In the last week, I’ve had at least 10 conversations with B2B SaaS companies that are moving down market. Primarily enterprise software vendors trying to expand their reach by targeting the SMB (also referred to as SME) market - selling to small and medium businesses. It’s a tough transition, as I know from my own, sometimes painful experience. It becomes increasingly challenging, I believe, when you're selling directly to small business owners.
Enterprise vs. Small and Medium-sized Businesses
To understand the difference between enterprise versus SMB buyers, let's start by breaking it down in terms of what every software buyer looks like today:
- Always connected - online all the time
- Want to self-educate
- Primarily interested in if and how the product will help them – personally
- Want to see the product as quickly as possible
- Have lots of choices
To fully understand the needs to small business owners in particular, we also need to take the following into consideration:
- They’re not usually buying between 9am and 5pm. That's when they're running their businesses. So the majority of their research and buying has to be done at nights and on weekends.
- Because they already have a full-time job running their business, the buying process needs to be fast and straight-forward.
- They don’t have the defined buying processes of large companies. So the defined selling processes of enterprise sales probably won't work.
- In the case of small business owners, their personal reputation and dollars are on the line, which makes them more risk adverse.
- Depending on the size of company, buying decisions are ultimately made by the CEO.
Bottom line: SMB buyers may require more, not less support from vendors. Setting aside the obvious variables to do with product complexity, the question for any SaaS company looking to engage with SMB buyers is: can you successfully reduce the level of sales support (and associated costs) without negatively impacting the buyer’s experience? Given that 75% of software companies that try to move down market fail, is it possible to capture this huge and growing market without impacting long terms customer value metrics and CAC?
I’ve been fortunate enough to share the stage at a number of events with other SaaS companies talking about their go to market strategies for SMB sales. The approaches varied widely:
- Leverage chatbots and business development reps (BDRs)
- Offer scheduled demos
- Provide product trials
As the CEO of an SMB SaaS company, I’ve experienced all three of these approaches as a buyer. If you’re trying to target SMB buyers and struggling with resources and cost of sales, check out my observations. Is this how you’re treating your buyers?
Chatbots and BDRs
- It’s 2pm on a Saturday afternoon and I’m doing my research on a product. The bot kindly informs me that “Joe”, the sales guy is out of the office, but I can access his calendar and schedule a time to speak with him next week. Funny how we expect our buyers to buy when it's convenient for us.
- I’m in the market for marketing automation software and connect with one of the larger platforms I’ve worked with in the past. After a couple of interactions with the BDR and requests to see the product, I’m cut off. Seeing the product requires someone to show it to me and apparently our organization’s too small to allow further sales resources to be applied. However, I can download the free trial and experience the product for myself. Since I already have a full time job and don't have the time to figure out your product, I decline.
- Many of the demos I get are given by sales reps. No offense folks, but the majority of these are really bad. As a former demo guy, I know first-hand that even the best sales reps don’t necessarily know how to give a demo.
- The CEO or CTO is the “only” person who can demo the product. As the CEO of a startup myself, I totally understand why – you’ve got to jump on every opportunity. However, have you calculated your cost per demo? And, given the low conversion rate of early stage demos, is this really the best use of your time?
- Like other startups, my small team wears multiple hats - we're busy. When we’re researching and buying products, we don’t have time to go through the traditional demo process - speak to a rep, schedule a demo, see a demo - just to figure out which vendors to shortlist. And by the way, we have even less time to figure out most trials.
- Great research from Patrick Chase and Tomasz Tunguz at Redpoint talking about the average conversion rate for unassisted trials of 4% - and highlighting that if you want to do better than that, you have to invest in sales support. If you're a SaaS company looking to sell into the SMB market, are you trial-ready? Is your business geared towards providing the right level of support (without impacting CAC)?
- I’m not surprised by these statistics. Too often, my only option to experience a product is to sign up for a trial. Too many products are complicated and not intuitive, and I invariably give up. When I do get “sales support”, it’s often in the form of an email, prompting me to check out some functionality. Unless I’m in the product at that time, it’s rare I make the time to read the email and apply what I’ve just read to my trial.
Regardless of what market you’re selling into, success increasingly depends on aligning your sales process with your buyer’s process. In the case of SMB this may mean:
- Allowing individual buyers to learn about your product on their time, not just during your 9 – 5 schedule.
- Enabling the buying team to learn about your product together at the time that’s most convenient to them.
- Figuring out a better way for your sales team to give demos.
- Letting buyers experience the product for themselves, before committing to a trial.
- Pro-actively supporting buyers during a demo or trial based on in-product behavior.
- Automating the process, by automatically connecting the buyer to other information based on prior activity or inactivity (and I’m not talking about sending timed emails).
The smaller the organization you sell to and the lower the ACV, the more you MUST help buyers do the buying work on their own – but in a way that aligns with when and how they work. If any of my experiences and observations sound uncannily familiar, leave a comment or send me a message. I’d love to chat about your experience and explore a better and cheaper way to grow your SMB revenues. If you’d like to check out what that looks like, just go to our homepage and enjoy a quick product experience for yourself.