8 reasons why you need "That Guy" to penetrate the SMB -Part IV 18 March, 2009 By Robert M. Cohen

Collectively, North American SMBs employ about 75% of the work force. In approximately 80% of the sales, these organizations ask that Computer Guy (a.k.a.: local Channel partner/reseller VAR, system integrator, solution provider, etc.) which solutions, products and brands they should purchase. Once asked, that Computer Guy's advice is taken verbatim 90% of the time.

We refer to that Computer Guy as a Trusted Business Advisors (TBA)... because they definitely are!

TBAs & SMBs

Volume. Individually, SMBs do not purchase the large volumes that enterprise customers do. However, collectively they account for the bulk of the sales of IT products and services.

Margins. Selling to SMBs through TBAs requires at least one and usually two steps (distributor and reseller), both of which want margins. However, distributors typically handle the picking, packing and shipping of products, warehousing and facilitate the credit. TBAs provide the outreach to the SMBs, have the touch points, relationships and trust of the SMBs. Furthermore, TBAs help to determine what products they require, build the solutions and do the installation, training, service and on-going support.

All in all, many vendors have realized that even selling through a two-tier distribution system, they obtain greater margins in the SMB space than in the tough enterprise market.

Growth. The SMB market segment is being treated as the economic engine of the IT industry because SMBs have been increasing their technology spends, unlike the enterprise market. In a recession, enterprises dictate X% budget cuts to which their IT departments must adhere.

SMBs are frequently owner managed and have less formal guidelines. Thus, in a recession, they will entertain increasing their IT spend if they believe it will have a fairly quick, positive impact on their bottom line. TBAs that can demonstrate IT-centric business solutions that show a measureable short-term ROI & can increase IT spending, even in these tough economic times.

Overall, SMBs are increasing their spends because they are seeing more technology-based solutions that increase their bottom line (decrease costs or help them increase revenues). Vendors, recognizing this growing market are launching new products, programs and most importantly, pseudo solutions that are designed specifically to help SMBs ensure a positive ROI. To get this message to the SMBs, vendors are relying on the relationships that the SMBs have with their TBAs and the TBA's ability to take pseudo solutions and make them into complete installed and working solutions, including ongoing service and support.

These two trends -- the growing need to be more competitive and the growing availability of solutions -- are accelerating the growth of the SMB market.

Reach. Like every business, selling to SMBs has its obstacles. They are difficult to reach, slow to adopt new technologies, need more handholding then enterprise clients and often come with credit and thus financing problems. For most IT vendors, this great opportunity simultaneously creates a new challenge: it is economic suicide to approach this market using their existing sales strategy. The SMB marketplace is simply too large, too complicated, too needy and too diverse to allow vendors to profitably engage their own sales force. They do not have and cannot justify hiring an outbound sales force to contact SMBs, develop relationships with them, discuss solutions and then bring specialists to facilitate the delivery, integration, training, service and support functions.

TBAs have the relationships, knowledge, local presence, motivation and devotion needed to reach, service and support SMBs.

Integration. Vendors sell products. SMBs NEED solutions. By working with distributors, resellers are able to sell, service and finance complete integrated solutions and thereby provide SMBs with what they want: single-source solutions on which they can rely. However, with tens of thousands of product offerings from multiple vendors, compatibility and convergence issues, and the warp speed at which technology changes, it is impossible for resellers to stay current. Further complicating the issue is product parity caused by too many similar products entering and leaving the market on an ongoing basis.

Vendors that partner with TBAs have a tremendously better opportunity to ensure that the TBAs know what products they sell and the benefits they provide.

NOTE: Vendors that belong to the W3 Channel Enablement Program dramatically increase this opportunity and gain the opportunity to send messages to the TBA's SMB customers.

Confidence. About 80% of the time, SMBs ask their local TBA for recommendations and then accept these recommendations 90% of the time. Ignoring TBAs immediately eliminates a vendor's opportunity to compete for about two-thirds of the SMB purchases.

Relationships. SMBs are looking more strategically at technology as a critical part of their business. Even Dell's legendary success in selling technology directly to SMBs is being challenged. That's why they have engaged VARs who have long-term personal relationships with their SMB customers; they know the individual businesses and act as a strategic technology partner to them. These VARs are a trusted partner relationship with their customers that enables them to recommend, sell, install, service and support a strong unified strategic IT solution.

It is no wonder that Dell has launched a huge initiative to engage TBAs.

Trust. SMBs are not small versions of enterprise customers. They tend to have a small or no in-house IT staff devoted to finding new solutions. Rather, their limited IT staff focus on keeping the current technology running and replacing outdated hardware and software.

SMBs think of their TBA as their Trusted Business Advisor. NOTE: What you are saying here is that "SMBs think of their Trusted Business Advisor as their Trusted Business Advisor". Do you want to change TBA to VAR?

Robert Cohen, a passionate and enthusiastic channel advocate, is the founder of the ChannelLine Advisory Council as well as president and business editor of Integrated mar.com, publishers of Channel Advisor, eChannelLine and ConnectIT. Since 1980 he has worked with 350 IT vendors, distributors and resellers in developing and implementing strategic go-to-market programs, using a variety of direct, channel and hybrid models. Integrated mar.com, in conjunction with Robert has created the Trusted Business Advisor program.

Robert can be reached at 1-800-465-2059 or by email at rcohen@integratedmar.com


Previous Trusted Business Advisor articles by this author:
08/27/09 On The Record With Robert Cohen & Autotask's Bob Godgart
08/27/09 Solving the business dilemma for That Computer Guy
08/27/09 On The Record With Robert Cohen & Ingram Micro's Justin Crotty
08/14/09 On The Record With Robert Cohen & Cisco's Dave O'Callaghan
08/14/09 Keeping the IT industry in touch via social marketing
08/14/09 On The Record With Robert Cohen & Westcon's Anthony Daley
07/30/09 On The Record With Robert Cohen & N-Able Technologies'Gavin Garbutt
07/30/09 On The Record With Robert Cohen & Dell's Greg Davis
07/23/09 On The Record With Robert Cohen & McAfee's New VP of Channel Operations Fernando Quintero
07/23/09 On The Record With Robert Cohen & D&H's Co-President, Dan Schwab
07/08/09 On The Record With Robert Cohen & Tech Data's Joseph Quaglia
07/08/09 On The Record With Robert Cohen & CSG Openline's CEO Jay Leon
06/25/09 On The Record With Robert Cohen & Synnex' Bob Stegner
06/25/09 On The Record With Robert Cohen & Hewlett Packard's Tom LaRocca
06/11/09 On The Record With Robert Cohen and Level Platform's CEO Peter Sandiford
06/10/09 On The Record With Robert Cohen and Level Platform's CEO Peter Sandiford
05/21/09 On The Record With Robert Cohen & CompTIA's New Head: Todd Thibodeaux
05/21/09 Grassroots marketing for those 'Computer Guys' - Part 6
05/21/09 On-The-Record with Robert Cohen & Keith Bradley, President Ingram Micro North America
05/15/09 On-The-Record With Robert Cohen & Gary Gillam, Xerox's VP, North American Resellers, Channel Operations
05/15/09 On-The-Record: Robert Cohen with Synnex Canada CEO Jim Estill
04/24/09 Twitterdee, Twitterdo, Part 1 of 2
04/15/09 On-The-Record with Arlin Sorensen
03/25/09 How vendors should partner with Those Computer Guys - Part V
03/25/09 The Trusted Business Advisor/Trusted Business Partner Code of Ethics
03/11/09 Part III: Vendors Wanting To Penetrate The SMB market Need That "TBA Computer Guy".
03/04/09 That "Computer Guy" is what we call a Trusted Business Advisor (Part II)
02/25/09 Reaching SMBs through their 'Computer Guy' (Part I)
02/18/09 TBA: The program built with you & for you!!!
02/18/09 Without a code of ethics, a professional industry isn't 'professional'




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