It's All About SMB Marketing

| April 19, 2005, 12:20 PM

This morning, JupiterResearch launched an important new coverage area, SMB Marketing. Quoting from the press release:

"This service helps companies market effectively and increase sales to small- and medium-size businesses. Though numerous, small-and medium-size businesses are highly diverse, variable in their technology purchasing patterns and difficult to target cost effectively. Drawing on comprehensive surveys of SMB decision makers, intelligence from successful marketers and JupiterResearch studies on evolving online marketing best practices, SMB Marketing identifies and profiles attractive market segments and spells out effective tactics to win SMB market share."

While the service will cover the market for businesses with zero to 999 employees, initial reports will tactically focus on establishments with fewer than 250 employees. The first report looks at technology spending among smaller businesses, which, according to JupiterResearch surveys will be flat in 2005 compared to 2004. However, within select segments some small businesses plan to spend more this year.

Clients interested in better understanding the segmentation and findings should contact their account representative or me directly. The segments in the report are representative, but more granular detail is available, particularly for number of employees or business tenure. Other segmentation data, such as spending viewed by decision maker, also is available. For example, more than a quarter of small business professional decision makers, such as accountants or lawyers, are not sure of 2005 technology spending plans.

Segmentation will be one of the new service's differentiators. In talking to vendors trying to sell goods or services to small businesses, I see two common tactical mistakes: Segmentation, if any, is by number of employees, or sales approaches are similar, if not the same, as enterprises. Both approaches ignore the great diversity of SMBs and the marketing complexity reaching them. Friend of mine is a contractor with 15 employees, same number as the local pediatric practice, but their technology usage dramatically differs. The contractor relies heavily on Nextel phones and their walkie talkie functions to dispatch and track his workers. The pediatrician depends more on PCs connected to server. Both businesses use CRM and billing software, but in many other respects rely on different technologies and for similar technologies in different ways.

One segment I am most interested in breaking open for vendors: Businesses with one or more employees, but no payroll. Nonpayroll businesses account for about 70 percent of all U.S. businesses, according to the U.S. Census Bureau. Their ranks include many businesses that have got to look like ungainly marketing prospects to many vendors. Exactly how many computer servers is that landscaper likely to buy? Probably none. Pretty good guess that he uses a cell phone, though. Now, if his carrier sold that device to him as a consumer, valuable add-on services could be missing. If the landscaper's business depends on that cell phone, what's he going to do if it's lost or stolen? The carrier should have sold him some type of loss protection, but may have failed to simply because the buyer fell below the business radar down into the consumer market. Or maybe the carrier missed an important cross-channel opportunity, bundling DSL, cell and even landline phone services into a single package.

One of my wife's friends is a hairdresser, who runs an appointment-only shop out of her basement. As a nonpayroll business, she might appear to some vendors as a poor marketing target. Turns out this 41-year-old mother of two uses the Internet to find good deals on select products, which she buys online; she manages her appointments with a cell phone and does the business accounting on her computer. The computer is her first problem, because she shares it with her grade school kids. What happens when, not if, the kids download something with spyware or a virus to her single family PC? The resulting disaster could bring new meaning to the phrase, "cooking the books." At the least, she should have some kind of support services or, better, a second computer. Vendors might find her to be a difficult buyer to reach. But what if search is her primary means of finding products? Some technology vendors could reach her through keyword placement. Or what if she shops online from a hair goods supplier some technology vendors could tap as a non-traditional sales channel for recommending some other goods or services? The hairdresser recently switched from DSL to cable. But her cell carrier, which also provided DSL service, failed to offer her a compelling bundle. Maybe the carrier missed a single sale, but multiplied by tens of thousands the market opportunity is much larger.

To many vendors, small businesses like these are simply invisible. SMB Marketing will help uncover who these businesses are, identify their buying characteristics and offer best practices for marketing goods or services to them. Many nonpayroll business marketing opportunities will depend on understanding similarities to regular consumers, such as purchase influencers, and identifying where cross channel makes the most sense.

But nonpayroll businesses are just one of many segmental opportunities the new SMB Marketing service will seek to uncover. Some buying influences or patterns, for example, vary when segmented by business size, tenure or decision maker. These nuances reveal important marketing and cross-channel opportunities vendors might otherwise miss.