By Mike Southon, FT Columnist

I recently attended a panel session organised by a software vendor. While the session was well intentioned, it reinforced my strong conviction that very few large organisations actually know how to sell to small and medium businesses (SMBs).

The clue is in the classification. Depending on whom you ask, the term SMB can include up to half of the UK’s economy. If you also include everyone who has an aspiration to become self-employed, this represents about half the UK’s population.

The vendor has a shrink-wrapped consumer product so was potentially interested in selling to every computer user. So long as these users accepted their product on trust, the cost of sale is minimal. But also in the room were one of the vendor’s resellers, looking to sell SMBs a differently branded product packaged with significant value-added services and other third-party products.

The session started with some thought leadership from the vendor and their VIP expert. They explained the major threats posed by insecure systems, including viruses and hacking, and then extolled the virtues of The Cloud, that almost mythical place where data is stored safely, remotely and cost-effectively.

I felt they were preaching to the converted. I doubt if there is any Internet user completely unaware of the need for data security and regular back-ups. The challenge is in finding the right supplier, one with the best technical solution as well as providing excellent value for money.

It transpired that the vendor really only had two solutions, a shrink-wrapped consumer product and a differently branded solution for more complex systems.

The reseller would have no problem selling to an organisation with a full—time Information Technology Director. To sell to everyone else, including the millions of people classified as SMBs, they need to understand that it is not about the buyer’s turnover, but the number of people in the organisation and the time they have available to look at the problem.

I classify SMBs as follows: everyone pre-revenue is an ‘apprentice entrepreneur’. They have no budget but are keen to learn, so the supplier should generate a free e-book detailing challenges faced, then provide a general technical guidance that could be used to buy from any supplier, not just a thinly-disguised sales pitch for their products and services.

Once an entrepreneur has generated some revenue, I classify them as ‘seedlings’. They will have no fixed office but can include a significant number of people working remotely. The people do not have the time and budget to evaluate various options; instead they will ask a friendly expert or mentor for the best solution.

Every on-line network, FSB branch or Chamber of Commerce has a ‘go-to’ person for useful and free advice in specific problem areas. It is important the supplier provides detailed, timely and relevant technical information, so these staunchly independent experts can do their selling for them. The guru’s motivation to help others should be for increased credibility amongst their peers, rather than material reward in the first instance.

Once the small business decides to establish a fixed office, I classify them as ‘saplings’ and will hopefully have engaged a bookkeeper or part-time accountant. These are the people that the supplier needs to influence; the issue will be less about technical merit, more about value for money.

After thirty people, an organisation becomes a ‘mighty oak’ and will include a full-time person whose role involves evaluating more complex solutions. Often, they will be people that the supplier has met along the way, who first developed a good impression of them when they received their free e-book all those years ago.

Originally published in The Financial Times: www.ft.com Copyright ©Mike Southon 2011. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon- Co-author of The Beermat Entrepreneur & Business Speaker- www.mikesouthon.com

Mike is one of the world’s top business speakers, a Fellow of The Professional Speakers Association. Mike is a Visiting Fellow in Innovation and Entrepreneurship at London South Bank University. He has made frequent appearances on television and radio, has a monthly sales column in Real Business magazine and is a regular commentator in the Financial Times.


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