The SMB Market—Quick Reference Guide To Winning

Last week I wrote about The SMB Market: the one that is difficult to win, but too large to ignore. My main claim was that SMB spending on IT is about to cross large enterprise spending, but very few companies are successful in winning this market. This phenomenon leads to a very scattered market, led by thousands of different vendors and lacking economies of scale. Take the Business management (AKA ERP): If you add Microsoft Dynamics, Sage, SAP and Netsuite, you will get to about 20% of market coverage. Who has the rest? Others. Who are those others? Many thousands of small to tiny companies that found a way to make a living out of selling a local or micro vertical business management software. Their customers may enjoy personal service and high fit for their needs, but they would not enjoy state of the art technology and the reliability of a large company.

 

The hardware space looks much different. In just about any survey you read, these two names are coming along strong as SMB market leaders in their spaces. These are two companies with a sound SMB strategy: Dell with its direct and efficient model (cut the middleman is an alltime SMB favorite) and Cisco with the smart separation of its business, keeping the Linksys unit as the SMB and consumer brand and Cisco as the enterprise brand.

Whether your business is a behemoth or an agile startup, if you are selling to the enterprise and now you want to sell to small businesses, you have to start thinking differently. Here are some ideas to get you started:

  • Build an SMB unit—This is absolutely the most important advice: build a dedicated unit that will report directly to the CEO, even if it starts very small. You’ve got to have a team of people who will wake up in the morning and will think about how to win the SMB space. People who will cheer every time they close a $5,000 deal. People who will visit only SMB customers, read only SMB surveys, subscribe to Inc magazine and read the e-myth revisited.

  • Defend your SMB unit—Don’t let large enterprise crawl in. SMB is a long-term strategy that builds itself by selling one small deal at a time. Don’t be tempted to borrow people from the SMB unit for other needs. It will start as a one-time loan and end up as a permanent habit that will kill your unit momentum.

  • Find a leader with SMB DNA—notice I have chosen DNA over experience: SMB experience is very helpful but not enough. You are looking for a leader who really loves SMB, thinks SMB, and understands how an SMB works from the inside. You are looking for someone who will peek behind the scenes when you go together to the corner cafe and will be able to describe how an SMB operates from the inside. Here is an easy interview question: ask your candidate to tell you about the last three visits he made to an SMB customer and look for two things: level of details and level of excitement. If your candidate is high on both, there are good chances he or she got the right SMB wiring.

  • Don’t downgrade—SMB requires new thinking, so don’t downgrade products, services or processes to work in the SMB environment. Think new and fresh, and design new products and processes for your SMB customers. Base the offerings on what they want, not on what you happen to have. Only then go back to your resources pool and see if you can base your new product on what you already have.

  • Think whole product—Another common SMB mistake is to think only about the core product. Say you build a product from scratch and it is a great fit for small businesses in the retail industry. What you didn’t do was ensure that the product comes with training materials that are SMB appropriate. As a result, your customers will have to buy expensive services to implement the product, and the overall experience will move from being speedy and pleasant to long and cumbersome. It is like comparing Amazon to e-commerce in China: you buy online but pay in cash to a delivery boy on a bike that will keep coming until he finds you at home, so delivery will take 2 weeks or 2 months. Who knows? The purchase experience may be great, but delivery and payment kills the pleasant buying experience.

  • Don’t outsource SMB marketing to your global marketing organization—Even companies that build SMB units tend to provide the unit with central services like marketing. Try to avoid it as much as you can. While your marketing organization should create the general guidance and brand strategy, and should act as a partner to dedicated SMB marketing people.

Last but not least (I am in Germany now and last but not least is the favorite phrase here): take it seriously. You can’t win in anything without giving it a real try. Winning the SMB market is no different. If you do it, drive fast with 100% commitment and not as a by-product of your enterprise product.

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The SMB Market—Quick Reference Guide To Winning

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