Cloud Topics

What Does the Growth of the Digital Economy Mean for Your Business?

By Nicole Lim / April 1, 2020

We’re in the age of the digital economy, and it’s important to understand how your company is affected by its growth and expansion. When you learn more about the digital economy, you’ll uncover ways your business can utilize this frontier to reach more potential customers, enhance your customer service experience, and collect important data.

What Is the Digital Economy and How Does It Work?

The “digital economy” refers to the revolutionary way the general public and businesses interact and engage in transactions online. As the internet began to rise in popularity, businesses turned to the online world as a way to achieve brand recognition and status within their industries. Consumers and businesses alike turned to the internet as a way to research products, make decisions, and purchase what they need while skipping out on face-to-face interactions.

Now, you can use the internet to research the differences between two car models, ask an expert questions, set up financing, and purchase the car you’re interested in, all without leaving your home.

Why the Digital Economy Matters

It’s important for business owners to understand the convenience that consumers experience when a brand offers services, communication, and information completely online. Businesses that harness the power of the digital economy provide this convenience to potential customers and current clients, so they’re more likely to see growth and success.

With closer connectivity to the general public, the collection of big data, and additional ways to achieve sales and marketing goals, the digital economy has proven to be essential. This shift has also provided:

• Easier ways for businesses to interact with consumers.
• Pressure for businesses to innovate with new products and services.
• Time-saving and efficient procedures for customer service, interaction, and sales.

As the digital economy weaves itself into consumers’ lives, it also becomes the influencer of most businesses’ service, sales, and operations techniques and strategies.

Measuring the Impact of the Digital Economy

The U.S. Bureau of Economic Analysis (BEA) calculated estimates on how the digital economy fits into the federal economy. According to the BEA, the digital economy’s real value has grown at an average annual rate of 9.9% from 1998 to 2017. These estimates also claim that the digital economy accounted for about 5.9% of the GDP in 1997, which increased to 6.9% in 2017. These upward trends demonstrate the growth and expansion of online sales and services.

The Organization for Economic Co-operation and Development (OECD) created a toolkit to better measure growth as it relates to the digital economy. With these universal guidelines and methodologies, countries around the world can definitively measure how the digital economy is growing and in what specific areas it’s experiencing the most growth. These measurements allow governments to regulate more adequately and provide businesses with the information they need to continue innovating and expanding online.

Impact of the Digital Economy on E-Commerce Sites

With the growing digital economy, e-commerce retail and digital services have exploded into many industries. With the internet so widely available, it’s become a common channel that businesses rely on to market their brand, provide information, and engage in transactions.

Subscription commerce services that provide software or other online services through a digital commerce platform are a popular way that e-commerce sites attract consumers. The software as a service (SaaS) model has been a boon to businesses looking to move past legacy systems and enjoy the efficiencies and savings associated with modern technology. Dedicated e-commerce sites must stand out from the crowd of businesses competing for consumer attention online. Digital commerce businesses have had to adopt innovative procedures and products to attract these consumers.

Business Strategies and Processes

With the continued growth of the digital economy, businesses have had to develop new strategies and processes that embrace the way consumers do research, interact with companies, and purchase goods and services. E-commerce businesses have been pushed to enhance their services and ensure they’re providing consumers with exactly what they’re looking for.

Brick-and-mortar businesses that may not have thought twice about online presence now find themselves embracing online digital strategies and processes due to the expansion of the digital economy. Since consumers have changed the ways they shop and seek information, these businesses have had to pivot the way they interact with these consumers. To become more digital-friendly, businesses may need to focus on:

• Payment systems: Businesses must embrace digital payment systems that focus on customer convenience. With subscription billing, customers are billed regularly for ongoing services. The digital economy makes it easy for these customers to receive their product, ask for assistance, and pay their monthly subscription bill. Automatic billing and different payment options make it easier and more likely for customers to purchase goods and services online.
• Marketing campaigns: Advertising on billboards may have been enough for businesses to gain exposure in the past. However, in the digital economy, these companies must focus on search engines, social media, email campaigns, and other online marketing strategies to reach customers where they are.
• Big data: With more online engagement, businesses have the opportunity to collect big data on their clients, buying patterns, and engagement. With this data, businesses can improve their processes, better understand which products and services their clients are looking for, and provide an upgraded customer experience based on what they know.
• Machine learning: Big data is effectively used through machine learning. With algorithms and automated processes analyzing the data collected, businesses gain knowledge on how they can alter their current processes to attract more clients and keep current customers satisfied.
• Artificial intelligence (AI): Chatbots, interactive online commerce platforms, and other forms of AI are also crucial in the growing digital economy. These advancements ensure visitors and online shoppers find what they’re looking for and get the service they’re expecting, even without human interaction.

The digital economy continues to grow and a business’s survival depends on its willingness to embrace this online space. Businesses must analyze their marketing plans, processes, and procedures so they can meet consumers online and provide them with the information and experiences they’ve come to expect.