European Small Businesses Benefit From a Digital Safety Net

March 24, 2021

A new report shows European small businesses (Small- and Medium-Sized Enterprises, or SMEs) that adopted digital technologies sooner and more aggressively during COVID-19 reported 80% better sales and hired more people than digitally skeptical businesses. Digitally Driven: Europe, a study of more than 5,000 European SMEs commissioned by the Connected Commerce Council (3C) in conjunction with Google and research firm Greenberg, demonstrates a strong relationship between early and committed digital tool adoption and more customers, better revenue, and more hiring during the pandemic.

The Data Catalyst Institute, via Catalyst Research, supported this Europe-wide research project.

The report shows that the Digital Safety Net — free and low-cost small business services that support communications and collaborative workflow, digital marketing and advertising, websites and social media, back-office tools, and e-commerce and online payments — provides strong support for European SMEs and positions them for more success in a post-COVID economy.

“Digitally Advanced” SMEs were nearly twice as likely to hire new employees than the least prepared “Digitally Uncertain” businesses. And among firms that hired new employees during the pandemic, Digitally Advanced firms hired 3.3X more employees than the Digitally Uncertain ones. Digitally Advanced businesses also retained customers at 1.4X the rate of Uncertain businesses during COVID-19.

The report finds that 42% of SMEs are Digitally Advanced, meaning they see digital tools as critical to their business. Digitally Evolving SMEs (40%) value digital tools but are not fully committed to them, and 18% of SMEs are Digitally Uncertain. If all Uncertain European SMEs were Advanced, the report predicts they would generate 262 billion Euros in additional sales and 3.76 million new jobs.