Selling to SMBs vs. Enterprise: 3 Key Differences
The traditional image of the small business isn’t accurate because it’s one-sided. Yes, many SMBs are mom and pop operations that will stay that way, or they serve their town, employ 50 people and will only grow if the town does. But SMBs also employ 4 in every 10 tech workers. And they’re increasingly aware that tech is important to their business, even if they’re not in a tech space themselves. Growth-oriented SMBs hungry for the tools to succeed are a fantastic opportunity for tech companies.
SMBs are a big sales opportunity, accounting for 54% of all US sales. They’re also more likely to reach for new technologies. In some cases that’s because they’re inherently tech-minded: they account for 39% of tech jobs, and 24% of the patents in the top 100 emerging clusters. In others it’s because while they might be very uneducated about technology, they both need and can see the business benefits and are able to make more direct purchasing decisions.
But while many SMBs hope to grow rapidly, they’re not there yet.
Selling a tech product or service to SMBs isn’t like selling to enterprise level businesses. There are three big differences that you’ll need to consider, evaluate and accommodate in your sales process to successfully sell to SMBs:
1: Pain Points
The biggest pain points differ sharply between enterprise and SMB clients. Early-stage or small SMBs often struggle to keep their heads above water, so rather than trying to control or reduce budget expenditure they’re paradoxically more inclined to spend if the value in growth or savings is strongly demonstrated. Later stage SMBs focus more on stability and process as they seek to make the transition from ‘large SMB’ to ‘Small Enterprise’ in structure as well as employee count and revenue. Finally, when selling to an enterprise client you might be competing with an existing solution; in an SMB there may be no extant tool that does what your offering does. So it’s important to find ways to incorporate general education about what tools like yours does, as well as more specific detail, into sales pitches.
Enterprise focus: Increase revenue, reduce budget
Enterprise level clients will often require input from several non-experts across departments. While the CIO might be on board with the sale, other CXOs and stakeholders might not really understand the terms of the offering or the benefits available. When that happens, consensus sales stutter and ‘just settle for what we’ve come to call the lowest common denominator. What’s the one thing we can all agree on? “Well let’s try to save the company a buck,” right?’ argues Brent Adamson.
SMB focus: Grow urgently to profitability/stability, achieve replicable business processes, long term savings.
Neil Churchill and Virginia Lewis propose a five-stage model of SMB development. Stages 1 and 2 are concerned with establishing a toehold and achieving stable profitability, while stages 3 to 5 are concerned with moving towards enterprise status. Thus, in stages 1 and 2 pain points for SMBs are very different from enterprise clients since for them growth is not a target but a pain point without which the business may not be profitable; self-funded SMBs fit this description, while capitalized SMBs may face high growth expectations from investors. In both cases, growth, survival and success are synonymous. In later stages, stability and organization are equally vital.
That’s an open door to salespeople who are willing and able to approach SMBs with a clear case for their offering based on the biggest business needs of this sector: growth, stability, and long term cost saving, with the first two clear frontrunners.
Make it work for you:
Leverage the growth, stability or saving potential of your offering.
Identify the stage your target SMB is at, and make sure your offering is couched in terms that speak to their stage-specific pain point.