Cracking the Code: The Game-Changing Impact of Digital Upskilling on Small Enterprises

This post is part of a series on our findings from Mastercard Strive’s Small Business Digital Evidence Map. The Evidence Map, developed by Caribou Digital, is the first interactive public tool charting evidence on the impact of digital and data-first interventions on small businesses. It documents the impacts of digital upskilling, digital market participation, digital financial services, and tools for digital business operations programs against seven core outcomes for small businesses. To learn more about the Evidence Map, visit the website and read our previous posts.

Good business and management practices are key to running successful firms, but businesses often need support accessing practical training. In conversations with business owners, we found that business owners want more training on how to establish a customer base and market presence, how to access and use financial services, how to improve their customer service and financial management skills, and how to adopt new digital tools and services that can grow their businesses. Digitally delivered training presents a promising alternative to in-person programs, especially for micro- and small enterprises. While it can mimic many of the features of in-person training, digitally delivered training can also be delivered in different ways (e.g., as standalone training, embedded within products, services and platforms, or bundled with other forms of support; as guided or facilitated courses, or as pick-and-mix modules). Digitally delivered training can also be provided through different approaches, including gamification, chatbots, and nudges, that are not available in traditional, in-person training. Digital upskilling is more cost efficient, flexible, and scalable than in-person offerings. But does it work?

To begin to answer this question, our team used the Small Business Digital Evidence Map. Of the 110 studies in the Evidence Map, 25% involve digital upskilling initiatives. From these our team synthesized the evidence to highlight the impact alongside the key challenges — and opportunities — for digital upskilling for small businesses.

Our overarching finding is that digital upskilling alone rarely supports long-term impacts such as more resilient businesses, more efficient operations, or new work opportunities. Of the 24 studies in the Small Business Digital Evidence Map that tested shorter-term impacts like capacities and uptake of new products and services, all found positive impacts. In contrast, of the 20 studies that tested long-term outcomes like small business resilience and growth, only 40%–50% of evidence points were positive. Findings from these studies are highlighted below.

Our findings indicate a number of design, delivery, and content features can support longer-term changes in upskilling initiatives.

Reminders and incentives can improve engagement and completion.

Digital upskilling programs often have low completion rates, which may undermine the effectiveness of any training on long-term impacts. Human behavioral biases and lack of physical interaction deter consistent participation and engagement with the material necessary for long-term change. In China, a large randomized control trial (RCT) involving 2 million merchants on a digital platform found that 45% of platform sellers browsed any training content, 24% started at least one training task, and just 13% completed a task.

Our review found six studies that evaluated the effects of reminders and incentives on training completion. These studies all found that different incentives and reminders can lead to significant increases in learner engagement — addressing some of the challenges created by a lack of physical interaction.

• In Brazil, an RCT among mostly low-income women-owned micro-businesses showed that a WhatsApp training course paired with monetary incentives and nudges increased both engagement with training content and adoption of marketing and recordkeeping practices, and had a positive impact on firm resilience. Without incentives, the training had no effect.
• In Guatemala, a randomized evaluation of an online training program found that weekly reminders via WhatsApp, digital money as a completion incentive, and one-on-one consulting calls (at an additional training cost of $187 per business) made small businesses more likely to take up and complete the course. Sales among businesses selected for the training were 6%–12.7% higher than their pre-training trend.

In both of these cases, researchers tested the impacts of monetary incentives to understand how they affect the cost-effectiveness and scalability of digital training. In Brazil, researchers found that the size of the monetary incentive (approximately $4 vs. $8) had no differential impact on small business outcomes. In Guatemala, digital money incentives averaged $72 per participant, and one-on-one consulting cost an additional $187 per participant. Both approaches were found to increase businesses’ consumption of training content, but these studies do not discuss whether they had any direct impact on outcomes like business profits.

Digital training is more effective when bundled or embedded with other digital products and services because it supports the application of learnings.

Digital training, when not bundled with other support levers or embedded in digital products and services, is more likely to lead to negative or null outcomes for small businesses than when it is. In three studies, trainees were found to be no more likely to receive loans or have their business survive, showed no difference in their application of time-saving processes, and showed no significant impacts on income. In contrast, the 23 studies where digital upskilling is bundled with other digital products and services or embedded within e-commerce or financial service platforms, found significant positive impacts.

Evidence suggests that embedding training within user journeys allows small businesses to directly apply what they have learned.

• The previously mentioned randomized evaluation in China found that on-platform training led to more customers (+1.3%) and higher revenues (+2.6%), via improved marketing and customer communication practices than for small businesses that did not complete the training.

Bundling training with financial services can also be effective.

• A study involving women micro-entrepreneurs in Tanzania showed that women who received both training and access to a mobile savings account saved 35% more than those who were given only accounts.
• In Colombia, the Mastercard Center for Inclusive Growth and Juntos found that conversational training embedded within digital financial services and products encouraged approximately 500 small businesses to immediately put new business skills to practical use by adopting payment systems and online banking features.

Tailored one-on-one support leads to improved business practices and outcomes because it provides personalized guidance that one-size-fits-all programs can’t match.

Traditional, one-size-fits-all training programs often fail to address small businesses’ needs. They are limited by a lack of personalization, low engagement, and mismatches in learner paces, learning styles, and needs. While digital upskilling can offer alternatives to traditional approaches by allowing learners to pick and mix content and choose their own pace, several rigorous studies have shown that in-person consulting and mentoring have contributed to positive outcomes for small businesses.

While there is less research on the impact of providing consulting and mentoring through digital channels (7 studies), the emerging evidence is largely positive — particularly when consulting was focused on marketing skills, customer acquisition, and market expansion.

• Among small businesses in Nigeria that were offered access to business training, digital consulting, and in-sourcing and outsourcing services related to financial and marketing skills, those with access to additional consulting experienced significant improvements in business practices (+13–23 percentage points), persisting over a year after the program ended. On its own, the business training program had no effect on small businesses practices. Consulting was conducted in person, for a total of 11 days at least monthly spread over 6 to 9 months.
• In Guatemala, researchers found that providing businesses with one-on-one consulting calls covering training content focused on marketing and financial management skills increased engagement with passive learning content by 14 percentage points drove the adoption of better business practices, and, ultimately, led to higher sales and profits.
• A randomized study across 6 Western Balkan countries found that small firms receiving 30 hours of live group training and 5 hours of remote one-on-one consulting adopted better marketing practices, which led to an increase in customers and sales revenue.

Upskilling focused on marketing and communication practices is one of the most tested pathways to improved small business outcomes.

The Evidence Map shows that, where upskilling programs have led to increased customers, higher sales, and better profits, it often occurred through improving small businesses’ marketing and communication skills and practices.

• Chinese e-commerce sellers who underwent training improved their marketing skills, attracted more consumers to their sites, and communicated more effectively with clients, which led to higher sales.
• In the Balkans, firms employed search engine optimization and a more professional social media presence, contributing to a 10% increase in sales.
• In Uganda, matching volunteer mentors with small businesses found that entrepreneurs randomly matched with mentors who were marketers significantly increased firm sales (51%), profits (35%), and employment (23%). Small businesses matched with mentors who had a background in consulting or other professional services saw no impact.

However, it is unclear whether teaching marketing is inherently simpler than teaching other business skills — and thus is more impactful — or, conversely, if marketing is the most significant influence. Further, internal improvements, such as better inventory control or bookkeeping, may take longer to show results and thus are more difficult to measure robustly. Nonetheless, according to currently available evidence, marketing and communications appear to be fundamental skillsets for upskilling initiatives.

Key takeaways

So what do these findings mean for organizations that are providing upskilling to small businesses?

1. Incentives, reminders, and other encouragement mechanisms can have notable impacts on small business outcomes. However, the use of high-touch support and monetary incentives can undermine the business case for digital upskilling as a cost-effective and scalable solution. Organizations designing upskilling for small businesses should consider how these tools can be built into their approach in a cost-effective, scalable way.
2. Upskilling and the adoption of new practices, products, and services work hand in hand. To increase its effectiveness, upskilling should be bundled with or embedded in the user journeys of new or existing digital products, services, and platforms.
3. Although costly and more time-intensive, human interaction and tailored advice continue to be important for digital upskilling outcomes. They encourage engagement with training content and support the diverse needs of micro- and small businesses that are not met through one-size-fits-all digital training programs. Experiences from Nigeria suggest consulting can be in person or digital, but is best when delivered with sufficient time between sessions to allow for business owners to implement advice.
4. Marketing and communication skills are essential for small businesses and are shown to have significant, measurable impacts. Upskilling support is most impactful when it includes marketing and communications skills that encourage small businesses to harness the potential of new digital marketplaces and appeal to a wider customer base.

Impactful small business digital upskilling is dynamic, integrated, and coupled with support mechanisms.

Mastercard Strive has put these insights into practice with our partners to drive small business engagement and adoption of training content. For example:

• In Indonesia, Tumbu Accelerator has worked with more than 6,000 small businesses through small facilitated WhatsApp-based groups. Mentors give advice on specific training content for each business owner, hold Q&A sessions, and guide business owners through a series of tasks to practice new skills. To increase participation, the program offered incentives (digital money/phone credits, social media promotion of their businesses) for completing courses and assignments.
• Flourish FI is working with financial service providers in Brazil to pair micro-learning content with gamification to empower small firms to better manage their finances.
• Digital mentoring and interactive group support are a key part of the Strive program in Brazilian favelas with Aliança Empreendedora and Central Única das Favelas. Through gamification of the learning journey, social elements, and peer-led training and mentoring, small enterprises will learn how to digitalize their businesses and responsibly use financial services — and unlock rewards as they go.
• Boost Capital embedded learning content within the credit application journey for Cambodian small businesses. In doing so, they not only reached over 5,600 small businesses with financial education content but also found that digital loan applicants who consumed content were more than 7% more likely to repay loans on time or early.

As our Evidence Map grows and we learn more about what does — and doesn’t — work for the digital upskilling of small businesses, we will continue to adapt and innovate in our programs.

The studies in the Evidence Map represent our best knowledge of digital support for small business insights. New studies are continuously emerging, and thus the Evidence Map will continue to evolve. If you have questions about the Evidence Map, are interested in discussing research priorities, or know of relevant digital support for small business impact studies, please contact hello@strivecommunity.org.