Understanding SMB software and IT needs, or the lack thereof

AMI-Partners (ami-partners.com), a global SMB insights and strategy consulting firm, classifies “small businesses” as those which have fewer than 100 employees, and “mid-sized” as those which have between 100 and 999 employees. And according to them, the software/IT services needs of the SMB market in the US will grow to $35 billion this year.

Enterprise software and IT vendors have for years targeted the SMB market for a lot of reasons, such as potential, demand, and flexibility. But because these small and mid-sized companies comprise the majority of the business market, vendors have been struggling to really grasp their interest. They offer the best goods and services and they paint a bright future in front of the decision-makers, but half of the time they miss their mark because they don’t have a system of segmentation.

So how does one attack the SMB market in the hopes of selling software or IT services?

Recognizing the need

Companies in the SMB market use technology to stay in the game and gain traction in their financial success. Some of these companies have 100% need of IT, while some are interested in technology just for the sake of technology.

The SMB market is divided into two tiers: upper and lower. The upper tier has the following characteristics:

  • Contributes the biggest chunk in SMB spending for software/IT
  • Their software solutions are part of their corporate strategy
  • Technology has a central part in achieving their goals
  • Their IT support and maintenance is present, but is sometimes limited
  • They prefer packaged software/services offers, usually with support

Meanwhile, the lower tier has different concerns:

  • IT resources are very limited, and sometimes not even present
  • They see the need for new solutions, but have difficulty in selecting one that suits their financial capacity
  • More attracted to less costly options than efficiency
  • Prefers out-of-the-box marketing, Value Added Resellers (VARs) and Sudden Impact (Sis)
  • More likely to purchase from regional or national chains

Segmentation by Revenue

While we employee head count to classify the type of business, we should use revenue to help determine the financial health of a company. The amount of money a company earns is a big factor to the decision making in terms of employing external resources.

By identifying companies’ revenues, vendors can easily calculate a reasonable estimate of potential spending for technology. This data is important in determining which kind of product or service is fit for a certain company based on its capability (or otherwise) to buy.

Existing software inventory

Another method that could be helpful in penetrating SMBs is to put up an inventory of current solutions, applications, and services used by a prospect company. Analyzing such valuable information can help vendors in identifying a pattern of behavior among SMBs in terms of product choices, buying preferences, and what their technological priorities are. Consequently, vendors would be able to refine their product pitches and zero-in on a SMB customer’s specific needs.

This content originally appeared at Callbox Blog.