Small Medium Enterprises channel

On earnings conference calls, we often hear large company executives refer to the SME or small
medium enterprises
channel. What are they referring to and why is this a prized and cherished market for so many Fortune 1000 and large companies? This customer channel refers to businesses that have fewer than 500 employees and generally less than twenty-five million in revenues. There are several reasons why it is treasured. First, there are less competitors in this marketplace versus the other crowded markets like the government sales channel, large enterprise channel, and retail sales channel. Secondly, it is a challenging channel that takes time to really figure out. Finally, the organizations that properly align their strategies to sell to this group of customers are rewarded with a growing sales channel and an excellent product margin structure.

Once corporate management recognizes the potential value of the small
medium enterprises
channel, the next step is to declare it as a key strategic goal of the enterprise and to align the company organization to properly attack this lucrative channel. It’s at this point that someone is given the title of VP or SME, VP of SMB, or generally just referred to as the SMB Executive. In our experience, it is a rare occurrence that this key executive dedicated to marketing to the small
medium enterprises
channel knows much about how these smaller businesses operate. Employees that work at large companies typically lack the experience of working at small companies, let alone starting up a small company and operating it through various growth stages. They lack the perspective of the small medium business owner and make key assumptions based on their misperceptions. This is where the challenge really begins and why the results can be sub par.

Corporate managers will make the common mistake of bringing over successful products or services from their other sales channels and try to sell the same item to the small
medium enterprises
channel. They will typically not alter the quantity, packaging, pricing, value proposition, or any other important factor related to the product. This is often a pending disaster and the results will be seen as the sales team reports back their results to management. Small medium business owners will not spend the same amounts that their large company counterparts will spend. Nor will they purchase in the same quantities or even purchase a product or service for the same reasons that other channels choose to purchase. Much of the tangled mess must be redone and a new strategy must be crafted with the sme customer’s perspective in mind.

The process must begin with active dialogue between the small
medium enterprises
executive and actual small medium business owners, CEO’s, and entrepreneurs. The questions to ask are often simple. What are your current needs and pains? What are you purchasing and at what price points? What are the factors in considering purchasing products like ours? The answers will provide insight that must be incorporated in the crafting of a proper strategy that will result in positive results.

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