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 âSMBâ marketâwhich, 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 strategyâand some tips on how to start remedying any deficits.
1. Your definition of âSMBâ is murky. When asked, some vendors have a hard time pinpointing what âSMBâ 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.Sâcomprising 99.7% of all U.S. businesses. Medium business is fuzzy, but see below so you donât inflate itâs size or spending power.
2. You think medium business includes companies with $500M to $1B in annual revenuesâand that if you crack this, youâre golden in âthe midmarket.â 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 isnât really midmarket anyway), many of the 185,000-plus companies in the $10M to $499M bands are likely to tune out.
3. 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:Â
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 thereâs 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.
4. 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% donât 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.
5. You believe SMBs are technology laggards. For a long time, SMBs have been cast as technology laggards with an âif its not broken donât ďŹx itâ attitude. But this stereotype no longer applies. Todayâs 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 companyâs 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.
6. Detective work is required to figure out how much your solutions cost. Iâm amazed that in this age of transparency, some vendors still donât publish pricing on their sites. This wouldnât fly at all in the small business market, so most culprits are aiming for medium or âmidmarketâ 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 youâll 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.
7. Youâve crafted a great solution for your SMB target market, but not for service and support. Most SMBs donât 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 supportâto provide them with fast, real-time fixes? Too many vendors, especially those trying to move âdownâ to SMBs, skimp on support. SMBs view their own time and the time to solution value as precious commodities. If you canât get them answers when, where and how they need them, youâll fail to convert them and/or lose them.
If any of these warning signs apply, SMB Groupâs new SMB Market Profile Service can help.Â