Small- and medium-sized businesses represent a vast, untapped market for many SaaS companies, but understanding how to navigate SMB sales may be difficult since many digital marketing firms tend to focus on large businesses. Understanding the SMB model and specific strategies for small business sales will help SaaS companies successfully maneuver through this lucrative market.
What is SMB Sales?
SMB sales are sales to small- and medium-sized businesses. In this guide, we will clearly define what’s an SMB and compare enterprise vs SMB sales. You will be able to confidently answer questions your team may have such as the meaning of SMB sales and what is SMB marketing. We’ll also break down SMB with specific small business sales tactics for SaaS, so you’ll walk away with strategies that you can start implementing right away.
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What Does SMB Stand For?
Here are some key terms to help you understand the content of this page:
- SMB: Small-and-Medium-Sized Business
- Enterprise: Large-Scale Business or Corporation
- SaaS: Software-as-a-Service
- B2B: Business-to-Business Sales
While the question of what SMB stands for in sales is pretty straightforward, defining what businesses count as SMBs is not so simple. Some people define SMB as any business with less than 500 employees. Others say medium-sized businesses can have up to 1,000 employees. If a business has over 1,000 employees, it’s most likely not an SMB. SMBs are often, but not always, local businesses and startups.
The Difference Between SMB and Enterprise Sales
Knowing how to sell services to small businesses is completely different than knowing how to sell to enterprises. If you are new to SMB sales, understanding the differences between SMB and enterprise is essential. The size and scope of a business may affect its:
Here’s Chris Bixby of Sezzle on what’s unique about selling to SMB vs enterprise:
“The fundamental difference for me is that the needs are completely different internally and how to navigate, sell into, and then, untimely, service an enterprise level customer”. Let’s look more closely at the needs of each type of business.
The Needs of SMB
Some of the needs of SMBs are obvious. For example, they would require a lower purchase price than you would offer a large business. Other needs may be more subtle. For example, an SMB may be looking for a SaaS product that could grow seamlessly as their business grows.
While any viable business will have long-term goals, SMBs tend to focus more on short-term goals out of necessity. SMBs may also not be looking to scale their business, so the sales strategy may need to be different. Identifying the specific needs of each SMB is key to closing any deal. Don’t assume that smaller businesses are simpler than larger ones. Dedicate time and resources to understanding each SMB’s needs.
The top three SaaS needs of SMBs:
- Affordability: Many SMBs operate on limited capital.
- Scalability: Some SMBs want SaaS software to grow with their business.
- Crisis Solutions: SMBs often seek SaaS solutions when they have an immediate problem that needs to be solved.
The Needs of Enterprise
Enterprises may have longer sales cycles due to the large number of stakeholders involved in the decision-making process. This means they might need more patience and a greater number of interactions before the sale is finalized.
Enterprises also tend to seek SaaS solutions to prevent potential problems rather than to solve current ones. Selling to enterprises requires being in tune with what those future needs may be.
- Effectiveness: Enterprises are often looking for the best quality product over the most affordable one.
- Committed Sales Team: It’s common to have a drawn-out sales process that requires more time from your sales team.
- Future Solutions: Enterprises often want preventive rather than restorative SaaS software.
The Benefits of Selling to SMBs
It’s natural to chase those large enterprise sales. A large B2B contract can be a game-changer for a SaaS company. However, there are many advantages to marketing to SMBs vs enterprises.
- Shorter Sales Cycles: SMBs often move through the SaaS sales funnel much faster than larger businesses.
- Larger Pool of Leads: There are simply more SMBs out there than there are enterprises. This means more potential leads.
- Ongoing Relationships: SMBs are often looking for software to grow with them.
Shorter Sales Cycles
Large businesses usually have a lot of bureaucracy which means sales may take longer to close. Shorter sales cycles mean making money faster, which can help keep a new SaaS startup going.
Larger Pool of Leads
A larger pool of leads means more potential sales opportunities. Also, established SaaS companies may focus more on enterprise B2B sales, leaving SMB sales with less competition. While we know that generating good leads is about quality over quantity, there is something to be said for having more potential options.
Loyalty is very important to many SMBs. That’s great news for you. If they love your SaaS solution, they are likely to remain a customer for years. If the business grows, the size of your contact with them will likely grow as well.
Tips for Selling to Small and Medium Sized Businesses
Since there are so many differences between SMB and enterprise sales, the best approaches to them are also vastly different. That’s why we compiled tips specifically for selling and marketing to SMB customers.
Tips specifically for selling to SMB customers:
- Build a trusting relationship
- Identify the decision-makers
- Understand the organizational structure
- Qualify your leads
- Tailor your marketing plan
Build a Trusting Relationship
We know that the majority of sales happen because of the relationship between the salespeople and the decision-makers. This is especially true for small business sales. Building rapport with SMB decision-makers is essential for getting those contracts. For a small business without a lot of capital, investing in a new SaaS product may be a big risk. Take the time to get to know them, and for them to get to know you, so they trust that you have their best interests in mind.
Identify the Decision-Makers
Decision-makers for SMBs are often very different from the decision-makers for enterprises. Don’t go in assuming who you need to speak with. The owner or founder of the business may be more involved than you would expect with a large corporation. Also, in SMBs, people often fill more than one role. For example, the CFO may also be the head of marketing.
Chris Bixby of Sezzle does a phenomenal job articulating how the decision-makers are different for SMBs vs enterprises. He says, “I think what we started realizing is that the decision-makers [of SMB] are completely different. And so at a smaller business it’s usually a founder, a CEO, president, head of e-commerce, someone in marketing. At a big company you start to involve finance, multiple decision makers… people that also have very different priorities.” Involving more people with different priorities can slow down or completely derail the sales process, so fewer decision-makers is another benefit of SMB sales.
Understand the Organizational Structure
Organizational differences can affect the ideal marketing and sales plans for specific SMB customers. For example, SMBs may need more incentives than enterprises. Or, they may need incentives earlier in the sales process.
Marketing and sales teams should work together like a well-oiled machine, but there is often more tension than collaboration between these two departments in SaaS businesses. Aligning marketing and sales is key to successfully generating leads and closing on SMB sales. According to Chris Bixby of Sezzle, “the biggest thing… is alignment organizationally. Building out personas, building out who we’re targeting and how we’re targeting them… really understanding where dollars are being spent and why”.
Qualify Your Leads
Selling to enterprises often comes with the security of knowing they have the money to spend. With SMBs, that is not always the case. SMB entrepreneurs may have great ideas and grand plans, but little-to-no capital. You wouldn’t want to waste your time on a business that simply doesn’t have the means to purchase your SaaS product. Therefore, you should do your research ahead of time to choose the right leads.
Tailor Your Marketing Plan
You may want to consider creating SMB-specific marketing and/or sales teams. This will allow you to fully differentiate your SMB marketing strategies from your enterprise marketing strategies. SMB marketing, meaning marketing specifically to small and medium businesses, can include highlighting a low-cost subscription or freemium model. We also recommend hiring a business development rep or sales development rep to focus solely on generating leads for SMB sales.
When thinking about how to sell products to small businesses, remember that many SMBs represent a niche market. That means your target audience is likely much smaller with SMB marketing. Take time to understand who you’re targeting and the best ways to reach them. Learn more about B2B SaaS marketing strategies from one of Augurian’s digital marketing experts.
Learn How to Sell SaaS to SMB With Augurian Marketing
Now, you can answer the question of what SMB stands for in business and, hopefully, the knowledge you gained from this guide goes far beyond that. We hope you feel confident in your ability to differentiate between the needs of SMBs and enterprises. In doing so, you will be able to customize marketing and sales strategies depending on the size of the business you want to sell to.
At Augurian, our goal is to work with your team to develop a sustainable SMB marketing plan tailored uniquely to your SaaS company. Our digital marketing team can help you make your first SMB sale or take your SMB direct sales to the next level. Tap into the SMB sales market by reaching out to us today!