no-smb image | The SMB Myth - Why Small and Medium Size Businesses are Different

The SMB Myth – Why Small and Medium Size Businesses are Different

There is no SMB. There…I said it.

For years now, companies have used the term SMB, or Small and Medium-size Business, to target-market their products and services based on company size. Let’s focus on technology providers, and see how well this has worked out.

When large technology companies developed products and services for other large companies, it seemed everyone was content. But once customers implemented their networks, software, servers, and workstations, technology vendors wisely went looking for new incremental business for their solutions. After all, the development costs were capitalized, so it seemed logical to segment the largest customers with the label Enterprise, and everyone else SMB. Just tweak the marketing messaging, assign dedicated sales teams, and leverage the existing investment for SMB.

Much success was realized selling technology products and services to medium-size businesses. The requirements, while smaller in scope, were comparable to Enterprise solutions. The biggest drawback was that the cost of sales was higher for medium-sized businesses because they required a similar sales cycle to Enterprise customers but for less revenue.

Medium-size businesses have staff dedicated to technology, RFI and RFP processes, exhaustive technology assessments, and often no allegiance to prime vendors even if incumbent. Just like Enterprise.

As similar as Enterprise and medium-size customers are, small business is different.

Small businesses generally view technology in pure business terms, rather than specs. How can I sell more screen doors? Can I count on the system being up when I work on the weekend? Why change something if it’s working?

Another big difference is how the small business owner manages their technology. 82% of the 1.5 million U.S. small businesses with 10-100 employees are self-supported with informal as-needed maintenance or dual-role employees. Only 18% utilize Managed Service Providers (MSP’s) that are usually discovered by referral and there is seldom a formal RFP process. These MSP relationships last for years and usually become quite personal. Small business owners like doing business with people they like.

I’ve had the pleasure of working within and with Enterprise, medium, and small-size businesses. From the perspective of marketing and sales, I find the only similarity of small and medium businesses is they’re not Enterprise.

I recommend you treat Enterprise, Medium and Small-size Business as three distinct target markets.

There is no SMB.

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