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Marketing to Small Businesses: What You Need to Know
Have you been wondering how to translate your success in the large enterprise market,
into selling to the fast growing and profitable small-business market? While you might be an expert when it
comes to marketing to large businesses, selling your products and services to smaller companies requires an
entirely different strategy.
Large enterprise’s IT budgets, while still on the rise, are not increasing as fast as small business budgets.
According to Computer Economics, worldwide small business IT spending is increasing at 10% annually while
large company IT spending is increasing only by 4%. As the price point for purchases of both software and
hardware products drop and technology solutions advance along adoption curves, technology usage by small
businesses is rapidly increasing. This makes the small business market an attractive new growth opportunity
for many technology vendors, but the rules of success in the small business market are different from those
of enterprise markets.
Stage 4 Solutions was recently engaged to create a small business go-to-market strategy for a major
Silicon Valley technology vendor. In this engagement, based on extensive market analysis, we found that
product features, high value price points, distribution channels and connecting technology solutions to
the small business owners overall success are critical to penetrating this market segment.
Many technology companies view theses small businesses like a big enterprise, but with simpler needs and
a small IT budget. Often companies believe they can delete a few features from their enterprise solutions
and sell them at a lower price. This simplistic approach is a recipe for disaster.
In developing a small business market strategy, keep in mind the following key factors:
- The "Small Business Market" is not a single market. Small businesses vary by size,
vertical, and the speed of adopting technology. In developing a plan to enter this market,
technology vendors need to sub-segment the market based upon customer needs and the solutions being offered.
- Small businesses have different needs compared to large enterprises. Based on our research on
this market, small businesses aren't interested in purchasing big solutions that have unnecessary
functionality that will get in the way of what they’re trying to accomplish. Keep in mind the fact
that these companies can’t afford the overhead of a full time IT staff or expensive implementation
costs. Small business solutions need to go in quick and be easy to maintain, while still providing
scalability as the business grows.
- Because of lower average selling points, the cost of sales for the small business market segments
must be lower than for large enterprise sales. A direct model is virtually impossible to sustain profitably.
Distribution through 2 tier channel partners (VARS), online sales and retail presence are critical to
achieve the reach required and the price points needed to offer compelling solutions.
- When marketing to small businesses, you will face new competition from many smaller and
regional players that provide focused solutions for niche markets. If you want to successfully
compete against these niche players, know that you need to be able to position your technology
against a multitude of offerings in a low-touch sales model.
- Compared to large businesses, small business buyers are much more apt to turn to the Internet
and online communities for purchasing advice. With the growth of these online resources and communities,
it’s important to use some of your marketing dollars to tap into these large networks.
Bear in mind that while many large technology vendors are entering the small business market,
there are only a few notable success stories. For example, NetSuite’s small business ERP solution
offers the only online business application that streamlines both front- and back-office operations
for small businesses, allowing companies to make "smarter, faster decisions" with accurate real-time
metrics of crucial business data.
As one of the first online, on-demand ERP solutions, NetSuite got a head start in marketing to small
businesses. The company’s success is credited to their focus on their strategic price points, as well
as ease of purchasing additional features along with the growth of their customers’ businesses.
Meanwhile, Intuit, the makers of Quicken and QuickBooks, can justly claim they know more about the current
state of small businesses than anyone else, based on their dominance of the small business accounting market.
They recently teamed up with The Institute for the Future to produce a lengthy report titled the Intuit
Future of Small Businesses Report, which takes a look at what small businesses will look like in the
coming decade. The report highlights how a new breed of entrepreneurs will emerge, including women,
immigrants and baby boomers. It is their interests, financial needs, and social goals which will fuel
small business growth over the next decade.
To reach this growing market, Intuit has aggressively pursued new ways to target these small businesses.
Last year, Intuit partnered with Google to provide tools that help small businesses use Intuit’s
financial software to help market themselves online. Meanwhile, the company maintains a site for small
businesses with advice message boards, and a free site called "JumpUp" that helps new businesses
get up and running. Intuit’s success in marketing to small businesses stems from their intensive market
research and being close to their target market.
If you are exploring this rapidly energizing small business market, Stage 4 Solutions can help you
craft a business and marketing strategy. Contact us at
or (408) 868-9739 for more information
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