The majority of businesses fall under the small and medium-sized business (SMB) range. At any given time, in any given location, there are multitudes of small or medium businesses where you could be selling your software.
But how do you do that? The sheer numbers you have to deal with can seem overwhelming. You could be thinking in terms of the number of resources you’d have to put in to reach this market. Then you probably look at the fact that they don’t have that much spending money at their disposal, plus they don’t have too many employees looking to use the software you’re selling.
It’s a conundrum, right? Maybe not so much. The fact that there are multi-billion-dollar software companies that started off with SMBs being their primary focus means there is potential there. What you need to build is a sure strategy.
Platforms like Vendasta can help you cater to your target market effectively, and you can check Vendasta pricing, but what you need to get the most value on platforms like these ones as a company trying to sell to SMBs is a strategy carefully curated for your specific market.
Thus, two things you need to pay attention to in order to be successful in selling to this market: you should create a product with a high need, and the product can cater to many customers.
This gives the perfect starting point to discuss what your strategy should look like when selling software to SMBs. What are the tips that could help give you an edge on the market?
1. You Need To Create High Need
When selling to big businesses, you can afford to create and sell luxury software, it’s not so when you’re trying to sell to SMBs.
SMBs don’t have that much money to work with, so they are mostly not going to make a software purchase for the luxury of it. It’s supposed to be mission-critical, or the purchase will be foregone.
The need for your software and what it does should be obvious. If you find yourself having to explain how a customer is going to benefit from the purchase then it might be that you’re selling to the wrong audience. An SMB usually needs to know that they couldn’t do without your software. If it merely streamlines a process that can be done manually, there is a chance they will forego it until they have grown enough to need your services.
After all, even if they end up buying after your stellar PowerPoint presentation, how many acquisitions can you achieve like that, and at what cost. The cost of acquisition might end up shooting far above expected profits, therefore defeating the whole process.
When marketing to SMBs, make sure you bring software that helps them solve a real problem.
2. You Need To Cater To Large Numbers
Here you have to make sure that your market segment has a large number of people so that numerous sales to these small to medium businesses can yield great profits.
Since SMBs don’t have the budgets of well-established companies, your success is going to depend on you closing a lot of sales.
Your software needs to be marketable to hundreds of thousands of people at the very least if the business strategy is going to be viable. And the combined profits that you will make over a large playing field can potentially make selling to small and medium businesses worth it.
3. Master The Art Of Creating A High Need
Now that you know what a high need is, how do you create it? Let’s look at some of the most common ways that businesses have created high need over the years so that you can pick what works best for you:
- Regulation– It is by far the easiest way for you to create a high need in your market segment. In this, you create software that’s already a requirement by government regulation. That way, you aren’t gambling about whether your market segment will even need your product. You know they will and all you need to take care of is your efficiency and an edge over the competition. Capitalize on regulations government makes to create an unwavering market.
- Core System– This one isn’t quite on the same plane as creating high need based on regulation, but it still works. When a business uses a core system to market to SMBs, what they are doing is capitalizing on core systems like payments and communications to push their businesses in a segment in which they are popular. If credit cards are what people prefer to play with, then interesting them in your business as a core payment method is going to boost the chances of people in your market segment wanting to do business with you.
Another thing you could use in this system is communications. With mobile phones being popular and almost everyone having one, making an app that can be managed from a phone and on the go can also give you a significant edge.
- Network Effects– In a field where other players already are or are most likely to enter (which is almost any business, to be honest), it’s a good idea to create software that can stand apart and offer greater value to SMBs. Creating a network of consumers or other service providers in a way that’s not done elsewhere can help you stand apart. Look at how Yelp managed to create unique value for its customer base.
4. Learn How To Target A Lot Of Potential Customers
To make a significant profit selling to SMBs, you’re going to have to sell to many industries. But that’s easier said than done. Many software companies looking to sell to SMBs often fail because of this point.
They create very industry-specific software that has a market value in only one industry. By doing so, they automatically narrow their pool of potential customers to the few small to medium-sized businesses in their chosen sector.
That almost guarantees failure. Of course, that will depend on a lot of factors, but for the most part, most SMBs will not be significantly profitable to sell to in small numbers. You want to cater to as many businesses as possible for any of this to even begin to make sense.
Find a horizontal use case for your software. That means your software should be useable in various industries without losing its high need factor. But it should be relevant in as many industries as you can.
Different industries have different needs, so it’s unlikely that your software will be able to save all industries the same, in the exact same way, and that’s not the point. What you should aim for is to make your software code adjustable to fit changing needs within the same industry or among different ones.
You could also adjust your product to customer size. It should be accessible to businesses of any size, from the smallest. This is where you can play with factors such as pricing to your advantage. To win, you can start by pricing your software or its basic/core elements so that even a business with a single employee can access it. After this, create a system of discerning upsells where you add value to your product as you also increase the price point. These upsells will only appeal to the segment of the market that has both a high need for why you’re offering and the budget to buy it. That way, you’re able to sell to businesses of any size.
Conclusion
SMBs have been known to spend very little on technology in general. It has led a lot of software companies to focus mainly on catering to the established business market, leaving this market segment to just a few players.
But that hasn’t stopped software startups from growing into giants by focusing on this segment. What they created was a strategy that helped them solve some of the problems that deterred many out of the industry. The strategies given in this article can help your SMB-focused business move to the next level.
About the Author:
Amanda Smith is an IT expert. She’s been in the field of the computer industry for 10 years. She is also a freelance writer that usually writes computer programming articles. Amanda loves mountain climbing during her free time.
