Q&A: SMB Sales Belong To The Channel

A lot has been written on the SMB segment and how every VAR can profit by marketing to these customers. What does it take to build true value in this business segment? We gathered the opinions of a few channel executives familiar with the needs of the SMB customers and the capabilities solution providers bring to this market segment. The participants include Ginger Yerovsek, North American director of sales and marketing for BitDefender (network security); Nigel Williams, VP of LinksysOne and NA channels for Linksys (VoIP [voice over Internet Protocol]); Frank Wasti, VP of sales and marketing for Computhink (document imaging); and Dan Schwab, VP of marketing for D&H Distributing. 

What common obstacles should VARs expect when selling to SMB customers?

Yerovsek: SMB customers don’t typically have their own IT department or it’s one or two people trying to handle the entire IT infrastructure, so VARs are put in the role of being a consultant and a technology educator. The challenge comes from having to communicate your value to nontechnical decision makers as well as generalist IT managers. VARs become the IT department for SMB customers in many cases, and successful solution providers understand they’re an extension of that customer’s daily operations. Small companies do understand the need to protect their information.

Williams: One obstacle VARs need to understand is that there are different types of SMB customers. Whether segmenting by vertical or geography, solution providers must concentrate on specific elements of SMB. Smaller companies have diverse infrastructure needs — from highly developed systems to not having a network — and the service and support VARs provide must address these needs. It is a challenge supporting a high volume of customers with smaller budgets. It costs more to market to a broad base of customers with diverse buying criteria, especially with the inclination of SMB customers to go to the easiest source for equipment (i.e. the Web).

Wasti: In document management, the degree of complexity can vary significantly based on the needs of each customer. Remote employees often need to access documents from a central document repository, but how can VARs provide secure entry for these users? Helping businesses solve compliance issues is difficult, but also a major value opportunity for solution providers. HIPAA (Health Insurance Portability and Accountability Act) and Sarbanes-Oxley can be complicated issues for SMB customers to understand, and consulting and implementing document management solutions can be a tremendous value. 

Schwab: Small business owners want to be more competitive with enterprise customers, and the technology VARs provide is a means to that end, so there are actually fewer obstacles than in previous years. Cash flow is a potential impediment, but technology and pricing are both finding their own levels in SMB. Our challenge has been to educate resellers and reposition some manufacturers that had typically built product specifically for the enterprise.

What are the hot technologies in demand by SMB customers? 

Schwab: SMB customers demand the same kinds of infrastructure as their larger corporate counterparts, including secure, redundant systems with significant storage capacity. They want high-performance solutions that will increase their productivity.  More small businesses are also looking toward emerging technologies, such as VoIP, to reduce the cost of communication and digital signage, which is becoming commonplace in applications for airports, medical offices, universities, government buildings, and shopping malls. SMB customers also want accessible pricing and small formats to accommodate budgets and space constraints.

Yerovsek: Multilayered protection fits into that category. Security is much more than antivirus, involving protection against hackers and malware as well. The criminals are after customer data, and SMB customers may be more vulnerable than enterprise companies. That’s where VARs can discuss the benefits of antispyware, firewall, and even a basic network appliance to help safeguard data at the gateway. A combination of these components provides comprehensive protection that is critical to your customers, even in an office with only 10 devices.

Williams: For SMB companies with little or no IT staff, hosted and managed services are beneficial options for solution providers to offer. Small businesses want partners who can solve their IT needs and provide simple bundled solutions and applications (such as IP convergence packages). Solution providers may need to offer hosted and managed services to reach smaller customers in a cost-effective way, and VoIP VARs must offer security measures and reliability for voice communications. If your customers’ phones go down, it can be extremely detrimental to your future solution business.

Wasti: Content management ranks highly in several technology growth studies, and SMB is the segment where the largest increases are projected. E-mail archiving is one of the hottest technologies due to recent legal discovery laws and judicial rulings affirming that e-mails are electronic records requiring management and reproduction on demand. Networking and storage components are also in high demand because of e-mail compliance and can be included in a comprehensive solution for SMB customers.

How does the sales cycle differ for this market segment?

Wasti: SMB sales cycles are typically shorter, usually the result of fewer decision makers and levels of approval. The real decision makers for enterprise customers can be three or four levels above the people you work with, which takes additional time. For the SMB sale in content management, the cycle is about three to four months, while the enterprise transaction can be double that time (which can also vary by industry). Smaller organizations with small IT staffs are looking for more end-to-end solutions, so VARs should consider that option. Our partners’ SMB customers typically have the VAR install the software and document imaging scanners, and offering service derives additional value. VARs also provide consultative services such as how to best automate and set up archives and build retention schedules. To SMB customers, the relationship is important since they rely on solution providers with a solid reputation and that have worked with them previously.

Schwab: The SMB sales cycle is much shorter than the enterprise or institution sales cycle. SMB owners typically work directly with their solution provider to determine needs and approve the project, versus a standard two- to three-month planning and approval cycle for many enterprise projects. This means business may be more sporadic, since these customers purchase IT based on business needs instead of a corporate or government funding schedule. The good news is that most of these projects are not being opened for competitive bids and may depend more on the solution benefits and service the VAR will provide.

Yerovsek: Smaller organizations are more inclined to provide the information needed to assemble the solution quickly, while larger companies tend to feed you information piecemeal. It may take two months to understand the scope of the project. SMB organizations don’t always have the luxury of time; letting projects drag out can be detrimental to their businesses. When dealing with smaller organizations (100 seats and fewer), once they identify a need, they are typically ready to make a decision and execute.

Williams: SMB sales cycles in VoIP can be as resource intensive as enterprise deals. VARs can’t put average salespeople in accounts and complete IP convergence deals in a week due to the complexity of the solutions. In vertical markets where technology is completely tied to business success, such as some legal and healthcare offices, there will be a fairly extended sales cycle. VoIP solution providers should assess the technology adoption category of their customers and build solutions and services that accommodate their needs.