Top 43 “SMB Tech” go-to-market resources
As LionBird was developing its investment thesis on “Digital Business Services”, I read everything I could get my hands on related to the space. Specifically, for startups serving the generally overwhelmed, unsophisticated and squeezed for cash SMB segment, I looked for best practices on how to profitably reach, sell to, on-board, and service them at scale.
There was a lot of junk out there, but among the noise, here are a few of the useful nuggets for those setting out to learn more about reaching SMBs.
Case studies
Of course, you can’t copy/paste the tactics other companies used to go to market, because what worked “back then” may be saturated now. But knowing how other companies cracked the SMB market is still useful for thinking about what new models may work well in today’s environment.
Growth hackers case studies
What you’ll learn: how Yelp built it’s successful crowd sourced reviews engine, including community building and an “elite” group that contributed most of the sites reviews.
What you’ll learn: Hubspot’s usage of inbound marketing, including tools, a book, blogs, events and webinars, enabled them to generate high quality marketing qualified leads at scale, enabling them to grow fast despite a low ACV.
What you’ll learn: how Belly build a local, city by city launch playbook that they leveraged into national coverage.
Individual case studies/interviews
What you’ll learn: video on how Constant Contact reached $250M in annual revenue, $39 at a time. The best part is between 7:00-26:20 min.
Is a great story of starting out and scaling, including the mirage of partnerships, the importance of “quick to wow”, how they educated market, and how they experimented and innovated with offline marketing channels.
What you’ll learn: how Yotpo sells to the long-tail of eCommerce shops at scale with minimum marketing budget. Facebook and PPC ads never worked for them, so they had to get creative, with 80+ marketing initiatives being measured and optimized in parallel.
- Xero: How did Xero get initial traction and Xero S-1
What you’ll learn: a great case of influencer marketing, Xero built a sales/account manager team (like traditional enterprise sales) to go after accountants, educating them about how to operate their practice in the cloud. According to their S-1, each accountant brings in 13 customers, which enabled them to achieve great sales efficiency even with a low ARPC of $167.
What you’ll learn: Thumbtack solved discovery for local SMB services by productizing quotes and bringing you the data you need to make a good decision. They did a great job starting with demand, and used that programmatically to recruit supply.
What you’ll learn: how a large company penetrated the SMB segment with a new offering, including their “5 lessons learned”. Given SAPs brand name and budget are different than those of a startup, not all lessons are readily applicable.
Tactical “Selling to SMBs” resources
Sales call tips
What you’ll learn: For those who have experience selling into larger organizations, selling to SMBs is a different ballgame. Challenges include: time to call is different for each vertical, prospecting is a challenge because it’s hard to find up to date business info, owners pay from their own pocket and need to see immediate ROI/value, and they don’t want to “learn” how to use a tech, must be intuitive and seller must be prepared to give a demo on their first call.
What you’ll learn: Great example of how critical it is to effectively segment your prospects when targeting SMBs. Yelp has found that assigning sales reps by geo to enable small talk on weather/sports is critical.
Consultative selling
What you’ll learn: The SMB marketing services industry is among the most mature categories targeting SMBs. SMBs are overwhelmed by the amount of calls they get per day, and the market has evolved towards positioning themselves as “partners”, including calling sales people “Internet Marketing Consultants” and providing free online presence assessment tools. This sets expectations upfront (important) for ROI and customer service/satisfaction, the two biggest contributors to churn.
Churn among SMBs
What you’ll learn: High customer churn among SMBs is treated as a given, due to the high turn over rate among these businesses. However, Google’s Adwords unit developed a churn-warning tool with more than 200 signals to identify potential churn before it happens. They found the top reason for churn among their clients is lack of perceived ROI, mainly because reporting quality is low and not being digested. Second largest reason is customer satisfaction/service, and they are working on processes to touch customers and retain them.
The challenge of targeting and segmenting SMBs
What you’ll learn: Due to high turnover among SMBs, names, phone #s, and addresses are constantly changing, making lead verification and sales cycle visibility a nightmare. These are longer reads, but good for those who want to better understand the challenge of developing prospect lists and segmentation for SMB space.
What you’ll learn: as SMB owners have become more comfortable with tech, both as consumers and as business managers, this has created a flywheel whereby: more data on SMBs is available → enabling better targeting of this once hard to reach group → enabling more adoption of tech by this group, making this a good time to go to market with SMB tech.
Inside Sales Podcast episodes
What you’ll learn: Easier to close desire for gain not fear of loss. The importance of scripting it as much as you can (their top sales person, who closes 3X as much as others, still sits with script in front of her). Tweak it over time, includes one size fits all approach to segments aka same core pitch for each group, but need to “think dynamically” including what can be applied to this scenario. Similar to how backup slides are used in a company.
Includes a lot of tactics as well, including how to tweak script over time, how to break down sales funnel and get sales people to input data so they get better over time, and how to hire people that can think “dynamically”
What you’ll learn: about the importance of consultative selling tactics, including how Booker sales reps use this selling style to answer common rejections like: “I don’t have budget for this”, “I don’t need your software”, “I’m too busy to deal with this right now”, or “I already use X competitor and won’t switch off them”.
What you’ll learn: from the current sales leader of FourSquare David Greenberger. He previously also led an sales at Yext, a classic “smile and dial” environment where on average, they made 150 calls a day, of these 7 would result on getting the actual business owner on the phone, and they had to get 3 of these to convert to clients on the spot.
For sales people to get past the constant rejection, he explains the importance of being human and getting on the SMB owners level, and how company culture, recruiting and training can enable this mentality.
Pricing and Business Models resources
On growing your LTV over time
What you’ll learn: great examples of tactics from GoDaddy, SurveyMonkey and others on how they earn more money per SMB over time
What you’ll learn: as startups reach $5M ARR, the scale of customer acquisition required to maintain fast growth from an expanding revenue base often pressures startups to move upmarket
Matching price with complexity
- The next wave of SMB SaaS, How low can you and your ACV go?, The Smallest ACV To Justify An Inside Sales Team At A SaaS Startup, and Three SaaS sales models
What you’ll learn: these are all written from the VC point of view, for those looking to build venture scale businesses in the SMB tech space. The articles include tips on how to get out of the dead ground between self serve freemium and ~$300/month product, and how to evaluate if your product can support a sales team.
Deciding where to start
- Should your SaaS company sell to SMBs?, From SMB to the Enterprise: When to move upmarket, The Innovator’s Dilemna for SaaS startups, and Startups should sell to small businesses not Enterprise
What you’ll learn: great examples of leading SaaS companies that started out servicing the SMB market and moved up-market over time as their product matured.
What you’ll learn: Over 50% of the working population (120 million individuals) in the U.S. works in a small business. Therefore, starting with a mass consumer base and finding the small business need therein can be a great starting point, both in terms of simplifying your product and distribution.
What you’ll learn: great summary of the pros and cons for each segment, helping new SaaS B2B companies decide which to start with.
What you’ll learn: many startups targeting SMBs choose to focus on a specific niche at first. While this works well at first, if you want to scale to other segments distribution, product management, and competition all become more complex. This article describes specific challenges therein.
What you’ll learn: Stelli Efti’s three pillars that let you know you are ready to hire sales people to move upmarket.
What you’ll learn: the first hand story of how Shippo bootstrapped its B2B startup by focusing on small businesses before moving to enterprise
Lead gen tactics
What you’ll learn: best practices on using surveys to build awareness, brand perception, site traffic, leads and sales.
General Advice/Research
What you’ll learn: some general observations for how SMB SaaS startups can reach scale
What you’ll learn: a great overview of the leading players in the SMB space, the challenge SMBs face in each portion of their growth cycle, and the “whitespace” opportunities therein.
What you’ll learn: a comparison of SMB, mid-market, and enterprise SaaS company valuation multiples. Overall, there is no meaningful difference in valuation by customer size. A SaaS startup at scale is going to be valued by its growth, market size, and long term prospects, irrespective of how many customers of what size it acquires.
What you’ll learn: includes a great summary about the challenges of selling to SMBs and McKinsey’s “5 winning SMB cloud strategies”
What you’ll learn: Bredin research group did a survey of 1,662 SMBs on a variety of topics. Here are links to the findings.
