Large vendors might be tripping over themselves to court small and midsized companies, but many of them are running into walls by repeatedly making the same mistakes.
A recent Gartner Inc. research report identifies seven common mistakes that large vendors make when selling to SMBs -- including being too focused on sales volumes and not the unique ecosystems in smaller companies.
And SMBs often find that the top-flight salesperson they first met then disappears during product implementations, when the second-string staff shows up.
"There are so many companies trying to get their business right now that one of top challenges for SMBs today is picking the right investment," said Mika Yamamoto Krammer, a Gartner research vice president.
A slew of large vendors want to stake their claim in SMB territory. EMC Corp. rolled out its Making Storage Simple strategy to target SMBs. Hewlett-Packard Co. expanded its SMB Smart Office program to sell blade servers to smaller companies. And SAP this year introduced a new channel partner program to cater to the midmarket.
But all the newfound attention means that SMBs must fight through the noise created by vendors clamoring for their dollars and competing claims of market leadership.
Krammer defines the midmarket as companies with up to 1,000 employees or $500 million in annual revenue. She identified the top seven mistakes as follows:
- Believing that "If we build it, they will come."
- Driving too hard for sales volume.
- Creating partnerships based solely on marketing.
- Lacking conviction in the go-to-market approach.
- Over-promising and under-delivering.
- Failing to create an identity and relationship in the market.
- Being too product focused vs. investing in the ecosystem.
Know the three R's of SMB buying
The three most basic criteria SMBs should judge vendors are reach, relevance and relationships, Krammer said. Reach refers to the vendor channel; relevance is how well the technology fits a company's needs; and relationships are defined by the level of support and satisfaction that reference customers receive from the vendor.
Krammer said she believes these flawed strategies create a lose-lose situation. More vendors are prevented from selling their products -- and SMBs are unable to find the best IT products for their companies.
Vendors wanting to improve their sales to SMBs should perform an honest evaluation, asking "How are we different from the others?" and "Why choose us?" according to the report.
Krammer points to IBM as one company that has improved its SMB offerings. Four years ago, Big Blue had no unique SMB software offerings. Today, IBM's Express product line targets midmarket with specialized products and pricing for SMBs. IBM has good reach and relationships, but needs to improve the relevance of its SMB products, Krammer said.
In contrast, Microsoft has high relevance and great reach in the SMB market, Krammer said, but poor relationships. The company treats SMBs in a "transactional" manner and abandons small guys once the sale is complete.
Krammer advises SMBs to spend extra time doing their homework to ensure vendors will deliver on their promises. This means checking with customer references, analyst firms and industry peers, she said.
Krammer's latest study follows up on two earlier reports, "Seven Big Mistakes Vendors Make When Targeting SMBs" in October 2001 and "Seven More Big Vendor Mistakes Inhibiting SMB IT Sales" in May 2003.