How to Understand SMB Buying Habits

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Small and midsize businesses have unique challenges that are often overlooked or misunderstood by soltuion providers, particularly large ones. Partnering with vendors that understand the market can help IT solution providers attract more SMB customers. Here, Bonnie Lam, director of channel sales at RingCentral, shares how it acquired hundreds of thousands of SMB customers by delivering cloud-based business phone systems that meet the fundamental needs of SMBs.— Jennifer Bosavage, editor

When selling to SMBs, companies should leverage core selling strategies such as understanding customer needs, uncovering pain and providing solutions that address those needs and customer paint points. However, companies who are truly successful and profitable selling to SMBs have a strong understanding of SMB behaviors and how it impacts their purchasing decisions. Success in this market is driven by understanding SMB behavior and knowing how to convert a SMB customer who is evaluating a cloud-based phone solution into a paying customer.

Let’s start by looking at how you can expand your pipeline and increase your close rate by adapting your selling strategy to account for common buying patterns across SMBs:

• Be prepared for SMB customers to shop for and research your solution online. Customers will often conduct significant research online before contacting you and while evaluating your solution. That makes it critical for solutions providers to partner with vendors who provide online price integrity and good content for their channels. Gain your customer’s confidence by providing examples of successful implementations that you have completed for other local customers to position yourself as their local expert for the solution.

• Value conscious SMBs want simple, all-inclusive pricing. The more complex the pricing structure, the harder it will be for you to close the deal. Find solutions that provide all inclusive pricing and, prepare simple, easy to understand quotes for your SMB customers.

• SMBs purchases are more transactional and less consultative. Solution providers should develop a standard and repeatable sales framework for SMB deals. While this should incorporate understanding needs and uncovering pain, your solution should only include the standard “out of the box” features for your products. To build a profitable business selling to SMBs, you need to drive volume. Solution providers, who get caught up in customizing, non-standard features, will not drive enough volume to become successful in this segment.

• SMB purchases are less planned and more impulsive than enterprises, but they want low risks. “Try Before You Buy” and “Money Back Guarantees” are common practice among businesses who are successful selling to SMBs. Partner with vendors who extend this to their channel and leverage such offers to shorten your sales cycles and close deals.

Beyond adapting your sales approach for common SMB behaviors, your job as a solution provider is to evaluate, choose and deliver technology that meets the core needs of their business. Our channel partners who have been successful selling to SMBs differentiate themselves by:

• Understanding market trends. It’s important to be educated on current trends and how technology impacts your customers. Those trends can provide opportunities for you to bring new solutions to SMB customers. For example, the widespread adoption of mobile technologies by businesses within the past decade has brought many opportunities for solution providers to deliver mobile communications and computing solutions to their customers.

• Making it easy. Provide solutions that are easy to set up and require minimal support resources. SMBs do not have the time or resources to invest in a long, arduous IT implementation processes. Commitment to this principle is one of the key factors in success with SMBs. For example, RingCentral offers a solution that is extremely easy for SMBs to implement yet provides the power of an enterprise level phone system. Any company can set up the RingCentral cloud phone system in minutes, it is instant, there is no support required, and no hardware.

• Keeping it low-risk.With economic uncertainty in our current business environment, SMBs have become increasingly cost sensitive, risk averse and disinterested in long-term commitments with IT vendors. Even as the economy recovers, remember that these perspectives on IT investments won’t change. Many are looking for low risk ways to save money on monthly business operation cost while minimizing up-front capital investments.

• Leveraging the power of the cloud to deliver better solutions. Cloud-based technologies have put business optimization in overdrive and SMBs are looking for additional ways to benefit from the cloud. However, not every SMB is tech-savvy enough to embrace the cloud. And if they are, many don’t want to build the solution.

Recent data states that in mid-year 2010, 14 percent of SMBs had adopted cloud-based technology. That number is expected rise to 42 percent by mid-year 2011. This creates an incredible opportunity for solution providers to bring better, cost-effective cloud solutions to SMB customers.

It is rewarding to sell to SMBs because the sales cycle is shorter than an enterprise sales cycle and you can see the impact your solution has on their business. The key to success in the SMB segment is to focus on leveraging the market trends that matter to SMBs like the current trends of cloud and mobility, making it easy for them to implement your solution, and providing simple, all inclusive pricing that offers a great value.

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