Marketing represents perhaps the biggest challenge. SMEs are spread out everywhere, and yet are hard to reach. The cost of customer acquisition can be very high. This has dissuaded most companies from trying to sell SMEs. Says Stuart Feil, senior editorial director of Bredin Business Information:
Small businesses are conservative by nature when it comes to change. They want to let someone else be the tester. For the most part, small businesses are not early adopters. There are a lot of offerings out there right now that are just looking to get some sort of an anchor online. They understand that they have to be there right now even though there might not be the customer base. So that when the customer base really does get there, these companies have a good toehold. This applies to Internet business solution or application companies. The enormous market might not be there now for these services. But you need to be there when the market catches up.
Gary Griffiths, CEO of Everdream, elaborates on the challenge of marketing to SMEs:
How to reach all of these granular customers in a cost-effective method is a challenge. Direct sales forces don’t work, because they’re not cost effective. We depend on sales channel structure with our partners such as ISPs and ASPs. There is also not a typical office; it’s like marketing to 10 million different individuals.”
One needs to be extremely innovative when trying to sell e-Business solutions to SMEs. Some possible approaches are:
- Partnerships – target those who sell to SMEs: SMEs need to interact with organizations like banks and telcos. They can work as good intermediaries for reaching out to SMEs.
- Internet – leverage for marketing: The Internet can be used as a low-cost marketing medium. SMEs need to be attracted by some free services (in many cases, it may make sense to give away a part of the basic service rather than spend money on expensive advertising in the press or other media).
- Word-of-mouth – use the SME Ecosystem: SMEs interact with other SMEs for many of their needs. They also tend to trust other SMEs. So, buzz among this community can play a strong role in adoption of a solution.
- Government and Industry Associations: SMEs need to interact with the government and are likely to be part of local and industry bodies. Interaction with the government is the biggest “pain” factor in the lives of many SMEs. The government can also be used in a positive manner – to encourage SMEs to adopt new technology (e.g. to adopt EDI solutions for customs clearances). Industry associations can help in offering success stories of how technology has helped the smaller companies compete effectively against the larger players.
SMEs may be hard to reach, but as an aggregate they offer a very attractive segment. To make a successful business selling to them, innovation is required across the board – right from the software to its distribution. The rewards for those who can do it right are high.