Selling Collaboration to SMB (Small Medium Business)

David Coleman

You would think SMBs would not need collaborative technologies… after all you can just pop your head into the next office or walk down the hall to talk to your colleague? This may be true for some small businesses especially SOHO (Small Office Home Office), but with the gloabalization of business today it is just as likley that a small business can be as spread out as a large enterprise and require collaboration technologies.

Where we Are

Take Collaborative Strategies for example. I work mostly from my home office in San Francisco, while Dave Antila and the Advisory Services team work in the San Mateo office (about a half an hour's drive south of me). Ann Marcus and another researcher are in Portland, Maurene Grey is in NY and Cliff our webmaster is in Atlanta. Being analysts in the area of electronic collaboration we have more tools and technologies then we will ever be able to use (although we try to test as many of the 1000 vendors we track as we can). 

When we talk to most vendors selling collaborative solutions, they are all focused on the big sale, the enterprise. However, there are only so many large companies (Fortune 2000) and there are over five million small businesses in the U.S. alone today. Some of the collaboration vendors we have talked with over the last year are waking up to the fact that the SMB market is a big one, and not as saturated with collaborative tools as the enterprise might be.

In recent months announcements from major vendors like Microsoft, Webex and IBM have indicated that not only have the smaller collaboration vendors noticed the market for collaboration tools in SMBs, but the major players have also.

The Research

Recently we interviewed a number of vendors that have been successful in marketing and selling collaboration tools to SMBs and asked them some hard questions about their success: how they generate leads? How they keep the cost of sales down? How they get their message right? How they choose their target markets or niches?

Citrix Online (www.gotomeeting.com) who has spent the last five years in this market focuses their “Simpler is Better” philosophy in building and delivering their services, and their licensing model are critical advantages in selling to SMBs.

Andy Swarbrick, the CEO of PopG (www.popg.com), a small 10-person UK- based company felt that working through partners and channels was the critical strategy for them to get higher quality customers in the SMB market. 

Miles Walsh, the CEO of Green Array (www.greenarray.com) also a small start up in San Francisco focused on project management that now has 1000 customers after only 3 months was also interviewed. Miles philosophy is to use a “catalog or mechanizing mentality” to sell successfully to SMBs. Based on this philosophy Miles changes their message (and web site) every month. His goal is to “drive people to lifetime value, while keeping the cost of sales down” much like a catalog-based retailer does. Their goal is to get to “zero touch” sales, and keep the cost of acquiring a user under $20.

Christian Smith, the VP of Sales and Marketing at eProject (www.eproject.com ) worked with his executive team in 2003 to change their view and help them see they are selling a service. They focused on mid-market companies and researched how they bought software. They used guerrilla marketing tactics from 2003 -2005 to prove their ability to sell to this market, and in the summer of 2005 got an $8 million investment which they used to retire debt and boost sales and marketing. As those newly funded marketing campaigns have come online (Q4 2005); leads, sales and revenues are up 100%.

Generating Leads

All of the vendors in question seem to make good use of Google adwords to drive traffic to their sites.  Some of them use download.com or other sites like that to also drive traffic and trials of their software.

Citrix found that focusing on specific vertical markets like financial services or health care was their best strategy. In this case they combined Google adwords with direct mail and PR campaigns to generate the highest result.

When the vendors were asked about trade shows, there was a mixed response. PopG and Citrix are going to CeBit in Germany this year. Citrix believes that only focusing on trade shows in specific verticals is the way to go. In terms of media PR, it is a core of the Citrix marketing platform to gain brand awareness and contribute to lead generation. Green Array also found that in December a coordinated campaign which included a press release did increase the numbers to their web site.

All of the vendors interviewed believe that channels or resellers are a good way to get to SMBs. Often these channel partners will embed the collaboration product into their own industry focused solution and also provide specific consulting services to round out the package and increase the value to the SMB.

eProject like Citrix focuses on Google Ad words, and optimizing their site for keywords, as well as a strong PR presence to help drive thought leadership and brand recognition. They have also recently focused on bloggers and their user community by launching “eLounge” which is a public place on the web for customers and prospects to talk to each other about project management, collaboration, etc. There are forums for each topic area. In addition they have integrated RSS feeds into the product dashboard so they see feed results and have made this a part of their regular Internet strategy.

Software as a Service

All of the vendors of collaboration services we talked with for this article offer their software as a service (SaaS) so it is easy for an SMB to buy a small number of seats without having to have an IT staff or any new hardware. All they need is an internet connection.  This is also true of large enterprises, but in our experience the larger companies, after they have done a “proof of concept” want to take the software on a server back behind their firewall. In the case of SMBs this almost never happens, and they tend to stick with an SaaS longer. Many of the vendors we interviewed had SaaS of the vendors we interviewed also offer a browser-based service, making it familiar to anyone who has used a browser (almost everyone) and keeping the learning cycle short.

eProject, unlike some of the other vendors interviewed, feels that they have a horizontal solution, and they use various web techniques to go horizontal. For their sales force (all inside sales) they value vertical contextual experience and are hiring salespeople for the specific verticals they have targeted (financial services, professional services, software development, manufacturing, government and education). These verticals are no surprise, as they are often the verticals CS sites as most rapid to adopt collaborative solutions.

When asked what advice these vendors had for others interested in selling collaboration to SMBs, Mike Mansbach, VP Marketing at Citrix Online noted “Keep it simple and intuitive, make sure you are delivering the greatest value from a collaboration product with the least amount of functional noise and feature bloat that will be a distraction to most users.”  Andy Swarbrick, the CEO of PopG says ““Don’t expect success overnight, keep after it.” PogG has been in business since 2000. Christian Smith of eProject gives this advice to those marketing to SMBs: “Know your market, and look at how that market buys software, and then find the most cost efficient and scalable way to be in front of those people when and how they buy software.”

“Every SMB, school, government agency, and non-profit is desperate for new and better ways to collaborate with their internal and external team members,” said Miles Walsh, CEO of Green Array.  “Traditional software typically replaces existing working systems, which can be expensive and high risk.  The key to success in the SOA world is providing complete solutions that leverage existing people, processes and help put out burning fires in minutes, not months.”

The Bottom Line

After interviewing all of these vendors on their success in marketing collaboration to SMBs a few things seem clear:

• Simpler is better, and wider adoption and faster growth (with SMBs) is more likely with this product strategy
• A browser-based SaaS offers a good way for SMBs to get started with collaboration software, and often they will bring their value network onto the service as needed.
• Getting the message right seems to be critical and many of these vendors change their message often (monthly) and experiment with different lead acquisition strategies (ads, PR, print ads, trade shows, etc.)
• Focus, focus, focus: picking a target vertical or population and either through a channel partner (VAR) or directly sell into that niche rather then going after the horizontal market and running into the major collaboration players.

David Coleman is the Founder and Managing Director of Collaborative Strategies (CS) and the editor of the “Inside Collaboration” newsletter. He is the author of two books on groupware, and is the editor and writes the “Guru's Corner” column for this newsletter. He can be reached at davidc@collaborate.com or 415-282-9197.