Small- and medium-sized businesses (SMBs) are a huge untapped market, but many B2B vendors ignore SMB sales because they believe that selling to SMB customers doesn’t justify the return on investment (ROI). Smart sales managers understand that SMB selling is different, and that successful SMB sales strategy requires a different approach that can yield substantial revenue.
SMBs make up 99.9 percent of U.S. businesses, and they consume a great deal of technology. According to a survey by SMB Group, 48 percent of SMBs are adapting for a digital future and 36 percent are implementing digital transformation strategies. With the onset of the pandemic, SMBs are accelerating their digital transformation and also embracing new technologies and strategies such as work-from-home to remain nimble.
SMBs already have embraced cloud systems and desktop virtualization, and now they are adding automation, artificial intelligence, and analytics to simplify workflows and get more insight from customer data. There are more sales opportunities than ever as SMBs seek out new technology to keep them agile and resilient. However, effective SMB sales require a different type of sales organization with a different structure and a different brand of leadership.
What’s Different About SMB Sales
Making a large enterprise sale takes time and many decision makers. It often starts with a request for proposal or by identifying an executive buyer with a specific need. Then it’s a matter of scheduling meetings and presentations and addressing objections, followed by more meetings, more presentations, demonstrations, engineering consultations, and convincing various departments and decision makers until they are ready to buy. In a poll of sales reps, 74.6 percent of new B2B customers took four months to close, and 46.4 percent took seven or more months to close.
SMB sales are considerably different. Rather than dozens of decision makers, you typically only have one or two: the SMB owners. SMBs tend to have fewer employees. Companies with less than 100 employees make up the largest share of SMB employment. As a result, SMB CEOs tend to wear many hats, managing sales, procurement, payroll, and HR, and overseeing other business functions, including IT management. This means their time is valuable.
SMB owners also are highly risk-averse. They have smaller IT budgets and can’t afford to buy technology that won’t guarantee ROI. SMB business owners are often more concerned about making the wrong buying decision, so they tend to do a great deal of research in advance to find the right solution. By the time they talk to a vendor, they need to be sure they are making the right choice, so it’s up to the seller to act as a sales consultant who can help solve the SMB’s problem.
Managing for SMB Sales Success
To make SMB sales pay off, you have to reduce the cost of sale and maximize customer lifetime value (LTV). That means structuring your sales team to minimize customer acquisition cost (CAC) and reduce churn to increase LTV.
If you want to minimize CAC, don’t burden your account execs with customer acquisition and lead qualification. SMB buyers are largely self-selecting because they do plenty of research before they buy. Prospecting and lead qualification are best left to marketing specialists who can attract buyers by continuing to attract and educate them with online content until they are ready to buy. You can use in-house marketing specialists or outsource lead qualification. Either way, this is a much more cost-effective approach to customer acquisition, and SMB leads should be rigorously qualified by the time they reach the account executive.
To promote LTV, your sales team needs to be able to offer lasting customer value. Structure your team to provide consultative selling services and ensure Customer Success, and you will build customer loyalty and increase LTV. You may have to rethink your sales team structure to deliver on the promise of Customer Success. We have found that successful selling requires these five elements:
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Personalization — Building a trusted relationship with SMB customers requires personalized service. Every customer problem is unique and should be treated that way. Specialization helps promote personalization because account execs can apply their expertise to address the unique problems of SMB customers, whether they are in finance, education, healthcare, technology, or another vertical market segment.
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Specialization — Territories no longer make sense for B2B selling. It’s smarter to organize your account teams by specialization. When you have defined an SMB prospect’s needs, you want to be able to address those needs in a market context. A rep who knows the market, its unique challenges, and how to address them will be much more effective in devising solutions for SMB success.
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Collaboration — Account execs are no longer responsible for the end-to-end sales process. They now function as part of a solution sales team with marketing reps and customer development reps to warm up the prospect and Customer Success reps to assist them during and after the close. Success teams are often organized by specialty or market so they can work together as a team, making the sales process simpler and painless.
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Advocacy — To build LTV, you need to advocate for the customer. Forrester research shows that with a strong Customer Success program, companies are 54 percent more likely to retain 90 percent of their customers. The account executive should be empowered to advocate for Customer Success to strengthen the business relationship and increase the potential for renewals and upselling.
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Efficiency — Restructuring sales into Customer Success teams promotes greater efficiency, which reduces CAC, cuts costs, and increases revenue. Every member of the sales team has a job that makes the overall process more efficient and cost-effective. Your goal should be to get your LTV:CAC ratio to 3:1 for optimal efficiency.
When you understand the needs of SMB buyers and how they shop for solutions, you can create a solutions-oriented sales infrastructure that can deliver what SMBs need, and you can make it pay off. Keep customer acquisition costs low and maximize customer LTV, and SMBs can become your most lucrative customers.
To help you achieve that optimum LTV:CAC ratio, consider partnering with the right Sales as a ServiceⓇ provider to cut costs and add expertise. Finding the right partner can cut CAC costs and help you find the special expertise you need to penetrate vertical SMB markets quickly and cost-effectively without adding overhead. To learn more about selling to SMBs, be sure to check out our infographic, “7 Techniques to Increase Your SMB Sales.”
