Best Practices & Lessons Learned

Sales Readiness (incl. success, support, & services)

• Have clear segmentation on which accounts are SMB. Have a clear plan to transition accounts to SMB AEs; otherwise, existing account owners will fight tooth and nail to hold the best accounts.
• Do not leverage your existing ENT focused team (SDRs, AEs, sales engineers, marketing) to sell ‘part-time’ to SMB; that is a recipe for failure Instead, spin up a dedicated team with enough critical mass to succeed.
  • Average and high-performing ENT reps will not want to be ‘demoted’ to SMB so cannot be moved.
  • Don’t ‘save’ low-performing reps by giving them a 2nd chance in SMB. They should be exited gracefully.
  • Strong SDRs are your first and best talent pipeline for SMB.
  • If you don’t have SDRs to promote, hire from the outside. This significantly increases risk and must be done with extreme care. Big company reps tend to not adjust well to the scrappiness needed to stand up a new segment. Instead, target hunter AEs who have sold similar solutions to similar companies at similar price points.
• The first line sales manager of the SMB team is perhaps the hardest to fill. Ideally, this should be an enterprise rep who is read to lead and who has (strong) prior experience with SMB sales. If you must hire from the outside, as with hiring outside AEs, you want someone who has led teams selling similar solutions to similar companies at similar price points. This person must be very disciplined in defining the sales process and inspecting deals to hold reps accountable. They will very likely act as a player/coach.
• You’ll need separate, more economical customer success and implementation; you may do so directly or via channel partners
• Since they do not have significant internal tech support teams, SMB customers are typically more costly to serve on a per-user basis. As such, invest heavily in self-service (or community-based support forums), operational excellence for support, and product robustness. A lower service level does not mean poor service.
• Design contracts that require limited/no redlining since legal involvement extends the sales cycle and eats margin. In fact, you should have a ‘no redlining for any deal under $x” rule.
• Expect (but don’t immediately accept) higher churn in SMB compared to ENT
• Increase the focus on pipeline generation and up-front deal qualification as you’ll likely reduce the energy spent on deal reviews in order to increase velocity

Marketing Readiness (incl. demand generation)

• Refine/narrow your ICP – geo, industry, specific size range, technographics, etc.
• Your branding is both a blessing and curse. The market likely views your solution as premium but complex. This presents two challenges.
  
  First, prospects will view your solution as not for them; small businesses won’t buy Oracle Database 23ai.
  
  Second, you risk cheapening your brand in the eyes of Enterprise buyers by selling to SMB. In B2C, moving down-market is often a one-way journey. However, there are successful sub-brand examples (Tesla Model 3 or Apple iPhone XR) and new brand examples (Gap’s creation of Old Navy; Oracle’s acquisition of NetSuite).
  
• SMB demand generation motions will almost certainly need to be different for a company’s familiar, yet costly, ENT motion. Cold outbound from SDRs and/or AEs will be too costly for ACVs below ~$40K. Instead, the SMB sales must be driven by inbound (paid or organic), PLG, resellers, etc.
• Create distinct content assets that appeal to SMB customers and feature case studies and testimonials from SMB customers

Product & Engineering Readiness (incl. pricing & packaging)

• Start with a sprint to assess product market fit (PMF) and the competitive landscape in SMB. This will help identify many key gaps and tighten up your messaging.
• Expect that your product will need to evolve to serve SMB so ensure you have carved out product management and engineering capacity in advance. Some key considerations:
  • Ease of implementation/administration
  • Ease of use; great UI/UX
• Simplify your pricing and packaging. Assuming SMB pricing is transparent, think through the repercussions to your ENT business. The SMB solution should not be ‘good enough’ that ENT customers could downgrade and get by. In addition, the pricing on SMB should be unattractive at large volume (of users or usage) for ENT customers.
• You may need more flexible pricing options such as month-to-month as well as the ability to accept payment via credit card
• Develop integration capabilities with popular SMB tools and platforms

General Readiness (other functions)

• Expect the move down-market to easily take up to 2 years to get right. Fund fully (or don’t do it) and be patient.
• There is a risk of the SMB team feeling ‘less than’ which would get in the way of success. Ensure this team feels value, especially via intrinsic motivation (ex: public recognition of the team and individuals by top leadership).
• Streamline billing and invoicing
• Good HBR article: Should You Take Your Brand to Where the Action Is?