickup or walk-up window options during the pandemic instead of delivery, even as social distancing guidelines lifted, customers continue to seek out the option to pick up.
SMBs can get strategic about evolving their business model and use the wealth of customer intel at their fingertips to increase communication with customers via websites, online chats and social media channels and truly listen to their feedback. Another way to level up customer engagement and loyalty is to offer discounts on digital platforms or host virtual events and contests to reward existing customers and capture new ones. Thinking more strategically about data and insights can help enrich customer engagement and ultimately increase sales and loyalty.
3. Identifying and filling market gaps quickly
According to the NFIB's Small Business Problems and Priorities Research, keeping up on business and market developments is one of ten small business challenges that business owners agree upon the most. But when an SMB can quickly identify and fill a market gap, they can stay one step ahead. Take for example the Los Angeles-based restaurant Dog Haus Worldwide. During the pandemic with grocery shelves bare and their in-dining numbers declining, they expanded beyond their restaurant to sell fresh foods customers would normally buy at the grocery store like hot dogs, sausages and burgers.
Small-business owners that stay abreast of industry trends, closely track developments in their competitive landscape and pay attention to pain points in their communities have a leg up in spotting new opportunities, early on. Thinking outside of the box to fill gaps in customer needs can lead to new streams of income.
Of course, the ability to pivot and meet consumers' needs quickly often requires purchasing power. SMBs should be aware of the different options available to them beyond bank loans that could help with expenses related to new projects.
To learn more about how to pay for business expenses and get rewarded for purchases, visit PayPal.com/businesscreditcard.
The PayPal Business Cashback Mastercard is issued by WebBank pursuant to a license by Mastercard International and serviced by Concerto Card Company. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
1Purchases and other transactions subject to credit approval. See the Business Cash Rewards Terms and Conditions for details. To earn Business Cash Rewards on eligible purchases, you must have an open Business account with PayPal to which your Business Card is linked. If your Business account with PayPal is closed for any reason, you will no longer be able to earn Business Cash Rewards and will forfeit any remaining Business Cash Rewards balance.
2Terms and Conditions apply. You must have a PayPal Business account to apply for a PayPal Business Cashback Mastercard.