Optimistic trans-Tasman SMEs face widening service gap

Thryv has released a new trans-Tasman study finding that small businesses in Australia and New Zealand are confident about growth and plan to increase spending on marketing and software, even as consumers report inconsistent service and a lack of basic digital options.

The 2025 Business Index and Consumer Report combines responses from 2,032 small business decision-makers and 2,023 consumers across both markets. The results point to strong revenue momentum among small and medium-sized businesses, while highlighting rising expectations for online booking, mobile-friendly websites and day-to-day communication.

Confidence and spend

Near-term economic sentiment is positive in both countries. In Australia, 54% of surveyed small businesses expect the economy to improve over the next six months. In New Zealand, 66% said the same.

Business performance expectations are also upbeat. About 64% of Australian owners and 72% of New Zealand owners expect revenue to increase. Around six in 10 anticipate customer growth (62% in Australia and 68% in New Zealand). Recent performance was similarly strong, with 57% of Australian and 64% of New Zealand respondents reporting revenue growth over the past year.

That confidence is flowing into investment plans. Marketing budgets are set to rise for 51% of Australian small businesses and 55% of New Zealand firms. Software spending is also expected to increase, with 52% in Australia and 56% in New Zealand planning to expand technology budgets.

"Confidence of this magnitude is rare in the current climate. Small businesses on both sides of the Tasman are backing themselves with plans to hire, invest and grow. However, optimism alone won't close the credibility gap. Consumers reward businesses that deliver consistency, connection and convenience, not just enthusiasm," said Elise Balsillie, Head of Thryv Australia and New Zealand.

Service gap

Alongside the positive outlook, the study points to a disconnect between how businesses rate their performance and how customers experience it. The widest gap is in service perceptions.

In New Zealand, 49% of small businesses said they completely agree they deliver consistently high service, compared with 24% of consumers. In Australia, 45% of small businesses said they completely agree, versus 25% of consumers.

Customer service ranked first among loyalty drivers. Across both markets, 69% said service is the biggest factor influencing repeat purchases. Product quality and price followed. In Australia, 66% cited product quality and 66% cited price; in New Zealand, 66% cited product quality and 69% cited price.

"Businesses believe they deliver excellence, but consumers hold them to a higher bar. In a market where loyalty is fragile and prices are rising, credibility is earned through service. Australians and Kiwis alike say friendly and responsive communication-63% in Australia and 68% in New Zealand-builds trust more than any marketing claim. The businesses that close this trust gap through authentic communication will define the next wave of growth for both countries," said Balsillie.

Digital expectations

The survey also finds a gap in digital confidence. About 72% of Australian small businesses and 75% of New Zealand small businesses believe they have a strong online presence across websites, social media and reviews. Only 49% of Australian consumers and 52% of New Zealand consumers agreed.

Many customers are willing to switch providers when expected tools are missing. Between 42% of Australian consumers and 47% of New Zealand consumers said they would change businesses if digital options such as online booking or mobile-friendly websites are not available.

Consumer preferences varied slightly between countries. In New Zealand, 52% expect a mobile-friendly website and 51% want online booking. In Australia, 43% expect both. Social media updates matter to 43% of New Zealand consumers and 32% of Australian consumers.

"Our data shows that between 42% (AU) and 47% (NZ) of consumers would likely switch to another provider if a business does not offer key digital tools such as online booking, mobile-friendly websites, or online payments. Consumers have told us how they prefer to engage-through email, trusted reviews and seamless online experiences. SMBs that rely on the wrong channels risk losing loyalty before the sale even begins," said Balsillie.

Costs and cash flow

Margin pressure sits behind the investment intentions. A majority of small businesses reported higher input costs, with 71% in both Australia and New Zealand citing increases. Wage bills have also risen, with 67% of Australian and 65% of New Zealand businesses reporting wage increases.

Consumers also reported greater price sensitivity. About 57% of Australians and 61% of New Zealanders said higher prices are the main reason they would walk away from a small business.

"Revenue without profit is an empty victory. The data shows owners are growing top-line sales, but rising costs and late payments are eroding the bottom line. Consumers are increasingly price-sensitive, with 57% of Australians and 61% of New Zealanders citing higher prices as the main reason they would walk away from a small business. That combination makes it harder to invest in staff or service-the very things that build customer trust," said Balsillie.

Owner strain

The research identifies workload and burnout as a growing risk. In New Zealand, 49% of small business owners said they have considered stepping away due to workload and burnout; in Australia, 45% said the same. Among New Zealand respondents who have considered exiting, the survey indicates a majority have already begun the process.

Access to finance appears to have improved. About 84% of Australian and 83% of New Zealand small businesses said it is easier to secure financing now than six months ago. Australians are as likely to rely on personal savings as bank loans, while New Zealanders lean more on institutional credit.

Reviews and recommendations remain central to discovery and trust. About 64% of Australian and 62% of New Zealand consumers said they are likely to leave a review after a purchase. In addition, 21% of Australians and 32% of New Zealanders said they always check reviews before buying. Discovery channels differed: Australians most often cited word-of-mouth and online searches, while New Zealand consumers were more likely to use social media to find local providers.

"When 63% of Australians and 68% of Kiwis say friendly communication drives trust, service can no longer be treated as a soft skill-it's a hard metric for growth. Optimism will translate into sustainable success only when service, digital alignment and owner wellbeing move together," said Balsillie.