Do SMBs have the most to gain from the AI boom?

Small and medium-sized businesses could harness the tech’s promise to establish themselves alongside market leaders

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In Nottinghamshire, a photography business is advertising for new staff, having generated a ten-fold increase in new customers in the space of just six months. In Kent, an IT support and cybersecurity company has more than doubled the size of its workforce since posting a 31% increase in turnover in less than a year. And, on the other side of the Atlantic, a US-based ecommerce firm selling premium dietary supplements is toasting a 40% increase in operational efficiency and a 15% reduction in operating costs.

What the three firms have in common is that they largely credit their adoption of AI for these startling improvements they have claimed. They’re not alone.

Deloitte reports that 96% of the global organisations they surveyed use AI in at least one major process or initiative. Research carried out by YFM Equity Partners also revealed that 41% of the 1.1 million UK businesses they analysed as part of their Entrepreneur Economy research are using the technology to support marketing, including copywriting, design and customer analysis.

“Email marketing and social media content are some of the top use cases for AI among small and medium-sized businesses (SMBs), simply because many generative AI tools are free or low-cost, and very accessible to beginners,” says Jamie South, partner and head of investments south at YFM. For SMBs, the benefits of AI are sizable. “AI can offer huge efficiency gains to firms of all sizes if used in a safe and responsible manner. But the potential is even bigger for the smaller enterprises that are tighter on resource and funding.”

“Small businesses don’t send enough emails”

Nigel Botterill teaches SMBs how to scale through marketing. It’s something he knows a thing or two about. He’s built 10 businesses that have each generated sales of more than £1m. Now, Botterill spends his days passing on his business-building secrets as the founder of The Entrepreneur’s Circle. Last March, he held a one-day event for entrepreneurs focused entirely on AI. “We started with the basics and looked at the opportunities small businesses could exploit by using AI,” says Botterill. “We covered email and video marketing, crafting social media ads and looked at successful case studies.” Even a brief introduction to the subject can do enough to inspire confidence where it is acutely lacking. 

A commissioned survey conducted by Forrester Consulting on behalf of Intuit Mailchimp has found that 88% of marketers at small to medium-sized businesses see automation and AI as crucial components to scale to meet increased customer expectations. Yet 51% are still pulling insights about campaign performance manually. 

“Six months after the event, it was surprising to see how few small businesses had started using AI,” says Botterill. “This isn’t their natural space and there’s a lack of understanding and trust.” So, where should they start? “The majority of small businesses don’t send enough emails,” he says. “One of the reasons for this is that they don’t know what to say or how to say it. AI fixes both of those things.”

He urges marketers not to let a fear of using new technology hold them back. While a considerable portion of the SMB community might leave AI’s potential untapped, their larger counterparts won’t be so hesitant.

Building customer relationships

Lydia McGoldrick is the founder and owner of Honey & Lace, a 10-year-old photography business based in Nottinghamshire. The company employs two full-time staff and five freelancers. McGoldrick started exploring how to use AI to grow her business in August of 2023. “We couldn’t respond to all of our customer queries,” she says. “We also didn’t have enough money to hire someone to take care of it.” 

She read up on the basics of integrating AI into small businesses and spotted an opportunity for growth. “I wanted to use AI to build customer relationships via email,” she says. “Rather than having a static brochure on our website, we can use AI to share information gradually so they stay in touch with us and get excited about their photoshoot. It also develops this feeling that they know us and the studio.”

From a brand and marketing perspective, the consistency automation enables is not something that a one-man band can aspire to without immense effort and support. McGoldrick used AI to help her set up email sequences for previous, potential and current customers who have already booked a shoot. New customers are supplied with information about the studio, their expertise and the props they offer. She notes that the company currently sends out hundreds of emails a week and there simply aren’t enough hours in the day to generate that output manually. She claims that the impact of AI on the business has been staggering, with a significant increase in enquiries and bookings seen since August.

The hyper-personalisation hype

Competition for eyeballs in inboxes is fierce. For Balance One, an ecommerce business selling premium dietary supplements, getting customers to open their emails was a problem. 

“Before we started using AI, we had a big issue personalising emails,” says CEO James Wilkinson. “We consistently encountered meagre engagement rates, but since we integrated AI into our marketing strategy, we’ve made mass customisation of personalised messages seamless.” He adds that email open rates and click-through rates have increased significantly.

But Balance One’s personalisation success didn’t happen overnight. The company consulted AI experts to learn about the technology and establish an effective route to implementation. In-house teams then received essential training, which allowed them to independently manage and integrate AI into their marketing strategy. Once set up, AI algorithms could dissect customer data, such as browsing behaviour, purchase records and responses to prior emails, to create personalised emails, which can be tailored to align with each customer’s preferences and needs. 

The system even predicts the optimal time to send emails to each customer. “What we’ve found is that AI doesn’t usurp the human touch, it enhances that touch,” says Wilkinson.

Levelling the playing field

Merging artificial intelligence with human connection is helping SMBs to accelerate growth and compete with their biggest rivals. Jason Lydford, CEO of Computer Rescue, an IT support and cybersecurity firm explains: “Our industry is incredibly competitive, but AI is helping us to level the playing field.” Until last year, the company’s marketing efforts were inconsistent and limited to a maximum of three campaigns a year. “There just wasn’t enough time to generate ideas and create content across all of our channels consistently,” says Lydford. “I couldn’t afford to go out and hire a Marketing Manager on £60,000 per year.”

AI has become a virtual member of staff

The launch of ChatGPT in November 2022 intrigued Lydford. He and his team began experimenting with the chatbot to see if it could help with content creation, generating ideas and articles for their blog. Its potential became immediately apparent. “AI has become a virtual member of staff,” he says. “We narrow down the ideas it comes up with and get it to do a first draft, and then we adapt that using our in-house knowledge.” The articles are then sliced and diced into different formats for email and social media marketing. Lydford claims that the average click-through rates on the company’s emails are now 62-65% – double what they were seven months ago when Computer Rescue began using AI.

A new David and Goliath

Lynford claims the impact on the bottom line has been seismic. “Our turnover has increased by 30%,” he says. “Previously, we typically attracted businesses with a turnover of up to £2m. Now we’re getting companies contacting us who are doing £400m.” In just seven months, the company has increased from a team of seven to 15 full-time staff. 

It’s a similar story for McGoldrick, who has hired a customer experience manager, a full-time make-up artist and is advertising for a new photographer. In the US, meanwhile, Wilkinson claims Balance One has seen its market share increase by 10% and operational costs fall by 15%. “AI is a remarkable equaliser,” he says. “The numbers are indisputable proof. It empowers smaller brands like ours to compete with our bigger counterparts.”

Despite the wins many are celebrating, not all SMBs have made AI a core part of their business and marketing efforts. A 2022 study published by Frontiers highlighted two key stumbling blocks that slow adoption. The first is organisational readiness, where companies face deficits in financial resources, talent, and the infrastructure required for AI implementation. The second involves the technical challenges that businesses encounter, such as complexities in integrating the technology with existing legacy systems, as well as ethical and trust-related risks.

“There’s definitely a knowledge gap and fear,” Botterill adds. “Many SMBs don’t even know how to speak to ChatGPT yet, but it’s like riding a bike. There also isn’t a big enough crisis yet. They’re not way behind the curve, so they don’t feel the need to do it.”

But for business leaders who have adopted AI early, suspicion has given way to trust. “As an owner, I don’t have many people to speak to when it comes to making decisions,” says Lydford. “I like to use AI to give me a second opinion or see if it says something I haven’t yet considered.” Wilkinson believes the benefits far outweigh the risks. “I wouldn’t let apprehension or unfamiliar territory hinder you,” he says, concluding that the future of email marketing will be shaped by AI. Small businesses should get ready to leverage its power.

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Disclaimer: The views, information and opinions expressed in this article are those of the people interviewed and do not necessarily represent or reflect the views of Intuit, Mailchimp or any of its cornerstone brands or employees. The primary purpose of this article is to educate and inform. This article does not constitute financial or other professional advice or services.