The Profitability of the SMB Market

The Small-to-Medium-sized Business Market (SMB) is a tricky one to market to — but incredibly profitable if you get it right.  It’s tricky because you have to figure out the best way to reach them, figure out what is really going to resonate with them, and make it incredibly easy to do business for them.  The more online interaction — the better.  This way, they can purchase when they have time.

Small business owners are busy — as the CEO of their companies they are the Chief-Everything-Officer.  As they build their business, they wear many hats — accounting, marketing, management, sales, operations.  They have a need for ease and convenience when purchasing what they need.

It is definitely worth figuring out how to serve this market, as they are reported as “the fastest growing market segment in the post-recession era” by Tom Venable, SVP Sales and Marketing for Rainmaker Systems, Inc. — who provides cloud-based solutions to businesses focusing on this market.  And along with being fastest growing, they can also be the highest gross margin producing segment as well. This is due to the fact that they normally purchase smaller volumes, thereby lessening discounting pressure.

Busy business owners rely on ease-of-doing business as a key reason to do business with a provider/supplier.  As I reported in last weeks post on this market, the majority of SMB’s prefer to be communicated with via email so that they can react and respond on their own timeline — off-hours, weekends, or during the business day.

If this is a market segment of focus for your business, you’re in good company.  Many of the companies that we support with our multi-channel marketing data are trying to create a name with this market.  This includes some of the Fortune 100 companies — particularly in technology, telecom and financial services markets.

Normally as the SMB market goes, so goes the economy.  If this market segment is growing most quickly, it is a harbinger of good things to come economically for all of us.