How can financial services get SMEs to listen?
Small and medium enterprises make up around 99% of European companies but 60%* don’t use a business bank card which presents a mutual opportunity for both financial service providers and SMEs. But communicating and engaging with them is becoming an increasingly difficult task for banks. Understanding the most effective methods is becoming more important and beneficial than ever.
Our research – which looked at 121 companies across the UK, France and Germany – suggests that SME growth is projected to increase steadily over the next few years. Supporting this sector is not only good for economic growth, but provides a large and valuable market for suppliers, in particular banks and financial services firms. As an example, 60% of European SMEs still don’t use a business bank card, with 1 in 4 never having been offered one. Because of this, cash and cheques are still used for over 40% of European SMEs’ expenses.
However, while there might be a number of ways in which banks and financial services firms can support SMEs, they are notoriously hard to reach. Not only are 40% of messages they receive deleted without even being read, there is also often a disconnect in attitudes that makes it particularly challenging for financial institutions to know how to communicate with them. For example, 3 out of 4 SMEs say they prefer face-to-face meetings to get financial information but when such meetings are offered, 30% turn them down.
The most successful companies are even harder to reach. The research shows that they answer fewer telephone calls – with around 80% going unanswered – than the less successful companies who still ignore over half.
So what’s the answer?
There’s no one size fits all approach. Not only are there differences from person to person, there are interesting national differences too, in how SMEs like to be communicated to.
The research has shown there to be three guiding principles when it comes to communicating with SMEs:
- 60% of SMEs trust their bank for advice when it comes to making financial decisions
- 70% respond to messages which are directly related to their industry
- 60% of these companies respond to communication from financial service providers when contact is made through their preferred channel
In a crowded market, it is essential to make sure that the messages you’re communicating and the products you’re trying to sell are highly relevant and tailored to their specific needs. As an example of this, our research demonstrated that SMEs were looking for better control of their finances with an increased ability to control and track their spending. MasterCard therefore developed inControl, a mobile application that gives SMEs an easy solution for managing their finances more efficiently, giving them greater confidence and control over their spending.
Other country to country differences include the fact that French SMEs are more digitally-oriented and appreciate on the move information (mails/social media), which is less the case for other markets. For French SMEs too, the message should be linked to the company’s sector and at their preferred information channels, whereas in Germany SMEs are more focused on market proximity messages. This is the same in the UK, but here, easy implementation and providing quick wins is something that’s more emphasised.
As an example of how this tailored approach and creativity can work in practise, Deniz Bank in Turkey partnered with MasterCard to launch the ‘Farmer Card’. It was specifically designed for and marketed to small and medium enterprises in the agricultural industry. The card offers credit to farmers suffering from cash flow difficulties to pay for fuel and pesticide which only requires repayment once the yearly harvest comes in.
All of this shows the level of careful planning that’s needed when thinking about how to make successful approaches to potential SME customers. Decisions on who to target, when, and through which channel, need to be driven by real-time data, advanced analytics and insight. SMEs might be a hard market to reach, but driving impact to the bottom line is possible. All that’s needed to leverage these profitable markets is the right set of tools.
 Source: MasterCard 2011 UK, FR, DE, ES
 Source: MasterCard 2013 UK, FR, DE, N = 121
*Source: Eurostat – non-financial business economy, EU-27, 2008 – 2011 edition