Anatomy of a Digital SME

Selling effectively into the long-neglected SME market requires operators to understand what makes small businesses tick and the ways in which many have evolved in the digital era — and to gear their proposition to that market accordingly.

Whatever the precise definition of a small to medium-sized enterprise (and opinions vary) most people will visualize an SME as a company of a few dozen to a few hundred employees that is not yet operating at a national or multinational scale. Its needs, however, are not so very different from larger enterprises. Like those large organizations, SMEs often have extensive support requirements, not least in IT and communications to keep its premises, assets and employees connected.

Where SMEs differ is largely in the budget they can call upon and the influence they have over vendors. Put simply, SMEs usually have less to spend with their suppliers, and therefore less influence in terms of price negotiation and deliverability. The large enterprise can demand a bespoke solution and drive a hard bargain in terms of price, while the SME is more likely to be buying ‘off the peg.’ However, SMEs may be even more attuned to value and competitive offers.

SMEs also typically have fewer IT skills and less appetite for hands-on management of IT solutions and platforms. They simply want things to work — but also to be sufficiently configurable that they can be shaped to their own business needs.

As businesses, however, SMEs ‘anatomical elements’ — the structure that supports and sustains them — can be remarkably similar to large enterprises. SMEs need to manage their customers, fulfill customer orders and fully monetize the propositions they bring to market. They need to do this in ways that are commercially effective, operationally efficient and give their customers the best possible experience.

• Managing customers means ensuring that customers feel fully supported and are given experiences that will engender loyalty and maximize lifetime spend. This area of the business has changed more radically than any other over recent years, offering the greatest scope for both reducing costs and improving the customer experience. Customers were once exclusively handled through a physical interaction — in a store or office, in the customer’s home or premises, perhaps through a physical call center — placing heavy demands on human resources (real people). Now, for many businesses, those physical elements have gradually dissolved, replaced by online channels that increasingly apply degrees of AI to interpret customer requirements and provide a  response. Physical interfaces  are being replaced by virtual, allowing much lower operational cost per transaction and, for most customers in most instances, much greater convenience.
• Managing orders and fulfillment means ensuring that customer orders and requests are fulfilled quickly and accurately, further reducing pressure on customer support. Order handling has been transformed. The rising generation of consumers has rarely seen a physical order document and wouldn’t recognize the multi-part order form that once accompanied a utility order. For many SMEs, the order process is largely virtual and automated, with human intervention provided by the customer to trigger, configure and verify the order.
• Managing money means pricing in a way that is competitive and meaningful to the customer, then charging and billing precisely and transparently so that customers understand what they are paying for and the status of their accounts and balances.

When it comes to payments, for businesses of all sizes, cash has largely disappeared. Electronic payments are ever-faster and increasingly contactless. Even street vendors prefer secure, trackable, reportable digital payments. How these anatomical elements perform and interact, and how fit they are for purpose, is critical to the efficiency and competitiveness of an SME. But how have they changed as the SME has moved from analog to digital?

The Digital Makeover

It’s no exaggeration to say that the anatomy of the SME has had a digital makeover. From flabby, inert and cumbersome to lean, agile, responsive and consuming fewer resources, the anatomy of competitive SME is ‘ring ready’. Importantly, this is the scenario that the telco has to play into.

The SME that has a substantially virtual relationship with its customers expects the same from its suppliers. It wants to understand:

• Can I order online, pay online and track my status in real time — just as my customers do? Can I do this and receive offers and services that are geared to me as a small business, not me as a consumer?
• Am I dealing with a supplier that understands that my needs are likely to encompass multiple users, perhaps several premises, a need for unified communications across several communications channels, and a need to meet pressing SLAs which, if missed, could result in significant penalties — and designs its offers to me accordingly?

Selling to SMEs means selling to customers that have considerably toughened up and slimmed down over recent years and have adapted their own technology and processes to meet the expectations of their customers and maximize their tight operational margins. Many are working in highly competitive spaces and have a keen understanding of what their customers need. They will choose suppliers that are similarly attuned and are willing to look beyond conventional suppliers to find a better and more competitive experience.

Stepping Up to Meet the SME

Many telcos have indeed taken steps to improve their digital engagement capability — often in ways that have proven commercially effective and operationally efficient. For the most part, this has happened in the consumer space, where many telcos have developed a strong relationship with consumers through brands and platforms dedicated to market segments perceived as digitally-receptive (i.e. younger consumers).

Now, however, the time has come to carry that experience into the long-neglected SME space. Simply making consumer offers to SMEs isn’t good enough, and the bespoke approach that often works for larger enterprises isn’t commercially viable for smaller businesses. Telcos must shape propositions to SMEs that are likely to include multi-network (fixed and mobile) access, higher-value premium services and cloud-based IT options, are easily adaptable to multiple users and locations and so on — and deliver it in a way that is both agile and digitally accessible by SME customers to maximize the experience and value and minimize the operational cost.

The digital SME is lean, mean and demanding of its suppliers — but it is likely to spend more with those that meet its exacting requirements. Can telcos step up, before they lose this market to hyperscale competitors?

Read more on the consumerization of SME customers