Enterprises need to change how they segment SMBs

SMBs are incredibly varied in their size, ambitions, digital maturity and much more. But for most enterprises, these nuances remain hidden or overlooked. Nearly half (49%) of enterprises only use one attribute (e.g., SMB revenue, spend, size, industry vertical) for segmentation or not segmenting their SMB customers at all1. The standard approach is dictated by spend with a specific enterprise. The more SMBs spend, the more likely they will get that enterprise's attention and a better, different, more personalized experience.

But as we covered in the first two essays in this series, by sticking with this approach to SMB engagement, enterprises are really not fostering the relationships they could have. They seem to fail to engage with SMBs on their terms and not reaping the potential rewards that we have proved that trusted relationships can deliver.

Time for change

It’s time to change and segment SMBs based on what they really need from enterprises. Although SMBs represent a huge variety of business types and ambitions, it’s important to note that a new approach to understanding and meeting their needs does not immediately require complex processes and a huge amount of work. In fact, even small changes to SMB segmentation can have a disproportionately large impact on how well enterprises can engage with them.

Getting segmentation right can bridge the trust gap. So, to do that, the first thing enterprises should do is to re-evaluate how they segment today.

Proper segmentation is the most critical step to building the right treatments, which leads to creating the trusted relationships that matter.

The more that enterprises can build a rounded understanding of how a SMB works, what their ambitions are and how they like to engage, the more successful they’ll be in their dealings with them.

Let’s take a privately-owned professional services firm as an example. They run a small, successful business providing niche services for their customers. They’re very good at what they do and are happy with the balanced lifestyle that their business offers them.

The firm uses digital tools and solutions that could help them to run their business more efficiently, and they’re interested in features and services that assist them to devote less time to relatively routine tasks and instead focus on what they do best and enjoy the most. In contrast, the enterprises they buy from are promoting products and services for driving growth.

This SMB has clear needs and priorities. But enterprises don't understand them and, as a result, they’re missing out on the opportunity to offer the right products and services. With the right approach to segmentation in place, however, that would not be happening. Enterprises would understand what that SMB wants and why.

Let’s take things slow

Of course, getting under the skin of thousands of businesses is not possible all at once. And it’s easy to become overwhelmed at the prospect of trying to do so. But getting everything right the first time is not what’s needed here. Instead, what is important is getting started with a new approach, working consistently and continuing to iterate and build.

64%

of SMB customers increased spend when enterprises personalized their recommendations.

And the rewards of doing that are clear. Enterprises that personalized their recommendations to SMB customers saw 64% of them increasing spend, compared with only 26% for enterprises who did not pursue personalization. Increased future spending shows an even bigger gap. Two-thirds (66%) of SMBs who got personalized recommendations said they'd spend more with the enterprises providing them. Only 24% of their SMBs whose enterprises did not personalize offers said they planned to increase their spending1.

Three things you should know about me

So how should enterprises start to think differently about their approach to segmentation? We believe they need a multi-layered segmentation model that comprises firmographic information, SMBs’ digital maturity, and their mindset. The best-in-class approach is to support all three layers. But even companies that use one of these layers are better positioned than most of their competitors.

The first is the most familiar. And that’s the firmographic information about SMBs. This means revenues, number of employees, the age of the SMB and the industry in which it operates.

Second is the SMBs’ digital maturity – and by understanding this, enterprises can start to design engagements that match the maturity of the SMB in terms of what they want now.

They can also develop approaches that will empower SMBs to accelerate their digital journeys. For example, the most digitally savvy SMBs pick more digital channels to engage with enterprise companies during the purchase phase. The least digitally mature are consistently under-served when it comes to their channels of choice: in-person sales reps, word of mouth recommendations, and physical stores.

Channels used to purchase (SMB) and sell (Enterprise) products

Source: Accenture, US SMB-Enterprise Dynamics Research, June 2021

Finally, there’s mindset, arguably the most sophisticated measure of all. Determined by two factors, growth and risk aversion (shown in the graphic below), this expresses the attitude and ambition of an SMB. Accenture divides these mindsets into four categories: Sustainer, Thriver, Survivor and Restorer. Understanding SMBs like this helps enterprises to identify the right time, messages, and support to engage most effectively.

Accenture divides SMB mindsets into four categories: Sustainer, Thriver, Survivor and Restorer.

Source: Accenture Fjord Small Business Strategy Client Research

Mix it up

So how should enterprises set about getting this done? Crucially, they don’t have to do everything at once. The best results are likely to come from a combination of data analysis and timely outreach. For example, the digital maturity of an SMB can be assessed by measuring an SMB’s online presence. Are they using analytics on their website? What sort of ecommerce engine do they have? And so on. Multiple signals like these, along with third-party data, can start to create a sophisticated picture of where an SMB is on its digital journey. Hiring data, too, can provide valuable insights. What kind of roles are being offered? How frequently are new jobs posted and what sort of skills do they require?

Below is an example of how we segment small-to-medium-sized professional services firms in the US, using data and AI. We enriched SMB firmographic details with third-party data and manufactured digital signals to offer deeper insight into the SMBs’ background, digital maturity and growth trajectories.

In the sample segmentation exercise, we began by identifying, gathering, and refining relevant digital signals to create clustering models. The combination of firmographic details (size and revenue, tenure) and digital signals (digital presence and technographics), and growth indicators (e.g., job listings etc.) offers a more holistic approach to determining the right treatments for each small-to-medium-sized professional services segment.

Example of a personalize pre-sales portal that Accenture created for a client.

Source: IRG Segmentation Analysis using Accenture Marketing Universe from June 2021

But in addition to using data and AI, it’s also important to ask questions and start a conversation with SMBs. Simple tools and touchpoints can help to build this dialogue. Take one example, the personalized pre-sales portal that Accenture has created for one of our High Tech clients. In this portal, SMBs received marketing content along with recommendations on how to improve their business. The portal provided SMBs with self-assessment and asked SMBs what they wanted and cared about most. SMBs' responses were included in the product and education content recommendations.

The critical lesson here? Keep listening, talking and learning.

Recognize me for who I am

If there is one certainty, it’s that SMBs continue to change. COVID-19, of course, created change at a pace and scale we’ve never seen before. But because most enterprises were not engaging with SMBs before the pandemic, they were unable to understand how best to help them when the pandemic hit. A new approach to segmentation will help make sure that enterprises and SMBs can finally have the trusted relationship that’s always been promised but has never really got going.

Coming up next

In the next article in this series, we will do a deep dive into how SMBs depend on other SMBs and how they can work together.

Sources:

1 Accenture, Global SMB-Enterprise Dynamics Research, June 2021

About the Authors

Robin Murdoch

Managing Director – Software & Platforms, Global Lead


Louise Barrere

Managing Director – Applied Intelligence, Solutions.AI for B2B Growth Lead


Stephanie Gorski

Managing Director – Accenture Strategy, Software & Platforms


Jing Brewer

Principal Director – Applied Intelligence, Product Manager


Kelley Harris

Senior Manager – Strategy & Consulting, Customer Sales & Service

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