RESEARCH REPORT

In brief

In brief

  • Google and Accenture surveyed 1,500 SMBs, interviewed 30 SMB leaders and analyzed employment data to better understand SMBs.
  • Small and Medium Business (SMBs) represent a major growth opportunity—but many businesses struggle to understand, segment and target the SMB market.
  • With the right mindset and an understanding of SMBs’ needs and purchase journeys, companies can prove successful with smaller customers.


When is small really big? It’s when you’re talking about Small and Medium Businesses, the 5.1 million U.S. companies of less than 1,000 employees. Despite the enormous scale, many companies find the SMB market daunting and a challenge to understand, segment and target. This does not need to be the case. With the right mindset and an understanding of SMBs’ needs and purchase journeys, companies can prove successful with smaller customers.

To better understand SMBs, Google and Accenture surveyed 1,500 SMBs, interviewed 30 SMB leaders and analyzed U.S. Bureau of Labor Statistics employment data.

What did we find?

  1. SMBs are unique

The SMB market is a huge opportunity as SMBs are equal in size to enterprise and are growing 4 percent annually. Moreover, nearly 40 percent of SMBs have been in the market for more than 25 years.

U.S. Employment by Company Type   64.5M* SMB Employees vs. 67M Enterprise Employees

* Does not include sole proprietorships, which is considered a ‘non-employer’ by the U.S. Census (one person corporations would be included; contractors would not). Source: U.S. Bureau of Labor Statistics; Small Business Administration

SMBs behave more like consumers than large enterprises. That may be why consumer brands often win SMB dollars as these brands appeal to individuals and have already forged relationships across the journey from awareness to loyalty.

SMBs are not one-size-fits-all and are often misunderstood.

However, when diving deeper into SMBs' buying behavior, we found many don’t actually have a preference for consumer brands. They simply default to what they know. That means both B2B and consumer brands can win SMBs' product and service purchases if they are positioned appropriate. We believe standard enterprise marketing messaging and use cases will prove limiting.

32%

of SMBs have no preference of B2B or personal brand when choosing a product or service for their business.

Similar to how consumers buy services for themselves and their households, SMB buyers have multiple roles within their businesses. An owner, for example, is likely to be the head of marketing, CIO and the operations leader. Playing multiple roles is typical until SMBs reach about 100 employees; at this size roles start to delineate and functional departments form.

Our research found that, on average, job responsibilities of survey respondents involved in the buying process span 1.5 to 2 functions. This creates a complicated matrix when companies consider how to identify individual SMB buyers and how to reach them. Once relationships are formed, SMB buyers who play multiple roles will rely on trusted parties to guide them in their path to purchase.

  1. A growth mindset

Driving revenue growth is the primary purchase motivator for SMBs. Growth goals span incubating new customer segments, opening new locations, or entering new markets. In our survey, one-third of SMBs indicated that new product and service purchases are growth motivated and this increases to nearly two-thirds (63 percent) of SMBs who are purchasing marketing services. Enterprises trying to sell to SMBs should keep in mind that SMBs will always have a “Will this scale?” mindset and will be seeking out solutions that promote their growth.

A chart indicating that driving revenue growth is the primary purchase motivator for SMBs for Marketing Service companies.

“Those advertisers that can address the segment differently, both from a product and marketing perspective, will win,” says Seth Schuler, managing director – Software & Platforms Strategy at Accenture. As an example, those that promote functions over features and offer more streamlined solutions should see gains.

  1. Digital, digital, digital
A graphic showing that search and Online Advertising are important components of the SMB buying journey, even beyond discovery. SMBs most frequently make purchases due to growth and expansion.

Digital channels are a go-to for SMB buyers: 79 percent of SMBs use online advertising and search engines in at least one phase of their buying journey. And, in each phase, from discovery to purchase and post-sale re-evaluation, nearly half of SMBs turn to digital channels, including company websites. While this should not be a surprise in this all-digital-age, what is different about SMBs is their desire for personal support and personalization. An experience that combines the digital approach with buyers’ desire for relationships is something many companies have not been able to master.

79%

of SMBs use online advertising and search engines in at least one phase of their buying journey.

Jay Bowden, Managing Director of Home Services at Google, emphasizes the importance of the digital experience: "When evaluating brands to use for their business needs, SMBs expect the same fast, frictionless, high-quality online experiences that they have with the brands they use in their personal lives. They do not delineate between the two, which significantly raises the bar for companies that SMBs do business with. Don't let your brand fall short in the eyes of the SMB consumer by having a sub-par owned website. Improving your online experience is just as important as having great customer service and a great product."

Given SMB buyers are typically not experts in every purchase, they highly regard recommendations from trusted experts, friends and family as a form of validation for purchase decisions. This highlights the importance and the opportunity of having influencers advocating for brands that choose to target SMBs.

  1. Loyalty first, second, third and fourth

Most SMB executives do not have the bandwidth to focus on buying processes. SMBs spend the time upfront, discovering and evaluating potential products and services. Once SMBs have decided on a solution or brand, they’re loyal and committed. SMBs will only reflect on their decision in the face of quality challenges or large price increases.

62%

of SMBs state they highly likely to renew products or services they purchased.

Maintaining a strong customer service mindset will help capture and retain SMB buyers. SMBs want a lasting partner that will provide high-quality, responsive support. SMBs do not have in-house experts to tell them how to use the product, so they lean on service providers for expertise. This leads to upsell and cross-sell opportunities.

"Loyalty is earned through the relationship established with SMBs," says Doug Novack, Managing Director of Business and Industrial Markets at Google. "Suppliers that are not only involved in the initial research stages, but also provide proactive post-purchase customer service are the ones best positioned to inspire loyalty and capture growth with the SMB segment."

What are the implications?

Selling to small-and medium-sized businesses can be a major growth opportunity. They are vast in number, accessible through digital channels, open to conversation and advice and, once a purchase is made, resistant to switching.

To capture this opportunity, “traditional enterprise-focused advertisers have to think more strategically about the growth value of the SMB market,” says Michelle Bandler, Managing Director Tech B2B, Google. Kevan Yalowitz, managing director – Software & Platforms Strategy at Accenture concurs: “Companies need up-front market, product and customer strategy to drive informed decision making as they go after this market. And these strategies should be based on actionable market insight from primary research, industry expertise and quantitative analysis.”

This research points to three important considerations as companies build strategies to more effectively succeed with SMBs. First, communicate a growth message. Offer value propositions targeted to unique business needs of SMBs and demonstrate how your product or services will help them fuel their growth objectives. Second, be there when SMB executives are searching for solutions to their problems. Companies need to be in the “dialogue” early in the company life cycle so they can support SMBs as they grow. Lastly, the conversation with SMBs needs to be about addressing business problems and opportunities; companies need a trusted advisor they rely on over time, not an order taker. And, once that relationship is established, the brand is well-positioned to win with SMBs.

Source: Google and Accenture SMB Study, US, August 2018, n=1,501 Companies with number of employees less than 500.

Kevan Yalowitz

Managing Director – Software and Platforms Strategy


Seth Schuler

Managing Director – Software & Platforms Strategy

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