How Big Tech Businesses Sell to Small Businesses

Small and medium businesses — those with 10 to 200 employees — are said to offer significant new technology sales opportunities to larger tech firms, at least according to a recent study by Harte-Hanks. The challenge for large tech companies is to match sales and marketing programs to the most commonly cited buying requirements of small and medium businesses, which differ significantly from those of larger companies, the study reports.

Based in San Antonio, Texas, Harte-Hanks is a worldwide marketing company providing direct marketing services and shopper advertising opportunities to local, regional, national and international consumer and business-to-business marketers.

The study, conducted by the market intelligence team at Harte-Hanks during the first quarter of 2003, sought to examine how technology-purchasing decisions are made today at small- and medium- sized businesses. The research methodology included focus groups, interviews with technology buyers at 611 small- and medium-sized businesses, and analysis of 280,000 telephone-verified profiles of technology infrastructure and decision makers contained in Harte-Hanks’ technology database.

Randy Wussler, Harte-Hanks vice president of product development and author of the report, said he sought to analyze the North American marketplace to reveal various tech-focused snapshots.

“The small and medium business marketplace has long been a target, but is one particular market that has been underserved, in part because sales were easier elsewhere and because there has not been a solid source of data on smaller enterprises,” Wussler said.

The study examined four different areas in an attempt to understand the tech-buying processes of smaller businesses, the role channel partners play for larger businesses, the most effective marketing strategies for reaching smaller businesses, and what small businesses are buying.

According to the Harte-Hanks study, dissecting the technology purchasing process in the small- to medium-sized business market is tricky business. The study recommends that tech marketers first understand what type of business they are selling to: a stand-alone business, a branch location or an enterprise headquarters. More than 50 percent of branch locations — a large portion of the SMB marketplace — must defer purchasing decisions for computers, networks and phone systems to parent corporations.

If the decision is made locally, then most likely it is made by a committee that includes the senior technology manager, the senior financial manager and the president or general manager.

The study points out that channel sales and marketing plays a highly significant role when reaching out to the small and medium business market. It further showed that 31 percent of small to medium businesses use a third party to manage some portion of their information technology infrastructure. Additionally, standalone locations are far more likely to outsource IT functions than locations that are part of a larger enterprise.

The most common types of functions outsourced are network configuration, system configuration and system upgrades — all areas where channel partners serve as an extension of the IT staff of small to medium businesses. More than 40 percent of the companies in the study that outsource a portion of their IT functions indicated that the third-party vendor performed a good portion if not all of the companies’ IT duties. In addition, nearly two-thirds of the smaller businesses that outsource IT functions report that their ongoing relationships with the channel partner is what drives their selection of computing solutions.

Internet-based information, tradeshows and e-mail marketing are rated as having great influence on SMB’s purchasing decisions. Internet research was rated as the most influential resource among small business technology buyers, with 77 percent citing the medium as either very highly or highly influential on their purchasing decisions.

Also trade shows cannot be ignored, since 30 percent of small businesses indicated these events were highly influential in their purchasing decisions. And while survey respondents reported that they dislike e-mail clutter, they do prefer well-targeted and educational e-mails from senders who understand their business needs and challenges over traditional direct mail.

Some specialized technology areas appear to be “hot” in this market. When it comes to current tech-buying trends, security issues such as anti-virus software, firewalls and e-mail filtering are just as important in the small to medium market as they are for larger enterprises. For example, 71 percent of small businesses currently have e-mail filtering, and nearly one-third intend to install a firewall over the next 12 months.

Small and medium businesses are on par with larger companies when it comes to the presence of advanced operating systems such as Windows XP. However, Linux and network attached storage are not nearly as well established in the small to medium business marketplace, as compared to companies with more than 500 employees. Perhaps most interesting, 72 percent of small businesses are planning significant technology purchases exceeding $5,000 in the next 12 months.

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