Chasing SMB sales

Enterprise IT vendors are desperate to grab a piece of the small and medium-sized business (SMB) action in the Middle East. To turn their SMB dreams into reality, many will need to rethink their market approach and understand the vital role that channel recruitment plays in building successful SMB routes-to-market.

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By  Stuart Wilson Published  July 28, 2004

Enterprise IT vendors are desperate to grab a piece of the small and medium-sized business (SMB) action in the Middle East. To turn their SMB dreams into reality, many will need to rethink their market approach and understand the vital role that channel recruitment plays in building successful SMB routes-to-market.

With the region’s large accounts all identified and established IT supplier relationships now in place, it is only natural for enterprise vendors to turn their attention to the next best sales segment. Cracking the SMB segment has become a strategic business focus for enterprise vendors supplying hardware, software and even complete IT solutions. While ‘SMB’ is a horribly generic term with each vendor imposing its own definition, one point is crystal clear: as the size of the customer being targeted decreases, the importance of channel strategy increases.

HP launched its SMB channel initiative a few months ago. Cisco followed suit in late July and a host of other vendors have also jumped on the SMB sales bandwagon. EMC has unveiled NAS and SAN solutions targeted at the SMB sector and channel programmes from VERITAS and Juniper highlight the importance of the sector. Almost as one, enterprise vendors have jumped on the SMB market and have put their thinking caps on in order to devise the best methods for generating and closing new business opportunities.

Without a shadow of doubt, channel strategy needs to be at the top of their ‘to do’ lists. In the enterprise account segment there are a limited number of customers to pursue. They are easily identifiable and in many cases — thanks to the limited number that exist — vendors can afford to send out one of their own highly-trained consultants to woo the customer and convince them to invest a sizeable chunk of their IT budget in the latest whizzy hardware or software.

This is a direct sales approach with installation, implementation and product fulfillment pulled in almost as an afterthought once a deal has been finalised. While this approach works a treat in the enterprise segment, any vendor attempting to replicate it in the SMB segment will be sorely disappointed by the results it achieves.

There are just too many SMBs out there for vendors to contemplate the one-on-one vendor-to-customer sales approach that works so well in the enterprise space. The rewards do not justify the expense and most vendors have no interest in building up the internal resources necessary to take on this daunting task.

There is an answer and it is called the channel. While this appears to be a blatantly obvious statement to make, it is one that vendors, and the channel itself, should ponder at length. The channel partners currently serving the Middle East SMB segment are in high-demand. Recruiting a local reseller serving a loyal customer base of SMBs with PCs and printers could in fact turn out to be a prize catch for a security software vendor or storage hardware vendor. This local dealer is in prime position to start adding value to his business by selling hardware, software and services that were previously deemed to be the preserve of the enterprise sector.

Vendors need to change their tactics to crack the SMB conundrum. It is not a case of appealing directly to CIOs at SMBs and giving them lectures on TCO and ROI. First off, many SMBs will not have a CIO — some may not even have a dedicated IT employee. Secondly, many SMBs prefer to go to the local dealer that they have had a long-term IT buying relationship with. This trusted supplier has a much better chance of selling a security software solution as a value-add when he goes in to replace a few ageing PCs than a slick salesman cold-calling the SMB. Vendors with SMB aspirations need to chase the channel first and the customers will surely follow.

Technology is king when it comes to selling to enterprise accounts. No disputes there. However, in the SMB sector — although there will be a few tech-savvy customers scattered around — the technology frequently takes a backseat. It is all about price, the market penetration the channel provides with a little bit of brand equity occasionally thrown in for good measure (although this typically doesn’t count for much).

Enterprise vendors wanting to make serious inroads into the SMB sector need to make serious investment in channel-building and recruiting the best partners now. The only way to do this is by communicating the benefits of reselling to potential channel partners and getting them on board early. That is the fundamental leap of faith enterprise vendors have to take. They need to pass on the responsibility for pushing solutions to SMBs to their channel partners rather than assuming it is their own responsibility.

Tangible investment needs to be made in appointing value-added distributors and giving them the resources and funding required to put some feet on the street and recruit the most appropriate SMB-focused resellers in the market. This needs to be done now, as the competition between vendors to recruit the best SMB partners will only intensify further moving forward.

Some vendors get it and others don’t. Chasing the SMB sale is far removed from the cosseted world of six-month sales cycles, corporate schmoozing and multi-million dollar contracts that characterise the enterprise account sector. Forget this and prepare for the rough and tumble of channel sales instead. This is a world dominated by rebates, margins and lead generation skills where the vendor with the best partner proposition and a strong channel strategy can leave competitors trailing in its wake.

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