The SMB market is a powerhouse, representing 44% of the U.S. GDP and half of the estimated $370 billion in technology investment, according to McKinsey. It is a huge market that is getting more sophisticated and careful about the products and services it procures. While SMBs want tech, they also want more competitive offerings and are turning toward usage-based consumption models to have more flexibility in the changing economic climate. MSPs need to raise their individual profile in this highly fractured market and do their homework, bringing specific insights to an SMB customer and building a product stack that will prove clear business value.
An often-quoted statistic is approximately 60% or more of vendor marketing development funds (MDF) go unused. Whether it’s north or south of 60%, the math still amounts to billions of dollars in funds wasted that should have gone to help a vendor-MSP relationship move their offering to the top of an SMB’s consideration list.
A former MSP myself, I know the funds are there for those who take the time to make the business case. If a vendor tells an MSP that there are no MDF funds available for them this quarter, the message is they have money, just not for them. MSPs must bring their ‘A’ game in professionalism to every at bat for MDF.
Why? Because successful partnering on MDF funds is a sales and marketing relationship but it’s also a financial relationship. Both sides need to derive an ROI from the agreement. Setting a mutual sales goal and detailing an account strategy over 3, 6, or 12 months will give the agreement specific milestones to hit. Also, there needs to be a clear plan on what the funds will be used for, like event marketing, paid SEO campaigns, or outbound marketing assets.
The MSPs who do obtain MDF funds come to the table with a highly professional proposal that is ready to execute, with clearly defined metrics. They also make it evident they can help their vendor partner grow their mutual account base over the long term.
Bringing a Fresh Perspective
A cautionary note from McKinsey: “Tech suppliers cannot simply apply their enterprise portfolio and channel strategy to SMBs and expect it to work. To succeed, they must understand the SMBs’ unique buying preferences and unmet needs, and tailor their products and commercial approaches accordingly.” Heeding this caution, the way to a sales win in the SMB market is to think about customization, about deeper knowledge of the customer’s own business strategy. If an MSP is bringing a new vendor into their product/service stack, they must verify that addition has value for the customer.
Customization and flexibility are key attributes in winning the SMB market. The bundled, large enterprise approach will fall flat with an SMB that wants to select products based on excellence in performance and not from a standard list.
All this individualized attention does take more time. However, it is the preferred SMB approach and shows no signs of changing as customers have become more cautious in their technology investments.
Going for the Win
Besides expecting more of an à la carte stack menu to choose from, SMBs are also not wedded to MSPs themselves. They are buying directly from technology vendors. Regarding MSPs and resellers, they are spending more time scrutinizing competitive offerings before making a decision.
To win more SMB business, MSPs and their technology partners will need to better integrate a professional services approach. With deeper knowledge of the customer, an MSP can act as more of an adviser and consultant, helping the customer execute their sales and revenue objectives. It will be about relationship building and setting a stronger foundation for future sales.
This process begins with securing MDF funds to rise above the noise in an increasingly fragmented and cautious SMB market.
PAUL HAGER is the vice president of professional services for Ingram Micro.