Responding quickly to customer demand is the biggest challenge facing European SMEs

Small businesses across Europe are missing out on new business opportunities because they are unable to respond to enquiries fast enough in a world where customers expect around the clock service, according to new research from Vodafone.

The research, carried out among Small Medium Enterprises (SMEs) across four key European economies; Spain, Germany, Italy and the UK, shows that more than three quarters of European small businesses (78 per cent) said providing a fast response to customer queries was the biggest source of competitive advantage.

One third (33 per cent) of small firms blame their inability to respond quickly enough to customer enquiries for the loss of contracts to more nimble competitors and they estimated the value of the average contract at around €14,550.

Half of firms said that operating in a 24 hour society, where customers expected an instant response to enquiries made across many different channels, was the biggest pressure facing their business.

The findings come as SMEs – which represent 99 per cent of all businesses in the EU[1]- get to grips with the demands of a new generation of customers keen to see the immediacy of their internet shopping experience reflected in their business dealings. Potential customers are quick to move on to the next provider if they do not get an instant response.

Nearly eight out of ten (79 per cent) SME managers now expect their employees to respond to customer phone calls immediately during office hours no matter where they are. The increasingly mainstream use of social media has also impacted on customer expectations with just under a third (32 per cent) of European small businesses expecting staff to respond immediately to customer requests made on social media such as Twitter during office hours.

Tom Craig, Vodafone Business Services Director, said that despite challenging market conditions, SMEs were determined to grow: “Small businesses are focusing on converting every lead into a sale and those firms that respond the quickest have the upper hand. As more companies operate mobile workforces to save on office costs, managed communications systems that can instantly route unanswered calls to mobile phones across a dispersed workforce are becoming increasingly important.”

In order to get back to customers as quickly as possible, SMEs are looking to raise their game by working smarter rather than by taking on new employees. Two fifths (42 per cent) of small businesses are planning to invest in managed communications to make themselves more competitive in challenging market conditions. This contrasts sharply with the fifth (20 per cent) that plan to increase recruitment in 2011.

However, two fifths of SMEs in Europe (40 per cent) report a lack of access to funding for such essential investment. As small firms struggle to secure loans, more and more are looking to improve their customer responsiveness through embracing managed communications services, which require no capital investment.

Tom Craig comments: “This is where we, as an industry, can help by letting our customers pay on a subscription model for their overall communications, doing away with the need for chunky, up-front investments. Smaller players can now get access to the same technology that is used by larger rivals to deliver a more professional service with the same number of staff – the basis of expansion plans.”

The Vodafone Working Smarter Research polled a total of 1,000 SMEs in UK, Germany, Italy and Spain over a 12 week period. The study was conducted by specialist technology consultancy firm, Vanson Bourne.