Telecom service providers around the world have been reorienting their enterprise segment strategies towards focusing on growth from SMBs (Small and Medium-sized Businesses).

SMBs are set to remain the growth engine in markets worldwide, but there may be bumps in the road.

According to The World Bank, SMBs account for most enterprises worldwide, representing about 90% of businesses and over 50% of employment. These numbers swell when including ‘informal’ SMBs (for example so-called side hustles, which are commercial activities undertaken alongside primary employment).

For most telecoms service providers enterprise revenue growth has been driven by the expanding population of SMBs and by a broad trend of technology adoption as core to business activities. In addition, a shift in work patterns influenced by Covid-19 gave rise to a wave of new business creation as people re-evaluated their careers, values, and goals. New business ‘births’ were also facilitated by ‘free’ money following the 2007/08 financial crisis giving rise to ultra-low interest rates for an unprecedented period.

SMBs face intense competition

The world has changed. The war in Ukraine has pushed up fuel and energy prices, with inflation increasing dramatically. As a result, central banks have raised interest rates. The combination of higher operational and financing costs has started impacting many businesses, spurring a rise in failures, both in smaller ‘mom and pop’ or family businesses, as well as larger ‘zombie’ businesses (ones that have relied on bail-outs or that were just making ends meet).

With competition in the SMB market already intense, telecoms service providers need to define who their target customers are, differentiate their offerings, and cut costs. Targeting customers is straightforward on paper but challenging in practice. Service providers need to fully understand their place in the market. This could be based on product offerings, sector expertise, price, value-added services, optimized use of channels to market, partnerships and a myriad of other aspects. By getting customer strategy  and USPs (Unique Selling Proposition) aligned, enterprises stand a better chance of success.

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By GlobalData

GlobalData Principal Analyst Rob Pritchard observed: “Managing technology evolution, investing in networks and systems, understanding customers’ needs and behaviors, defining processes, developing systems, finding and retaining talent, and nurturing partnerships is a tricky combination of spinning plates – but one that service providers face on a daily basis.”

All substantial service providers have announced initiatives to optimize their operational efficiency through activities that come under the ‘digital transformation’ banner. Systems and processes are automated, and an increasing amount of customer interaction is performed via digital channels such as web portals, both cutting costs and improving customer control.

Pritchard continued: “The battle for SMBs’ telecoms spend is intensifying the world over. Success will come to those who understand their customers and how they can win their business in an intensely competitive market. Winning and losing will come down to a combination of customer knowledge and operational efficiency.”