SMB owners wear numerous hats and their needs aren’t always boilerplate--and they often avoid any formal RFP process. Demands are driven by customers, users and immediate operational needs--but not as often by the IT department even when there is one. More SMBs are influenced by IT contractors than resident IT staff and this is important to understand.
Still, oftentimes the acquisitions are very informal. Vendors sometimes face a collection of requirements when SMB customers rattle off what they want in a solution after meeting several vendors. Larger SMBs that many call "the sweet spot," are from 40 stations upwards to 100. This customer class tends to buy solutions and application-driven solutions relying more upon one vendor. This doesn’t mean one brand; it just means more buying opportunity from the servicing company that can deliver more of what the customer needs.
The very small businesses are 1-10 stations and these customers I believe are the bulk of hosted voice customers. The SMB space is diverse and ranges in size and revenue, and a firm’s size isn't necessarily related to revenue.
There's still a void in selling opportunities and that means potential just as much as it means challenges in that these businesses may need access to bandwidth, education on the benefits of IP, or cash. The National Federation of Independent Businesses (NFIB) reported that, "Overall, 91 percent reported that all their credit needs were met or that they were not interested in borrowing." Consider this compared to what the WSJ reported that, SMBs just need sales and are unable or unwilling to take on new debt to expand.
Still, SMB owners determine value in different assets and how and when they are acquired and held. But the buying process even when it means saving money or gaining benefits won't bring signed orders and contracts. Favorable returns on capital investments do take a back seat when fear is in place.
For customers in the 11-250 stations, I think customer behaviors that I've observed need to be considered in understanding SMB buying behaviors:
* In past IPT system purchases, customers opted to stay with their vendor of choice and upgrade their system, reusing their old TDM phones. The other benefits were little or no learning curves and less disruption to the organization.
* Customers purchasing new telephony systems often purchased IP capable systems but with new digital proprietary telephones and without IP licenses. Their reasoning was simple; they didn't want to get left behind or stuck without the capabilities, but they weren’t ready or willing to pay for all-IP solutions.
* Customers refused new IPT systems and remained in their TDM solutions to avoid investment in new gear, or to wait and see or decided to simply do nothing because their existing solutions are adequate.
* SMBs have a huge disparity in their infrastructures, and "enterprise class" translates to cost-only decisions that they may fail to grasp.
* IT contractors and IT in general have played "trusted advisor" in marketing for decades, and Interconnects and "traditional voice only" contractors' past focus was on service/availability/reliability for voice. SMBs place a high value on "trusted relationships" and "service responsiveness" and remain loyal until those values head south.
The current economic climate and conditions felt by SMBs across the nation is summarized in the NFIB’s report: NFIB Small Business Report Economic Trends:
COMMENTARY
It appears that the small business sector remains in a "rut", unable to find reasons (drained by a 2 plus year recession period) to ramp up hiring and capital spending. The top problem remains weak sales, spread over too many firms. With weak sales prospects, hiring or spending on capital projects have little likelihood of paying off and therefore will not happen. Congress passed or tried to pass a ton of legislation that had little to do with helping the economy. It is no wonder that consumers and owners are in a canyon of pessimism; the recession took a huge economic toll and the leadership inspired fear, not confidence. With the small business sector on the sidelines, it is hard to get national growth above the 2 to 3 percent range and the economy will not enjoy the type of rebound experienced after 1982 when GDP grew 8 percent for over a year.
There's more to understanding SMBs' attitudes and buying behaviors, and while they don’t always add up to sales or movement in the direction that vendors and suppliers want, it's easier to understand why from reading the NFIB report. On the optimistic view it’s easy to see a flood of opportunity awaiting or arriving sometime in the future and I'm not so certain that "pent up demand" is adequate in describing the future prospects in the SMB space.
