Are you trying to get on solid footing in small and medium businesses (SMB) market, but missing the mark? All too many technology vendors target but rarely build a volume business in this space.
Many vendors simply fail to take the time to really understand the composition and characteristics of the “SMB” market–which, in reality, is short hand for a fragmented market that consists of many diverse sub-segments with different needs, goals and attitudes about business and technology.
Here are seven warning signs that your company needs to refresh its SMB strategy–and some tips on how to start remedying any deficits.
- Your definition of “SMB” is murky. When asked, some vendors have a hard time pinpointing what “SMB” means to them. Among large vendors, different groups within the organization sometimes define SMB differently. While there is no one universal definition, you need to sharpen up your definition and focus to zero in on the requirements, attitudes and buying behavior of the SMB segments you want to serve. understand the true requirements. To put this in context as you do the math, the U.S. Small Business defines small businesses as those with less than 500 employees, and estimates that there are 28.8 million of them in the U.S–comprising 99.7% of all U.S. businesses. Medium business is fuzzy, but see below so you don’t inflate it’s size or spending power.
- You think medium business includes companies with $500M to $1B in annual revenues–and that if you crack this, you’re golden in “the midmarket.” So many vendors are competing for this tiny slice of the market. According to NAICS, there are just 2,941 companies in the U.S. with annual revenues in this range. For comparison purposes, they estimate there are 19,122 firms with revenues between $100,000,000M to $499,999,999M, and 169.655 in the $10,000.000 to $99,999,999 band. If you gear your product and marketing to the $500M to $1B crowd (which isn’t really midmarket anyway), many of the 185,000-plus companies in the $10M to $499M bands are likely to tune out.
- You are chasing small business unicorns. Unicorns are very attractive. They are the fast growth, typically venture capital backed small businesses that could be the next Facebook or Amazon. But unicorns are very rare: According to Inc. magazine, the majority of fast growth businesses rarely on self-funding; only 6.5 get venture capital funding. Among the broader small business market, VC funding is even more of an anomaly: According to the SBA, about 600,000 new businesses are started in the U.S. each year, about 300 are funded by VCs. While there’s nothing wrong with pegging your marketing and messaging to these high-fliers, this will probably not woo the owner-financed businesses that comprise the vast majority of the market.
- Your marketing is geared more to IT than to business decision-makers. IT does have strong influence and sway in the SMB technology decision-making process. But the buck most likely starts and stops with business decision-makers. This is especially true for small business, as 38% don’t have any internal IT staff, according to SMB Group research. Even if you are selling a backend-type of infrastructure solution, take the time to spell out the business benefits clearly and explicitly.
- You believe SMBs are technology laggards. For a long time, SMBs have been cast as technology laggards with an “if its not broken don’t ﬁx it” attitude. But this stereotype no longer applies. Today’s SMBs see the ground shifting: Roughly three-quarter of SMBs agree/strongly agree that digital technology as impacting their businesses and industries, and also that using technology effectively is key to their company’s survival and growth. However, only about a quarter strongly agree that their businesses have a well-defined digital business strategy. They get it, but need help to figure out which solutions can help them achieve business goals. They want, need and will invest when they see demonstrable evidence that solutions will deliver the business outcomes that they need.
- Detective work is required to figure out how much your solutions cost. I’m amazed that in this age of transparency, some vendors still don’t publish pricing on their sites. This wouldn’t fly at all in the small business market, so most culprits are aiming for medium or “midmarket” customers. Having talked to hundreds of these customers, I know that this is a big turn-off. Make it easy for them to get pricing information, or you’ll be cut from the short list. This is especially true for vendors that have made their mark in the large enterprise space: SMBs are likely to automatically think your offerings are too expensive unless you explicitly tell them otherwise. Of course, this means that you need to have a good understanding of what SMBs spend on technology to ensure that your pricing is realistic.
- You’ve crafted a great solution for your SMB target market, but not for service and support. Most SMBs don’t have a lot of time or resources for training. And even if you think your solution is drop dead simple to deploy and use, I can guarantee that they will have encounter glitches during the trial and in the on boarding process. Do you have the mechanisms in place, such as real-time chat and/or phone support–to provide them with fast, real-time fixes? Too many vendors, especially those trying to move “down” to SMBs, skimp on support. SMBs view their own time and the time to solution value as precious commodities. If you can’t get them answers when, where and how they need them, you’ll fail to convert them and/or lose them.
If any of these warning signs apply, SMB Group’s new SMB Market Profile Service can help. We’ve designed this offering to provide you with comprehensive view of the U.S. SMB technology market. Clients can select from the different market segment options and different packages. For details, click here or contact: Lisa Lincoln at firstname.lastname@example.org, 508-734-5658
© SMB Group 2018