One of the greatest frustrations associated software sales is being told by management to go after the small and medium business (SMB) market. After all, there probably are hundreds, perhaps thousands, of SMBs within driving distance of your office. It’s pretty easy to get a list of local companies, but how do you tell which companies might need your software or services? Here’s a four-step approach to this challenge.
Step 1. Rank the following 10 industries from 1 to 10, with 1 being the industry that’s likely to get the least benefit from your software or services and 10 being the industry that’s likely to get the most benefit. Ignore the percentages and the Target column for now.
|[ ]||Banking 5.6%||____________|
|[ ]||Construction and engineering 4.4%||____________|
|[ ]||Electronics 5.6%||____________|
|[ ]||Financial services 5.9%||____________|
|[ ]||Healthcare 4.6%||____________|
|[ ]||Information technology 6.9%||____________|
|[ ]||Media 8.2%||____________|
|[ ]||Pharmaceuticals 5.5%||____________|
|[ ]||Professional services 6.9%||____________|
|[ ]||Transportation 3.9%||____________|
Step 2. Multiply your rating number by the percentage given for each industry and put the total on the line in the Target column. Now put an asterisk (*) next to the three highest target numbers. Companies in these three industries are most likely to buy your software or services. Go through your list of potential customers and eliminate those that are not in the three target industries.
Step 3. Either by cold calling the receptionist or another quick research method, determine the size of the companies remaining on your list. Eliminate those companies that are not large enough to make use of your company’s offerings.
Step 4. Determine whether your product offerings are primarily infrastructure oriented, such as Web servers, networks or help desk, or applications oriented, such as CRM, ERP, or POS. If your offerings are primarily infrastructure oriented, sell from the bottom up – call first on the smallest companies on your list. If your offerings are primarily applications oriented, sell from top down – call on the largest companies first.
Why does this work? Gartner, the world’s largest high-tech market research firm, recently performed an extensive study of SMBs’ IT buying habits. The percentages in the ranking list given above are the percentages of revenue that SMBs in each industry plan to spend, on average, on IT. Turns out SMBs in highly competitive industries, such as media, are spending more on IT because they see IT as a competitive advantage. SMBs in more mature markets tend to treat IT as just another cost of doing business, thus plan to invest less.
Gartner also discovered that small and mid-sized organizations with less than $1 billion in revenue are spending 53% to 60% of their total IT budget on infrastructure. Organizations with more than $1 billion in revenue, however, are spending only 50%, on average, on IT infrastructure. Therefore the smaller SMBs are more likely to buy infrastructure, while the larger SMBs are more likely to buy applications.