Tapping into the Rich Market of Small and Medium-Sized Businesses

Small businesses also tend to generate less than $50 million in annual revenue, and medium-sized businesses tend to generate between $50 million and $1 billion in annual revenue. But however you define them, SMBs tend to have these same characteristics:

• They buy like consumers; they research before contacting vendors.
• They have a smaller group of decision makers or, in many cases, the business owner is the sole decision maker.
• They have smaller IT budgets and are cautious about spending.
• They understand that choosing the wrong solution could be costly, so they don’t choose at all.

There are 30.7 million SMBs in the United States, making up 99.9 percent of all U.S. businesses. Despite having a smaller workload, 11 percent of SMBs are investing in technology, spending more than $1.2 million annually on cloud computing services alone. In fact, SMBs run 43 percent of their workloads in the public cloud and 35 percent in the private cloud—and SMB technology spending is only expected to increase. 

Whereas larger organizations tend to have teams of decision makers representing various departments, SMBs have fewer decision makers—and in many cases, the owner is the sole decision maker. 

Enterprise sales take substantially longer, largely because there are so many decision makers involved in the process. The sales rep needs to be prepared to focus on the long game, building relationships with key players and making multiple presentations and demonstrations to satisfy everyone involved. 

With SMB sales, the process is much shorter. Because there is usually only one decision maker, the sale can often be closed with the first demo.

The application of content as part of the sales process differs as well. Where the enterprise prospect wants to see more successful case studies of companies in similar markets and of similar size, the SMB buyer relies more on peer recommendations and trust as the result of their own research.

Time Constrained

SMB decision makers tend to be busy running their business and rely on strong partnerships and vendors to navigate upgrading their technology infrastructure. For example, 66 percent of SMB owners are responsible for three or more business areas, including:

• Operations
• Finance
• Sales
• Marketing
• Human resources
• Customer service
• Product development
• IT 

This means that SMB buyers often have to research technology solutions in their spare time. As a result, an overabundance of information often clouds their ability to make a quick decision, especially when they feel that the wrong choice could be a setback for their business. 

Risk Aversion

SMB owners are highly risk averse. With smaller budgets than those of enterprise operations, SMBs are frequently bootstrapping operations and can’t afford to make a mistake when choosing technology. They are usually looking for solutions to well-understood problems, and assurances that they are making the right choice. 

For example, enterprise organizations tend to have vast amounts of data stored in different corporate siloes so that when they choose a customer relationship management (CRM) solution, they expect to invest in more expensive platforms that can handle data normalization and integration. SMBs don’t have the same problem and generally look for technology that they can deploy on the fly.  

Budget Restrictions

SMB budgets are another consideration. The average SMB is spending between $10,000 and $49,000 annually on technology. However, IT budgets are increasing. Thirty-seven percent of companies with 99 employees or less, 47 percent of companies with 100-499 employees, and 51 percent of companies with 500-999 employees will increase their IT budgets in 2020. 

Seventy percent of the SMB Buyer’s Journey is complete before the SMB even contacts a supplier. The role of the seller has become more like that of a consultant rather than a vendor, with the focus on promoting Customer Success rather than just closing the deal. 

By promoting Customer Success with your SMB customers, you create ongoing value, which drives recurring revenue and increases LTV. 

Rather than a funnel, the sales process is now more circular. The process begins with the lead generation and qualification process, which leads to closing the deal. Then comes customer onboarding and ongoing support to cement the engagement, creating a brand evangelist. Then, the process starts all over again with upselling and cross-selling.

The sales team needs to deliver contextual support at each step of the customer’s journey, and the best strategy is to apply a more diversified approach, with specialists supporting the prospective customer at each step. 

Start by rethinking the actual sales process and restructuring the sales team to better inform the customer by helping them find the right solution to their problem, reassuring them about their buying decision and continuing to support them to promote success and renewal. 

For SMB sales success, consider restructuring your sales organization to accommodate these five trends:

1. Specialization: Whereas B2B sales reps used to be generalists, they now need to specialize to help the buyer at each step. At the beginning of the sales process, you want a customer development representative (CDR) for lead discovery and validation and to address initial questions. It’s at this stage that the buyer clearly defines their need and starts considering options.
   
   When the prospect is qualified, an account executive (AE) or account manager (AM) is assigned to handle customer acquisition. After the contract is signed, a Customer Success representative (CSR) handles onboarding and adoption. By segmenting the process through specialization, the customer has a better experience and the best, most cost-effective sales resources are responsible for this at each step of the sales lifecycle.
   
   
2. Collaboration: The goal is to provide a frictionless buying experience. This requires that sales specialists work closely together. The CDR, AE, and CSR need to operate as a team, handling a common set of SMB customers and reporting to one sales leader.
   
   By having the same sales specialists handle the same prospects and customers, there is better continuity and sharing of information. To encourage a collaborative approach, incentives should be awarded for team performance rather than individual sales—and this sales structure is scalable. You can move AEs and AMs to new teams without disrupting the sales process.
   
   
3. Advocacy: In the subscription economy, Customer Success has become more important than simply closing the deal. The goal is to advocate for the customer to make sure they receive maximum value from your solution. According to Forrester, the vendors with a strong Customer Success program are 54 percent more likely to retain 90 percent of customers.
   
   What’s more, 80 percent of buyers say that the experience of working with the company is as important as its product or service. When you advocate for the customer, you build trust and create a tacit agreement that this business relationship is for mutual benefit. This makes it easier to deepen the relationship by upselling and cross-selling additional products. By partnering with the customer as an advocate for their success, you maximize customer satisfaction, improve retention, and increase LTV.
   
   
4. Efficiency: Restructuring the sales organization to focus on SMB success also increases overall efficiency, which cuts costs and increases profits. It’s about using the right resources to support each step of the customer’s journey.
   
   To maintain a CAC:LTV ratio of 1:3, you need to streamline SMB lead generation and qualification to make it as cost-effective as possible.
   
   Using CDRs supported by lead scoring and automated sales processes at the start of the sales process is a more efficient approach. The customer increases in value as they move through the sales lifecycle, and so you can use more expensive sales assets such as AEs and CSRs to enhance the customer experience and generate more revenue.
   
   
5. Personalization: Successful SMB solution selling requires building trusted relationships and providing personalized service. Each customer will bring problems that are relevant to their business model and market, so rather than selling by territory, it makes more sense to use personalized selling by industry.
   
   Using industry experts with a background in a specific vertical such as finance, education, healthcare, or technology makes it easier to understand and empathize with the customer’s problem, speak their language, and offer the right solution. Using more collaborative sales teams organized by industry or specialization allows you to provide personalized service, build stronger customer relationships, improve customer satisfaction, and increase LTV.

As you reorganize your sales team, consider where you might outsource to lower CAC, increase efficiency, and create even more savings. 

Seek out an outsourced sales company that has the expertise to function as an extension of your sales organization, along with the ability to support specialization, collaboration, advocacy, efficiency, and personalization.

Here are just a few capabilities to consider when looking for an SMB outsourced sales partner: