Posted by Michael Heyman
The traditional image of the small business isn’t accurate because it’s one-sided. Yes, many SMBs are mom and pop operations that will stay that way, or they serve their town, employ 50 people and will only grow if the town does. But SMBs also employ 4 in every 10 tech workers. And they’re increasingly aware that tech is important to their business, even if they’re not in a tech space themselves. Growth-oriented SMBs hungry for the tools to succeed are a fantastic opportunity for tech companies.
SMBs are a big sales opportunity, accounting for 54% of all US sales. They’re also more likely to reach for new technologies. In some cases that’s because they’re inherently tech-minded: they account for 39% of tech jobs, and 24% of the patents in the top 100 emerging clusters. In others it’s because while they might be very uneducated about technology, they both need and can see the business benefits and are able to make more direct purchasing decisions.
But while many SMBs hope to grow rapidly, they’re not there yet.
Selling a tech product or service to SMBs isn’t like selling to enterprise level businesses. There are three big differences that you’ll need to consider, evaluate and accommodate in your sales process to successfully sell to SMBs:
1: Pain Points
The biggest pain points differ sharply between enterprise and SMB clients. Early-stage or small SMBs often struggle to keep their heads above water, so rather than trying to control or reduce budget expenditure they’re paradoxically more inclined to spend if the value in growth or savings is strongly demonstrated. Later stage SMBs focus more on stability and process as they seek to make the transition from ‘large SMB’ to ‘Small Enterprise’ in structure as well as employee count and revenue. Finally, when selling to an enterprise client you might be competing with an existing solution; in an SMB there may be no extant tool that does what your offering does. So it’s important to find ways to incorporate general education about what tools like yours does, as well as more specific detail, into sales pitches.
Enterprise focus: Increase revenue, reduce budget
Enterprise level clients will often require input from several non-experts across departments. While the CIO might be on board with the sale, other CXOs and stakeholders might not really understand the terms of the offering or the benefits available. When that happens, consensus sales stutter and ‘just settle for what we've come to call the lowest common denominator. What's the one thing we can all agree on? "Well let's try to save the company a buck," right?’ argues Brent Adamson.
SMB focus: Grow urgently to profitability/stability, achieve replicable business processes, long term savings.
Neil Churchill and Virginia Lewis propose a five-stage model of SMB development. Stages 1 and 2 are concerned with establishing a toehold and achieving stable profitability, while stages 3 to 5 are concerned with moving towards enterprise status. Thus, in stages 1 and 2 pain points for SMBs are very different from enterprise clients since for them growth is not a target but a pain point without which the business may not be profitable; self-funded SMBs fit this description, while capitalized SMBs may face high growth expectations from investors. In both cases, growth, survival and success are synonymous. In later stages, stability and organization are equally vital.
That’s an open door to salespeople who are willing and able to approach SMBs with a clear case for their offering based on the biggest business needs of this sector: growth, stability, and long term cost saving, with the first two clear frontrunners.
Make it work for you:
Leverage the growth, stability or saving potential of your offering.
Identify the stage your target SMB is at, and make sure your offering is couched in terms that speak to their stage-specific pain point.
2: Path to Sale
Enterprise clients often have established buying processes. SMBs sometimes don’t have established processes for anything. They’re focused on servicing their customers and have little internal business administration or structure.
What’s more, the standard paths to sales often don’t offer traction at the SMB scale. SMBs are often not using the online avenues that would usually let reps learn about a decision maker before they made the call. Social media use is different, dominated by Facebook as in B2C, and referrals are much more important than anything except TCO and search results.
Enterprise: established buying process.
Enterprise clients usually have established procedures for making purchases. Consensus sales involving multiple decision makers from across departments and levels will cooperate on a purchase decision made with strategic budget and strategic intent.
SMB: No defined buying process, different typical buyer journey. More closely resembles B2C.
SMB decision makers rely on a circle of advisors defined by personal trust rather than professional acumen, and seek information in similar ways to consumers; they like and trust industry leading brands, and they focus on search rather than more in-depth data gathering methodologies.
At enterprise level, 48% of business buyers will look at two to five pieces of content before making a decision. Tech B2B buyers prefer whitepapers (98%), case studies (66%) and tech guides (37%). At SMB level, research is conducted differently with much more emphasis on search rather than content and more emphasis on personal recommendations. Search was the first choice for business purchase information in 49% of SMBs.
This means that if you want to sell to SMBs successfully you might need to reorient marketing toward PPC and (perhaps local) SEO rather than the content marketing and social that seems to be more of interest to larger companies.
Make it work for you:
Build an agile, adaptable SMB selling path that lets you respond to the customer, and cover the bases:
Search - get found. Whether you need local or global search depends on your business, but if you want to sell to SMBs, this is how they’re researching vendors.
Reviews and recommendations - SMB buyers are making decisions based on reviews and recommendations on blogs and forums (34%) and third-party review sites like Yelp (35%). This is where they’re establishing a preference.
Buyer research - information will be on Facebook, the company’s website and on forums rather than on LinkedIn.
3: Decision Makers
Just as the path to sale and the internal structure of SMBs differs from enterprise clients, so does the person who will eventually make the purchase decision. Where enterprise level sales are characterized by consensus in C-level groups, SMBs typically make faster, more agile decisions. In part this is because of tactical rather than strategic focus - decisions are being made with undifferentiated budget because the business has insufficient capital and revenue to divide budget, and planning is more short term.
Enterprise: Consensus sale with input from CIO who can act as a brake; C suite often not tech literate and slow to learn.
Consensus sales of tech usually involve the CIO, who understands tech as it relates to the enterprise, and between four and five other people from around the organization, who may not. Achieving consensus often requires getting the CIO onside, yet this can be hard: conservatism, operational focus and concern for keeping the train on the tracks rather than innovation can hold back many who try to sell direct to the CIO.
Meanwhile the rest of the tech suite may have little tech knowledge or experience. That can make the learning curve to them understanding the value of your offering too long and too steep.
SMB: Single purchase decision maker, often though not always founder/CEO.
Where the CEO/founder is not tech literate, they’re often willing to learn if the bottom line is up front and process is fast.
Most SMB purchase decisions are made by the founder/CEO. Sometimes responsibility for those decisions is delegated, but 98% of tech purchase decisions in SMBs are made by CEOs. It’s not unusual to be closing a deal on the first call - or losing it. SMB founders aren’t making impulsive decisions but they’re seldom accountable in the way corporate officers are. They can make immediate decisions based on what you can tell them about the value of your offering.
Make it work for you:
Tie value to education and deliver quickly - expect to do prospecting, demo and sale sometimes in the same phone call.
Selling tech to SMBs requires a different approach than selling to enterprise customers. It’s not simply a case of ‘enterprise lite’ - they have different needs, different methods and different structures. But if you can tailor your approach to how SMBs operate, you’ll have access to a large market that offers medium deal size, short sales cycles and the potential for growth as your SMB clients grow.
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