24th January 2012

The MYOB Business Monitor surveyed over 1000 business owners around New Zealand on their approach to business in 2012.

MYOB general manager Julian Smith says the tough trading conditions of the past three years have highlighted how important it is to keep existing customers happy, while being constantly aware of new opportunities.

“The most popular strategy for businesses in 2012 is customer retention,” says Julian Smith.

“This speaks volumes about the way business owners are structuring their business, and gearing them to be more service focused and proactive in keeping their existing customer base.”

More than one-third (35 per cent) of business owners surveyed expected customer retention activity to increase in 2012. Business owners who expected to put most effort into this strategy were much more likely to be a medium (73 per cent) or small (56 per cent) business; to have an annual revenue of $1-5m (57 per cent); and to have a business website (53 per cent, compared with 26 per cent without a website).

“During the recession, business owners became all too aware of how hard won every new customer was,” says Julian Smith. “This new focus will actually make us more responsive and more competitive as an economy.”

Top 10 priorities for Kiwi businesses in 2012 | MYOB Business Monitor

1. Focus on customer retention strategies – 35 per cent of businesses

2. Increasing business activity in new markets – 33 per cent

3. Focus on customer acquisition strategies – 31 per cent

4. Increasing the number of products or services offered by the business – 27 per cent

5. Sales of products/services offline – 27 per cent

6. Sale of products/services online – 25 per cent

7. Increasing spending on online marketing & advertising – 23 per cent

8. More sales promotions – 22 per cent

9. More investment in IT systems & processes – 22 per cent

10. Increasing salaries & wages – 20 per cent
 
The second most popular strategy for 2012 is new market growth, according to the survey. One-third (33per cent) of business owners expected to increase the activities of their business in new markets.

Business owners most likely to focus on expansion of their business were predominantly in the Finance and Insurance sector (54 per cent), and the Manufacturing and Wholesale sector (46 per cent); and had a business website (52 per cent, compared with 24per cent without a website).

While a majority (57 per cent) of business owners said they would not change their product or service offering, a significant 27 per cent intended to extend their range. This was led by those in the Manufacturing and Wholesale sector (47 per cent), and those who had a business website (40 per cent, compared with 21 per cent).

Smith says the trend towards diversifying into new markets shows Kiwi business owners are looking at opportunities beyond the current, constrained performance of the local economy.

“Again, this trend towards a broader mix of products and new markets will position the whole country well for the future,” he says.

“Most importantly, as we face such uncertainty in the international economic situation, it is extremely heartening to see that Kiwi business owners are increasingly determined not to be exposed to a single market, or offer a narrow range of products and services.”

Smith says New Zealanders are also recognising the importance of the digital economy and finding ways to use the internet to engage both local and international markets.

“We are continuing to see the benefits of owning a website, and the additional advantages of using e-commerce sites to drive sales. In particular, promoting your business online – where more than two thirds of consumers now do their initial research into a product or service – makes it a lot easier to acquire and retain customers, while introducing new products or services.”

According to the survey, one quarter (25 per cent) of business owners hope to increase online sales. The businesses most strongly focused on online sales are in the Manufacturing and Wholesale sector (42 per cent) and in the Retail and Hospitality sector (41 per cent). Two-fifths (41 per cent) of all businesses say they are likely to use their website to drive offline sales.

The internet is also becoming the dominant media for advertising, with more business owners intending to increase marketing and advertising spending online than offline in 2012.

Just under one quarter (23 per cent) of business owners expected to increase their online advertising and marketing spend, compared with one-fifth (19 per cent) who expected to spend more offline. Those who were the most focused on online marketing and promotions are in the Retail and Hospitality sector (43 per cent); or own a business in Christchurch (32 per cent).

Around one-fifth (22 per cent) intend to invest in IT systems and processes in 2012. The most likely were in the Finance and Insurance sector (45 per cent); the least likely were business owners in the Transport and Warehousing sector (12 per cent) and Construction and Trades sector (15 per cent).

“With a bullish growth strategy, the financial sector is focused on investing in the IT resources to support significant expansion,” says Smith. “Minimising the amount of time spent on business systems enables these companies to channel that resource into customer retention and acquisition.”

However, the investment plans of New Zealand business owners won’t flow through the whole country immediately, according to the survey.

“While, we can expect to see a period of business growth over the next twelve months, this is unlikely to be reflected in the labour market,” says Smith.

“Only one in nine (11 per cent) business owners intend to increase the number of full-time staff, with 66 per cent indicating this aspect of their business would stay the same.

Only one in six (17 per cent) said they would increase part-time staff. However, 20 per cent of business owners are intending to increase the amount they pay their staff.”

© iStart Technology in Business www.iStart.co.nz

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