The small business sector is rife with revenue opportunities for service providers, but marketing to this crowd is a delicate business

It's not surprising that, for all their diversity and scope, small businesses are being presented as a collective gold mine of opportunity for carriers. According to those seeking to penetrate the business market, small businesses represent an under-served segment worth billions of dollars. Although estimates on the number of small businesses range from 6 million to 40 million, it's clear that many small businesses will need additional and advanced telecommunication services if they are to remain competitive.

The challenge, as it has always been, is how to cost-effectively reach and serve large numbers of those small businesses.

To increase the probability of success, marketing must become a competitive advantage for service providers. There are no quick ways to capture the small business marketplace. Small businesses are pressed for time, very cautious when it comes to spending money and weary of making decisions that can have big consequences.

Pouring enormous amounts of money into mass-marketing activities will have little effect on capturing the mind share of small businesses. Rather, telcos that are prepared to build and nurture relationships over a period of time will find success. Potential customers need to have easily accessible and seamless interaction with service providers' solutions. Telcos also need this interaction to continuously know what their customers are thinking.

A true top-to-bottom service provider requires a commitment to human capital as well as technological proficiency. Only those companies with thoroughly engaged marketing plans can determine how to most appropriately use resources, overcome limitations and generate a positive return. It's not easy, but it can be done.

Earning the small business vote

In building a marketing engagement plan, it's helpful to compare telecom to today's presidential campaigns. Candidates must follow a grueling schedule, be capable of relating to diverse interest groups and be prepared for the unexpected. At the same time, they must keep cool and hold true to core values and principles. Candidates must demonstrate their competencies, whether flipping pancakes or speaking in front of a large rally.

A successful candidate uses every possible vehicle to engage the voter. Candidates deploy surrogates, whether family members or friends, to pound the pavement for them. A dedicated network of people that run the gamut from party leaders to neighborhood organizers volunteer to take on unglamorous but important tasks. In addition, a campaign Web site engages people with details about the candidate. The site also includes a host of options on how voters can get involved in the campaign effort.

As former Speaker of the House Tip O'Neil once said, "All politics is local." Likewise, it can be said that when marketing to small businesses, "All marketing is local." Marketing means rolling up your sleeves and engaging a host of resources just like a political campaign to reach ambitious goals. It takes a total commitment (Figure 1).

To begin engagement marketing, it's essential to understand the methodology behind small business statistics because the market is interpreted in varying ways by research organizations and government agencies. The size of the small business market can be expressed as the number of businesses and/or as total number of employees. Some market calculations include home offices and telecommuters. The Small Business Administration classifies small businesses as having up to 100 employees. If the SBA's methodology is used, almost all businesses in the U.S. would be classified as a small business. In other cases, small businesses are defined as having anywhere from 1 to 500 people. They also are often classified within certain revenue parameters.

Segmentation is a marketing necessity because the small business market is not homogenous. Segmentation not only provides direction, but it also helps focus marketing activities (Figure 2).

For instance, specific vertical markets can be identified by using standard industrial codes, which are established by the government to classify all businesses. Providers should plan to create affiliate programs with representative organizations such as trade associations or chambers of commerce. Such organizations are increasingly looking to provide value-added services for their members while generating additional revenue for themselves. Therefore, this sector can be a valuable and receptive source of market research.

Along with traditional segmentation methods, there are other worthwhile ways to identify market clusters. For example, technology, such as accounting and financial offerings or Web services, is shaping many new businesses. These companies are receptive to marketing campaigns that present the value of new telecom services. Likewise, young start-up companies represent another technologically friendly group.

In developing segmentation strategies, telcos should consider general industry/business characteristics that catalyze small businesses to change. For instance, how do businesses with immediate competitive threats benefit from telecommunication services? It might be appropriate to segment businesses that depend on or need to upgrade their customer service and businesses that need to project a larger presence.

Service providers should consider general economic trends and their impact on small business. With the tight labor shortage, small businesses need to use their employees more efficiently. What telecom services can successfully address this need?

It's not always about the technology

Just because new technology makes innovative products and services available, expecting these "breakthroughs" to be immediately embraced by significant numbers of small businesses goes against market history. Small businesses are focused on their daily concerns. They are not keeping abreast of telecom standards, protocols and technologies. Ironically, the service provider's focus on technology will make services harder to market. With a constant bombardment of information, small businesses can become overwhelmed.

Given the rapidly changing nature of technology driving an influx of new telecom services, the service provider can strategically engage small businesses by positioning itself as a knowledgeable resource. The provider must demonstrate dependability and objectivity to make sense out of the confusio n.

Accordingly, providers must not overestimate their technological sophistication. For instance, according to Dun & Bradstreet, only 65% of small businesses use fax machines. Also, many small businesses share the fax machine line with a voice or data line. A majority of small businesses with less than 10 employees don't have phone systems or know what a PBX or Centrex system is.

Because telecom providers are so immersed in technology, it's easy assume that small businesses will be taken with impressive feature sets. But this leads many service providers to underestimate the importance of basic marketing principles such as product, price, promotion and place. Talking about terms such as frame relay or asymmetrical DSL and assuming the benefits are obvious is not the proper way to engage the average small business. Small businesses prefer simple, straightforward messages that immediately mean something. When Oracle went to market its NetLedger Software, it didn't use terms such as "subscription service" or "outsourcing." Instead, Oracle called it "online accounting" or "anytime, anywhere accounting software."

Service offerings must be presented in real case studies on how other small businesses are benefiting from similar services. As part of the story, service providers should address what initial concerns were expressed and how they were managed. They should be able to present references. Better yet, providers should encourage prospective customers to talk to or visit with current customers. The key is to engage prospective customers as if they already were highly valued customers.

Working to fulfill the needs of small businesses requires exceptional listening, patience and persistence. If, after an interactive needs assessment, a service provider is unable to realistically meet the requirements of a small business, the provider should be prepared to direct it to more appropriate resources. From this position, the provider is likely to receive the residual benefits through word-of-mouth recommendations.

Online, offline

Many companies proclaim the Internet now makes it possible to rapidly and cost-efficiently reach and serve small businesses. For this goal to be realized, however, the hype of the Internet's power has to be put in perspective. Web properties are too often electronic representations of physical counterparts - a brochure or spec sheet, for example. Once on the Web site, the potential customer is not prompted about their needs. In other cases, when information is collected, there is no established processes of further engaging the prospect with newsletters or more direct follow-up.

The rapid growth of online small business-related partnerships is causing much noise. However, because telcos are too often in a rush to form relationships, specialized content is never developed. Unfortunately, static general information is simply placed on a partner's site with the hope that this is the right type of visibility to produce a wave of results. But on the Web, attention spans are limited. There are myriad choices, and it just takes a simple click to move on. Thus, there is an exciting opportunity for companies that can devote resources to carefully delineate how online partnerships can become part of the marketing engagement process.

To learn even more about small businesses, it might be worthwhile to consider targeting business even before they formally start. According to a study by Babson College and the Kauffman Center for Entrepreneurial Leadership, approximately eight out of every 100 Americans currently are trying to start a business. Among this group are many employed by large corporations who realize the productivity benefits of technology first-hand.

One thing is certain: Small businesses want to use their size as an advantage to show their close relationships with customers. In tandem, they also want to present themselves as having the necessary capabilities to perform like a larger enterprise.

However, service providers that say small businesses can be like big companies with the right telecom services are sending a mixed message. A more receptive marketing tactic would define the competitive benefit the large companies achieved and how this same possibility is now legitimately available for smaller businesses. While small businesses want services that others have found beneficial, they must feel that they are getting a customized solution.

Engaging the customer

With so many telecommunications choices, a wise engagement plan would focus on making small businesses comfortable and empowering them with a few services backed by iron-clad guarantees. At the same time, the service provider should give them the assurances that they will be able to keep up with the business' evolving needs. Engagement marketing follow-up activities include user satisfaction surveys, customized information and various creative means such as special seminars to forge relationships.

Potential customers also will have an easier time making decisions if they can be shown corresponding connections between the services and the potential benefits. The provider should establish ways to measure the positive effect that telecom services can have on small businesses.

In other cases, service offerings might be more easily embraced if there were an accompanying physical product; people tend to relate better with something they can see and touch. For instance, software customer service is now embedded in a physical form through a packaged card at computer stores. You typically don't think of buying customer support until there's a problem. But now a physical, pre-paid product can not only remind one of the service - it is the service.

In educating small businesses, instead of trying to build another learning curve, service providers can use existing product or service knowledge to convey the virtues of new services. For example, marketing unified messaging services might be an easier sell when providers focus on a particular wireless user profile. Providers also should consider positioning messages that bring more of a consumer orientation to small business marketing.

With the imperative to engage the customer in many physical and virtual places, coupled with the high cost of getting attention and the sheer diversity of small businesses, forming partnerships is a natural solution. Partners can serve many roles, from referring new business to handling on-site installations if needed. Plus, small businesses need ancillary services to handle issues such as training and financing when more complex service offerings are involved. For this comprehensive customer engagement effort, a variety of channels with identified core competencies need to be explored and designed to work in conjunction with each other.

It also must be kept in mind that small businesses prefer to buy from other small businesses because they find that there's a higher degree of accountability and responsiveness. Thus, critical components of a partnership program must involve value-added resellers, systems integrators, technology consultants and anybody that influences small business decision-making. The same personal attention that is needed for end-user engagements also is required with all partners.

Service providers and small businesses have high expectations for each other. In an environment of constant change, it's time that marketing provides a framework of stability. The genuine needs of small businesses can't be predetermined by the possibilities of technology - only by the feedback that comes from relationships that are engaged in constant communication.