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June 8, 2022

SMB: A complex challenge for telcos

Telcos increasingly see small and medium-sized businesses (SMBs) as the most attractive growth market in the enterprise space, but with literally hundreds of millions of them worldwide, developing, selling, and supporting this hugely diverse market is a massive and complex challenge.

Traditionally, service providers have segmented the SMB and SOHO markets by number of employees, but this is a simplistic approach: these businesses range from hobbyists to tradespeople to sophisticated data-driven start-ups. They can operate out of a van or across locations globally. By pursuing a more insightful and targeted strategy, service providers must more clearly define opportunities by business challenge and customer technology need. They need to justify demonstrable value for the services they provide – charging a premium just because it’s a business customer reflects more on their historic culture and practices than anything else.

Service providers struggle with the SMB market

Service providers have historically struggled to deal with the size and complexity of small business markets – they vary by country, by vertical sector, by technology maturity, and – most importantly – by buying behavior. Usually, the ideal strategy is to offer a balanced direct/indirect approach to market that addresses customers’ commercial drivers, such as customer acquisition, revenue growth, improved employee productivity, and so forth – all of which can be delivered through the appropriate use of technology.

Although there is considerable competition in these markets, established service providers have the opportunity to leverage their breadth of portfolio, brand, existing customer base and associated data in an increasingly automated and insightful way to compete against challengers who are often focused on price. A judicious balance of a premium direct channel, and a third-party or automated go-to-market ‘value’ strategy optimizes both the addressable market and potential margins.

One size will not fit all

The ’cost of living crisis’ is shaping future strategies but does not apply universally across the market, so by intelligent analysis of customer data and market research, service providers can tailor propositions to address the ICT needs of their target sub-segments. A mix will be required of direct and indirect channels to market depending on customer lifetime value, which includes acquisition and support costs. Premium business customers of whatever size will always appear more attractive but will also incur higher costs of sale and support.

One thing is for sure: a one size fits all approach will not cut the SMB mustard.