Why enterprises need to up their game to truly support SMBs
Small and medium-sized businesses (SMBs)1 are at the heart of economic recovery and growth. They account for more than 40% of total economic output in the US2 and 52% of private sector employment3. SMBs are also, of course, a key market for enterprises. In theory, that is. In practice, enterprises are set up to work with other enterprises and consumers, and they have consistently missed the mark when it comes to engaging effectively with SMBs. So unless enterprises change their approach, they will continue to underserve SMBs and miss the extensive value that could be achieved in a relationship that both parties value equally.
You’re not listening
We’ve been hearing from SMBs for years that enterprises are missing the mark and could engage with them in a much better way. So, we decided to explore enterprises’ engagement model in more detail. To do that, we commissioned a survey of more than 1,000 respondents3 – split equally between enterprises and SMBs. When asked about the state of their mutual relationship, enterprises consistently rated their performance and engagement far higher than SMBs’ assessments of enterprise performance across a number of critical attributes – trust, caring, understanding, and relationships.
Overall, it’s clear that enterprises believe that they get what SMBs want and need. But SMBs don’t see that understanding coming through in practice. In fact, there’s a considerable gap between the perceptions that enterprises have about their relationship and the reality that SMBs express.
When it comes to trust, 83% of enterprises believe that the SMBs they work with trust them. But only half of SMBS said that they did, in fact, trust enterprises. Eighty-five percent of enterprises believe that their company cares about SMB success. Nearly half of SMBs (48%) say they don’t. When it comes to whether enterprises understand the challenges facing SMBs, 72% of enterprises believe that SMBs are a major focus for their company, yet 47% of SMBs think enterprises aren’t trying to understand their challenges. Eight out of 10 enterprises believe they have a strong relationship with their SMB customers. But 45% of SMBs say that’s not the case. Taken together, these findings highlight the clear disconnect.
We asked SMBs to imagine how enterprises would answer the questions about trust, understanding, caring and relationships. While SMBs guessed that enterprises would assess their performance higher, those guesses were still significantly below enterprises’ self-assessment. Two things are clear from this: SMBs know there is a sizeable gap. Enterprises are not aware just how big it is.
The gap matters
This perception gap really matters. Addressing this gap is critical to the success of our economy and, more specifically, the survival of SMBs. We see a direct correlation between each of the four attributes and values. For example - the more that SMBs trust enterprises, the more they spend with them.
Additionally, the perceptions that enterprises care more about selling than they do understanding SMB needs (see graphic below) has a discernible impact on likelihood to churn. And the larger the SMB, the more likely they are to act on their concerns.
Know what I want, don’t know how to get it
So, are enterprises simply blind to the needs of their SMB customers? Far from it. In fact, our research shows that enterprises have a basic understanding of many of the challenges facing SMBs. But even though enterprises understand in theory, that’s not coming through in how their business models or approaches fulfil that understanding. Enterprises recognize that SMBs’ greatest concerns are retaining existing customers and marketing to new ones. But they place far less emphasis on the importance of cost. When we asked SMBs what enterprises could do to win more of their business, cost was by far and away the single largest variable. And it was also significantly underestimated by enterprises.
Making the right connections
One way to close that perception gap is by addressing the channels that enterprises use to serve their SMB customers. So, while enterprises’ marketing and sales through digital channels, such as social media and digital advertising, may suit SMBs that are comfortable with digital, they are not meeting the needs of digitally immature businesses. These businesses are looking for more in-person attention and are particularly persuaded by word-of-mouth recommendations from their peers. In fact, our research suggests that this specific channel is twice as important to SMBs than enterprises realize.
Raise the game
SMBs make up a diverse and dynamic sector of the economy that represents a significant market for larger enterprises. But it’s an opportunity that they have yet to fully address. Our research shows that only 41% of them have a centralized team focused on supporting SMBs. That means that for many, their SMB customers are falling through the cracks between consumer and other enterprise customers. It’s a gap that enterprises need to close.
By failing to raise their game for the SMB – across all four attributes of trust, caring, understanding and relationships – enterprises are missing real value. Persisting with one-size-fits-all approaches will do nothing to build better, more trusted relationships that are so critical to success with SMBs. But like any successful partnership, if they put in the work, enterprises will see the rewards.
Coming up next
In our next piece in this series, we’re going to explore the connection between SMBs’ digital maturity and trust in enterprises.
1 SMBs defined as having under 500 FTEs: Micro: 2-19 FTEs, Small-to-Medium: 20-99 FTEs, Large: 100-499 FTEs