Meeting the SME challenge

On the face of it, the future for those in IT sales who are thinking of switching their attentions to small and medium sized enterprises (SMEs) looks bright.

Datamonitor predicts that total European SME investment in IT will rise from $76bn in 2002 to $109bn in 2006, with the IT services sector demonstrating the greatest growth.

While spending by large organisations on enterprise resource planning, supply chain management and customer relationship management applications is expected to remain flat for the foreseeable future, the SME market is predicted to experience significant growth.

It would be a mistake, however, to smugly picture all those SMEs as proverbial low-lying fruit, ripe for the plucking by even the laziest vendor.

For while SMEs are clearly big business in potential, accounting for 99.8 per cent of the UK business population and employing 12 million people, the research consistently shows that over half of their owners don't consider IT to be a key component of business success.

Even more disturbingly, no fewer than 45 per cent of small businesses believe that the IT industry lacks professional standards.

Suspicious minds
One reason for this distrust is that SME owners feel let down by recent IT innovations. In a survey of SME IT spend carried out by Profectus Group, they shoot down applications such as 3G, Voice-over IP, broadband and streaming media for not living up to expectations.

No surprise then, that the SME attitude towards buying IT is frequently characterised by suspicion and lack of enthusiasm.

IT is often seen by SMEs as, in the words of one software provider, "a grudge purchase". Furthermore, there is evidence that SMEs still don't really see the potential of technology and fail to exploit it.

For example, the Profectus Group survey showed that many SMEs still view their IT systems simply as an enabler of a business process and not as a strategic contributor to the business plan. A massive 43 per cent consider IT as just another overhead.

There may be sound reasons for this scepticism. "IT is a headache for most businesses and SMEs especially, as some do not have the financial or human resources to deal with the technical problems that arise," argued Richard Althorp, managing director of Sol-Tec, an IT solutions provider and itself a SME.

"The reason why SMEs see IT as an unnecessary evil could be down to past experience. During the dotcom boom, many companies became convinced that they had to invest in the latest and greatest technology, which proved unnecessary and expensive.

"Now that the boom is over and the dust has long settled, SMEs are seeing the waste they incurred and have a bad impression of the IT companies that advised them in the first place."

Jeff Meulman, managing director of Via Net.Works UK, makes a related point. "Many SMEs understandably feel disillusioned by IT," he explained.

"SMEs have sometimes been sold overcomplicated or unsuitable IT systems that they do not have the in-house expertise to manage.

"Furthermore, these systems are backed up by customer service that is sometimes prone to treat SMEs as second-class citizens behind high-value large corporate accounts."

Clearly then, to succeed in the SME market sellers face a tall order. They must regain the trust of businesses and rekindle their enthusiasm for technology. But how?

New approaches
As a first step, vendors should acknowledge that selling to SMEs demands an entirely fresh approach, not merely a scaled-down version of the methods used with big corporates.

Owner-managers want to feel that the seller is interested in their particular business and will resent any approach they see as patronising.

"The first thing that SMEs can see through is when a corporate software vendor announces that they've had a Damascus-like experience and are now SME-focused," said Colin Boag, managing director of JBS Computer Services.

"Leopards don't change their spots and corporate software vendors moving into the SME space betray by their words and deeds their corporate roots."

The most obvious contrast between SMEs and larger organisations is that many of the former do not have dedicated in-house IT departments.

In fact, the responsibility for technology may even fall on individual owner-managers or managing directors themselves.

This lack of expert intermediaries has ramifications that can challenge a salesperson more used to dealing with large companies.

"The difference with SMEs is that you cannot use the IT department as a buffer between you and the business problem," explained Dale Vile, a corporate salesman who moved into SME sales before becoming an industry analyst with Quocirca.

"Decisions are generally made by business people and, in a surprising number of cases, the guy who actually runs the company.

"As a salesperson, you therefore have no choice but to engage with business decision-makers to close a deal if that deal is at all significant.

"Such decision-makers are likely to have limited technical knowledge so benefits have to be expressed in business terms, and often spelled out pretty explicitly. That's a completely different type of sale."

The less formal, faster sales cycle that dealing with SMEs entails may also come as a shock to the system for some salespeople.

"SMEs usually need a less formal approach: two meetings to agree service levels, product package and pricing. They don't expect fancy PowerPoint presentations or large written proposals," said Marcos Richardson, European director of WebtraffIQ.

"Legal documentation is required but they would rather have a simple and concise agreement which doesn't need a costly lawyer to look over."

Having said this, many IT sales and marketers specialising in SMEs stress that selling to this market is not actually difficult - just different. And it can be very satisfying.

"I love selling to the smaller organisation because the buying process is so much simpler, the people you deal with tend to have a broader knowledge base and the benefits your product can bring to bear on that company are so much more tangible," said Georgia Leybourne, sales and business development manager at Albany Software.

SELLING INTO SMEs: FIRST-HAND EXPERIENCE

Know your market
While selling to SMEs is different to selling to larger organisations, it's also important to appreciate that SMEs are different from one another.

The term itself is very broad and definitions can vary: Datamonitor, for example, classifies the SME or 'mid-market' sector as comprising companies with between 10 and 1,000 employees.

But it isn't just a matter of disparities in size and resources. SMEs will expect you to focus on the business benefits of technology when you are selling to them, so it will often be important for you to know something about their business. And that could be just about anything.

"My advice to anyone targeting SMEs is to verticalise," said Vile. "Choose a few sectors that you can become familiar with enough to have a sensible conversation about the prospect's business or the market they operate in, then focus your efforts."

Short and sweet
SMEs are time-poor, so it's essential that you keep the whole process of buying technology in whatever form as easy, efficient and straightforward as possible.

As well as frequently not being technical experts, SME decision-makers are often extremely busy running a multitude of aspects of their companies, so the less documentation, presentations and meetings involved in making a sale, the better.

"I can almost guarantee that the SME will have little time and little patience for long, convoluted sales pitches. Time is money and they need the solution quickly and efficiently sold, closed and implemented," said Leybourne.

Winning trust
Because many SMEs have a once-bitten-twice-shy attitude to buying IT, honesty and reliability are essential.

The basics are more important than ever: focus on selling solutions, rather than products; and never promise anything you can't deliver.

Building up trust is also essential, because the person buying the technology often has a very personal stake in the investment. Indeed, the money may be coming out of their own pocket rather than a seemingly bottomless corporate budget.

Back to school
Because you will probably be dealing with people for whom IT is not a primary function, there is an educational element involved in selling to SMEs.

"More often than not, SMEs don't have the time to find out what technology their business needs, so you should educate and guide them through the maze of information out there and show clear understanding of how technology can make a difference to their bottom line," commented Tim Evans, head of marketing at BT Business.

While doing this, however, you have to keep the particular needs of SMEs in mind. They will expect to see a far quicker return on their investment than larger companies, so it's essential that you seek out and demonstrate the ways in which technology can bring tangible results to their business.

Be a flexible friend
In order to win over SMEs, it's important for sellers to tailor their solutions to their particular needs.

Vendors should be providing solutions that are specific to SMEs in terms of scalability, price and versatility, and not just delivering a pared-down version of what is traditionally supplied to large corporates.

"If SMEs are not buying equipment at the moment, and are still wary of buying IT, then why not suggest an alternative route?" said Althorp.

"One cost-effective and safe way for an SME to be tempted into spending money on IT again is through leasing, which can provide many benefits not only to the vendor, as it means that it creates sales, but to the SME, as it can cut costs."

SIZING UP A SALE: GETTING THE SME APPROACH RIGHT

• Always be accessible.
• Provide the buyer with a single point of contact.
• Avoid convoluted sales pitches.
• Focus on direct, tangible business benefits.
• Keep your communications brief and to the point.
• Be prepared to be flexible.
• Suggest a pre-installation list of timed deliverables and performance criteria, agreed with the customer.
• Appreciate that SMEs need a faster return on investment than larger corporations. Avoid solutions that require overly complicated installation/operation.

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