The current global economic climate presents significant challenges and opportunities for providers of B2B products and services. The economic downturn and other macro factors (e.g., technology evolution, generational shifts, changing media consumption habits) have increased pressure on traditional business models and go to market strategies. At the same time, these changes create significant opportunity for savvy marketers to reach numerous, large, and highly engaged market segments.
This market opportunity requires that successful B2B firms develop an awareness of a new culture - the culture of the small-to-medium business (SMB) buyer.
… is driven by self-educating buyers who dine at an "all you can eat buffet" of information and vendor offerings, but who lack the time for thorough, objective decision-making.
… takes place in many unmediated settings that are beyond the seller's direct control (blogs, social networks, peer groups, conference rooms).
… is relatively less consultative and more transactional than Fortune 500 buying.
… proceeds most rapidly at the stage where the seller directly engages the buyer (the final purchase decision).
To the casual observer, consumer behavior often appears irrational. Or, at best, herd-like. Seemingly overnight, a new gadget (e.g., the iPod) or social networking service (e.g., Twitter) will captivate masses of individuals, touching off a tornado of media attention and word-of-mouth effects, resulting in even more users, more media attention, and so on.
By contrast, the SMB buyer's decision to initiate a purchase process is rational, and is almost always driven by change occurring in the buyer's business. For the SMB buyer, these changes may be problems (e.g., declining revenue, poor close rates, increased competition), opportunities (e.g., new product, new market segment), or both (e.g., management team change, sales force turnover).
Much like consumers progressing through significant life events (marriage, home purchase) SMB buyers gather resources and information to help them adapt and grow through the expected change events. Unlike their "large business" counterparts, SMBs often lack the budget, staff, and time to conduct a formal, objective, and rigorous vendor selection process. Instead, research is done informally, subjectively, and quickly through a variety of active and passive channels. Buyers will enlist the support of employees, consultants, and network contacts in this effort. Inevitably, however, the buyer or his/her delegate will consult the vast array of information available on the Internet.
Search engines, bloggers, analyst research, white papers, press coverage, social networking sites, Really Simple Syndication (RSS) feeds, contextual advertising, vendor web sites, and video streams - all of these information channels help the SMB buyer frame the key issues in their vendor evaluation. In this stage, the buyer is rapidly synthesizing a large amount of facts and opinions into a working hypothesis of an acceptable solution. This "supporting evidence" will in practice be tainted by the buyer's emotionally-influenced perceptions of the vendor's: market position, "mindshare" with analysts/bloggers, marquee customer accounts, management team, awards, press coverage, operating history, search engine ranking, etc…. In addition to - but not in lieu of - this "evidence," the buyer will also review marketing messages, product literature, interactive tools, and pricing offers to validate that the vendor's offering actually addresses the buyer's business requirements.
Having formed this working hypothesis, the buyer is now ready to directly engage those vendors (if more than one) who conform to the buyer's frame of an acceptable solution. An SMB buyer who engages a vendor at the point of sale is typically looking to rule that vendor out or in, depending on the working hypothesis. The amount of "friction" the buyer experiences at this stage (poor responsiveness, lack of transparency, inconsistency between marketing and sales messages, complex pricing and/or terms of service, etc) is inversely related to the vendor's probability of closing the sale.
1) A successful Go to Market strategy will demonstrate a proficiency in the language and culture of the SMB Buyer. Specifically, a winning strategy will include a plan to influence buyer perceptions of the SMB Vendor in the "unmediated settings" (blogs, social media services, white paper syndication services, paid and organic search results) that are relevant to the SMB buyer.
2) Vendors who have won marquee accounts that are relevant to their SMB target should project these marks of distinction outward to advertising copy, blog posts and press releases, etc…. SMB buyers are strongly influenced by recognizable brand names, particularly from their own vertical industry. Confining your points of distinction to your web site and collateral pieces significantly short-sells your competitive strength, because many of your prospects will never engage your web site.
3) Identify and remove areas of potential "friction" in your client's buying process. Are your lead capture forms too long? Are you displaying special offers on your web site that your sales team is no longer authorized to offer? Do you measure sales responsiveness to inbound inquiries against an industry-leading benchmark (e.g., all inbound leads will be contacted within 8 business hours)? Do your pricing policies, packaging requirements, or sales compensation schemes work with or against your buyer's motivations? Is your sales team equipped with the tools needed to quickly generate quotes and track customer interactions? Are your firm's operational risk management strategies excessively limiting the ability to close legitimately profitable customer accounts? Work to achieve a friction-less "wind tunnel" where the prospective buyer can self-educate, develop a working hypothesis favorable to your firm, and easily initiate a sales dialogue or execute a purchase decision.
4) Determine an acceptable marketing cost of acquisition (COA) for a typical customer account or unit of revenue (seat license, SKU, etc…). There's an old joke that says "an economist knows the price of everything and the value of nothing." That joke is no longer funny in the context of modern B2B marketing and sales practices. Knowing how much to pay for a customer is essential to modern marketing success, and yet a surprising number of SMB vendors have not taken this basic step. A per-customer or per-unit COA is the necessary constraint on all well-intentioned plans to grow revenue, and it is a key input to any methodical and repeatable revenue growth strategy. It can be used to establish media budgets, manage lead generation vendors, and evaluate marketing and sales performance, or even re-assess operational risk management practices.
B2B product and services firms whose marketing and sales strategies do not reflect changing buyer habits will struggle to maintain revenue growth during this economic downturn and beyond. Success in selling to SMBs begins with an understanding of their buying process and the changes that are required in your go-to-market strategy.