What you need to know to sell software to small and Medium size business
What You Need to Know to Sell Software to SMBs
It’s no secret that the big growth market for software sales is supposed to be in the small- and medium-businesses (SMB) segment. Selling into the segment is challenging, though, because the revenue from an SMB opportunity is likely to be much smaller than a large enterprise sale, but cost your company the same or more. The big software vendors have been struggling with this fact for about a decade, and still haven’t come up with much of a solution, which is why there’s still opportunity in this area.
The key to selling software to SMBs is to understand how that market is different from the traditional enterprise market, according to the Yankee Group, a leading market research and consulting firm. They recently surveyed a large number of IT buyers in the SMB segment about their hardware buying habits. What they learned tells us a great deal about how SMBs purchase software.
Yankee’s overall vendor rankings put IBM as the market leader, followed by a tie between Dell and HP, with Dell gaining share and HP losing share. Sun ran a distant fourth. IBM won in the SMB space because of “innovation, solutions, and services.” SMB customers told Yankee that IBM’s Express line of business and systems solutions was “aggressively priced and packaged for better availability and delivery.”
Dell was the volume leader in the SMB segment for servers, desktops, and laptops because Dell’s Web site is “user-friendly and features tools that educate SMBs on new technology solutions.” HP, by contrast, is slipping in market share, while Sun, despite some lingering strength in the technical computing market, continues to struggle. The clear implication is that IBM and Dell, by making their hardware easier to buy, are addressing the buying habits of the SMB market better than HP or Sun.
Let’s see how that dynamic plays itself out in an actual software market. According to another Yankee Group study, the SMB market opportunity for Web-based professional services is “burgeoning” because most SMBs lack the time, technical expertise, and Internet marketing skills to establish and maintain a professional-looking Web presence on their own. As you know, Web-based services enable SMBs and mid-market enterprises to capitalize on online marketing, advertising, and e-commerce sales tool benefits.
This is a very important and strategic capability for SMBs because, according to Yankee, online marketing and advertising spending will grow from $1.3 billion in 2005 to $9.3 billion in 2010. Needless to say, that represents a lot of opportunity for software vendors. Web-hosting market revenue alone is expected to climb from $4.4 billion in 2005 to $5.4 billion by 2010, and the Web-based services market will grow from $2.9 billion in 2005 to $4.1 billion in 2010.
As SMBs become increasingly interactive and e-commerce enabled, their adoption of online marketing tools to advertise their businesses will also climb. Currently, about 39 percent of U.S. SMBs sell and conduct e-commerce on their Web sites, which is a 5 percent increase from 2004. However, as the search marketing area gets more complicated and the online marketing and advertising stakes get higher, SMBs are turning to specialists to outsource their online marketing initiatives.
In other words, the area of online and search marketing has become too complicated for SMBs to tackle on their own, which is creating a big opportunity for professional Web services companies that can help them test, learn, optimize, maintain, and enhance their online Web presence, e-commerce, and online marketing. That’s the exact opposite dynamic of what happens inside large enterprises, where the tendency is to bring mission-critical applications in-house so that they become better understood and better integrated with the rest of the corporate infrastructure. SMBs are saying the opposite – that as things get more strategic, they want to remove themselves from the picture and get outside help.
When selling to SMBs, you can’t assume anywhere near the level of expertise that you’d find inside a larger enterprise. Instead, SMB IT buyers will need hand-holding and to be led toward a workable solution.
www. SELLINGPOWER.COM
--------------------------------------------------------------------------------
"Among all things that you expect in life, pay the greatest attention to what you expect of yourself. - Gerhard Gschwandtner
--------------------------------------------------------------------------------