2022 Middle Market Trends: Companies Embrace Expansion
Heading into 2022, middle market financial decision-makers look at investing strategically
November 3, 2021 5 min read
What does 2022 hold for middle market companies? Strategic investment in people and technology. Capital One and Morning Consult recently surveyed 400 financial decision-makers in the middle market—representing companies with revenues between $20 million and $500 million—to uncover how they plan to invest in their businesses to achieve growth, competitiveness and sustainability as they continue to navigate the pandemic.
Middle Market Confidence and Outlook
The middle market is a critical part of the economy, representing close to 3% of all U.S. businesses but responsible for about one-third of private sector GDP and employment.
While the pandemic has had major repercussions for the middle market, many enterprises enhanced business continuity and are now pushing toward recovery. The survey pointed to growing confidence that is helping middle market businesses look toward transformation and business innovation.
The survey indicated that middle market financial decision-makers are optimistic about business conditions and plan to grow their businesses between now and March 2022.
4 Middle Market Investment Trends & Priorities
Middle market businesses are examining investment priorities for 2022 and beyond to increase their businesses' health and to grow. The survey asked them to select where they’re heavily investing outside of business-as-usual expenses pre-COVID and today.
1. Thirty percent are heavily investing in employee wellness and improved experience today.
Companies are investing in employee wellness and experience—a key contributor to continuity and growth. That includes greater access to mental health resources, childcare and elder care, along with wage increases.
2. Thirty percent are heavily investing in cybersecurity today.
Pre-COVID, cybersecurity emerged as the third-most selected area where companies were heavily investing. Now, cybersecurity tops the list alongside employee experience and wellness.
As cyberthreats continue to evolve, so do companies' security measures. In addition to technology investments, businesses are taking steps to train employees to recognize and report fraud attacks especially in areas like business email compromise.
3. Twenty-eight percent are heavily investing in data analytics today.
The survey showed that middle market leaders' focus on investing in data analytics has remained a top priority. Whether companies are focused on optimizing marketing, developing products or identifying new markets, data analytics allows them to discover, understand and act upon trends that boost profitability and competitiveness, which drives customer retention.
4. Twenty-six percent are heavily investing in eCommerce today.
Middle market businesses remain focused on eCommerce to ensure customers can seamlessly find and purchase what they're looking for. These investments can include website enhancements, mobile app development and maintenance and integration with social media platforms. It also means accepting a multitude of payment options. By meeting customers where they’re at and accepting the payment methods they prefer, middle market businesses can enhance sales, drive customer retention, increase profitability and strengthen their brands.
Middle Market Executives Anticipate ROI
While managing the business through the pandemic, middle market executives have started shifting attention to how their investments will deliver on ROI and growth targets.
In both the next 6 months and the next 1 to 3 years, more than a quarter of respondents anticipated their employee experience and wellness investments and artificial intelligence investments will be top contributors to ROI.
Another 27% of leaders anticipated their investments in customer experience and upskilling the workforce will drive ROI in the next 1 to 3 years. That’s likely why 64% of respondents said their companies are taking measures to invest in continuous learning, development and training programs.
Twenty-four percent of leaders also expected cybersecurity, data and data analytics and payment technology investments to be top ROI drivers in the next few years.
Middle Market Addresses Challenges with an Eye on the Long Game
The pandemic introduced new challenges for the middle market, ranging from implementing new technologies to adhering to safety measures related to COVID-19. Yet their investment plans reveal common themes in how they plan to tackle these challenges: with a focus on people, an eye toward tech-forward solutions like eCommerce, data and AI, and the expectation for strong cybersecurity solutions.
The Capital One survey was conducted by Morning Consult among 400 U.S. middle market financial decision-makers representing companies with total annual revenues of $20 million to $500 million. The survey was conducted from an online panel from September 1 – September 9, 2021. The margin of error is +/-5%.