There Are Four Types of Digital Businesses—Which One Best Describes Yours?

There Are Four Types of Digital Businesses—Which One Best Describes Yours?

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“Basic” isn’t just a pejorative term for young women who wear Ugg boots and love pumpkin spice lattes. It also describes the 20% of U.S. small businesses that aren’t using digital tools to their full advantage. And if your business is “basic,” instead of a truly digital business, you could be leaving money on the table.

The Deloitte report Connected Small Businesses U.S. examined how digital tools help small businesses and, by implication, the U.S. economy. The study classified small business owners into four digital engagement levels based on how they use online tools. Here’s the breakdown:

1. Basic (20%): Small businesses at this level have an undeveloped digital presence. They rely on traditional marketing methods, such as direct mail and print advertising. They have no website or social media presence. Essentially, the only digital tool they use is a business email address.

2. Intermediate (30%): At this level, a small business uses digital tools such as a simple website (without e-commerce or mobile capabilities). It employs some basic online marketing tools, such as being listed in online directories or third-party marketplaces.

3. High (30%): A high-level business has a more advanced website, such as one with mobile, online booking, or e-commerce capabilities. It engages with multiple social media and online marketing channels. It also uses internal digital tools, such as videoconferencing or cloud software, to enhance the businesses productivity and effectiveness.

4. Advanced (20%): This truly digital business uses all of the digital tools above, but at a higher level. In addition, it uses more sophisticated digital tools, such as developing a mobile app or using data analytics to learn more about customer preferences or sales trends.

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The higher your digital engagement, the greater the benefits for your business, the survey found. This holds true no matter how long you have been in business, where your business is located, or what industry you’re in. In fact, the gap between the accomplishments of basic and advanced (truly digital) small businesses is huge. Consider:

  • Digital small businesses are job creators. They are nearly three times as likely as basic businesses to have created jobs over the previous year. In addition, their employees tend to be more productive, thanks to the internal digital tools the company uses.
  • Digital small businesses are reaching new markets. With a wider variety of marketing outlets, they are able to reach a more diverse customer base, and as a result are three times as likely as basic businesses to have exported a product or service in the last year. More than four in 10 (43%) of digital small businesses’ customers are regional, national, or international customers, compared to 28% for basic businesses.
  • Digital small businesses are innovators. High-level businesses are five times more likely, and advanced-level businesses almost 10 times more likely, to have introduced a new product or service in the past year as basic businesses.
  • Digital small businesses are reaching more customers. In the last year, they are almost three times as likely as basic businesses to have seen increased sales inquiries. In fact, digital small businesses experience more customer activity throughout the sales funnel, from interest to inquiries to purchase.

With all these factors in their favor, it’s no wonder that …

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