SMB Channel strategy

The term SMB Channel is the latest buzz with large companies and their marketing departments. Everyone seems to have received a memo from their bosses asking them to sell more to the SMB channel. With that in mind, no one has asked why the small to medium business customer is suddenly such a focus? With the holiday shopping season coming up rapidly, many large companies are scrambling to offset their lack of growth from their other sales channels. They are leaning on the small to medium business customer in hopes that it may be a sales channel to save their year.

 

Most technology companies have focused on this small to medium business channel for years. In fact, they were possibly the first to systematically develop partners called value-added resellers that would solely focus on this tier of customers. The concept was established in the late 1980’s and early 1990’s whereby a hardware manufacturer would expand its distribution capabilities by leaning on business partners and their respective sales organizations. The strategy worked, as hardware and software manufacturers were able to capture revenues from the SMB channel. Additionally, it allowed Fortune 1000 and large companies to use their direct sales forces to market to other large companies or to government accounts. The VAR channels simply focused on the small to medium business channel in a manner that was perceived to be non-competitive and synergistic.

 

As the SMB channel grew and prospered, it quickly became apparent that it would require a three-prong approach and a dedicated strategy. First, large companies decided that the market was large enough to justify allocating a direct sales force to the small to medium business community. Second, marketing departments were funded to pursue a multi-channel approach to effectively reach the SMB target market. Third, key partnerships were established to ensure that the prospective customer heard about the product or service being sold multiple times from multiple sources. This all out offensive approach of marketing to the small to medium business community worked in the early years, but eventually needed to be refined.

 

In more recent years, marketing and product departments have shied away from a shotgun approach and instead have shifted their efforts to an approach tailored by vertical market, sub-markets, and geography. Additionally, they have crafted products and services that are very specific to the market so that the messaging and the value proposition resonate more with the SMB channel. Any example is that instead of marketing one product to every retailer, they have now segmented the retail vertical. Within this vertical, if the company chooses to market to restaurants they have a very specific product line or service that they market to restaurants. This way, they are not trying to force a product to every retailer as they’ve discovered that even though everyone has the same label, they are significantly different. Restaurants, dry cleaners, shoe stores, and flower shops are examples of retailers. However, each one has a distinctly different need in terms of the product or services that they purchase. Marketing departments have figured this differentiation out and now conduct their efforts accordingly.