Small and medium businesses (sites of between 10 employees to 200 employees) offer significant new technology sales opportunities, according to a recent study by Harte-Hanks, Inc. (NYSE:HHS). The challenge is to match sales and marketing programs to the most commonly cited buying requirements of small and medium businesses, which differ significantly from those of larger companies, the study reports.
The study, conducted by the market intelligence team at Harte-Hanks during the first quarter of 2003, sought to examine how technology purchasing decisions are made today at small and medium businesses, and what are the "best practices" for tapping technology revenue opportunity at these locations. The research methodology included focus groups, interviews with technology buyers at 611 small and medium businesses, and analysis of 280,000 telephone-verified profiles of technology infrastructure and decision makers contained in the Harte-Hanks CI Technology Database TM (CITDB).
The "Tapping the SMB Opportunity: A Guide To Sell and Market Technology Effectively To Small and Medium Business" study is available at no charge at http://www.hartehanksmi.com/smb
"The small and medium business marketplace has long been a target, but is one particular market that has been underserved, in part because sales were easier elsewhere and because there has not been a solid source of data on smaller enterprises," said Randy Wussler, vice president of product development, market intelligence, Harte-Hanks, who authored the report. "Harte-Hanks has sought to analyze the North American marketplace with various tech-focused snapshots."
The study examined four different areas:
- How does the technology buying process work within SMB companies?
- What role does channel selling -- through dealers, distributors and other marketing partners -- play in this process?
- What are the most effective marketing and promotional strategies?
- What are the key technology buying trends in the SMB marketplace today?
Each month the Harte-Hanks market intelligence team conducts interviews with 70,000 North American IT [information technology] buyers for its CITDB, the largest and most in-depth business technology database of its kind. The database monitors spending plans at 330,000 businesses in North America. Similar profiles are collected for 135,000 business sites in Europe and Latin America. Together, these account for a large majority of today's global IT spending.
Understanding the Tech Buying Process
According to the Harte-Hanks study, dissecting the technology purchasing process in the small to medium market is tricky business. The study recommends that tech marketers first understand what type of business they are selling to: a stand-alone business, a branch location or an enterprise headquarters. More than 50 percent of branch locations (a large portion of the SMB marketplace) must defer purchasing decisions for computers, networks and phone systems to the parent corporation. If the decision is made locally, then most likely it is made by a committee that includes the senior technology manager, the senior financial manager and the president/general manager.
The Role of Channel Partners
The study points out that channel sales and marketing plays a highly significant role when reaching out to the small and medium business market. It further showed that 31 percent of small to medium businesses use a third party to manage some portion of their information technology (IT) infrastructure.
The most common types of functions outsourced are network configuration, system configuration and system upgrades, all areas where channel partners serve as an extension of the IT staff of the small to medium business. More than 40 percent of the companies in the study that outsource a portion of their IT indicated that the third-party vendor performed a good portion if not all of the companies' IT needs' assessment. In addition, nearly two-thirds of companies that outsource IT report that ongoing relationshipsis what drives their choice and retention of a channel partner.
Standalone locations are far more likely to outsource IT functions than locations that are part of a larger enterprise.
Most Effective Marketing Strategies
Internet-based information, tradeshows and e-mail marketing are rated as having high influence on the SMB IT manager's technology purchasing decisions. Internet research was rated as the most influential with these technology buyers, with 77 percent citing the medium as either very highly or highly influential on their purchasing decisions.
Also trade shows cannot be ignored, since 30 percent indicated these events were highly influential in their purchasing decisions. And while survey respondents reported that they dislike e-mail clutter, they do prefer well-targeted and educational e-mails from senders who understand their business needs and challenges over traditional direct mail.
Key Technology Buying Trends
Some specialized technology areas appear to be "hot" in this market. When it comes to current tech-buying trends, security issues such as anti-virus software, firewalls and e-mail filtering are just as important in the small to medium market as they are for larger locations. For instance, 71 percent currently have e-mail filtering, and nearly one-third of the business sites without a firewall plan to install one in the next 12 months.
Small and medium businesses are on par with larger companies when it comes to the presence of advanced operating systems such as Windows XP. However, Linux and network attached storage are not nearly as well established in the small to medium business marketplace, as compared to business sites with more than 500 employees. Perhaps most interesting, 72 percent are planning significant technology purchases (exceeding $5000 per site) in the next 12 months.