RTM: I guess the principal problem with SMBs is how to segment them.

RW: Yes.  Not only are they not an amorphous group, but they don’t congregate in one place or read a particular magazine or newspaper either.  So they are even less homogeneous and less easy to target than consumer groups, so reaching them is a matter of mass marketing. 

RTM: There is always direct marketing.

RW: Yes, but the lists simply don’t exist to enable companies to accurately target different segments of the market – unless you are looking at industry verticals.

RTM: So how do you segment SMBs?

RW: I think you have to do so by their buying behaviour as well as by their demographics.  Broadly speaking, the smaller the SMB, the less time it has, and the more it will behave like a consumer.  The bigger it is, the more rational its decision-making will become, or at least try to become.  But most SMBs are grouped round the bottom of the scale.  You can define SMBs as employing anywhere from one to 50 people.  But the vast majority will be self-employed sole traders or employers of one to three people.

For a mobile-phone company I segmented SMBs into eight groups by size and buying behaviour.  Basically, at the bottom you have the self-employed individual who behaves just like a consumer, and simply hasn’t got the time or inclination to seek out the best price or technology.  And then you go up from there with different people taking the decision at different sizes.

“It’s good enough for the governor, so let’s just add a few more phones.”

So you have companies that delegate decisions to employees who are felt to be knowledgeable.  "Oh, he has worked for an IT company, so he can specify the database."  Eventually, and this is probably on rung five or six, they bring in financial controllers who start basing decisions on financial grounds.  Later on, decisions are based on advice from technical experts and professional buyers.

RTM: So what kinds of messages are going to appeal to these groups?

RW: Well you don’t want to portray them as besuited business folk who are trying to build the next IBM…