How Do You Sell to SMB?

When you are selling products and services, you are willing to pay for the cost of your sales activity with a fraction of the gross margin you are making from the sale.

It is important to keep in mind that smaller businesses need smaller solutions and lower invoices than bigger enterprises. Let’s say you are selling a software product over the phone for $50. The gross margin to be made is $25. Even if the sales transaction costs $20, you are turning a $5 profit.

If you are selling a subscription service, such as access to a cloud based SaaS platform, then you should calculate a lifetime-value for the acquired customer, since it would make sense to assume that most of customers will stay on, and there would not be another sales acquisition cost at the time of renewal.

Let’s say 80% stay the second year, 20% the third year and none beyond three years. The expected revenue from one customer becomes $100 (assuming the interest rate is zero just to make this calculation simple). In this case, you can expect to bring in $50 gross margin and increase your sales acquisition cost to $45. Don’t forget; you will have to fund this acquisition until future revenues come in. There are very important cash flow implications and interest calculations involved that are beyond the scope of this simple post.

Since in most markets, closing a sale in person will cost you more than $45, you will have to use alternative channels of communication to close the sale from a distance; such as phone, e-mail, web, chat and etc.

So how would you execute your omni-channel sales activity:

1-Collect a list of companies, their contact phone numbers and mail addresses. Please note that this is public information in many markets, you just need to find where to get it. Check local laws and regulations and also keep in mind that you might have to collect opt-in or opt-out permissions.

2-Filter and segment the list with the information you have. Exclude the ones you should not be targeting based on your strategy.

3-Prepare a questionnaire of relevant information that will help you in the future to profile the companies and segment based on factors such as size, type and industry. You will use this information for efficient targeting of products and services.

4-Contact them one by one; go through your questionnaire and generate leads on the spot when possible. If there are no opportunities, enter the information into a database.

5-Go back to the same list every few months (TBD based on your sales strategy) on varying channels (phone, e-mail and etc.) and assess needs, position products and services, and generate leads.

Remember to track and follow up on your leads on a capable CRM and sales automation system, since you don’t bring in any revenue until you close the sale. Nowadays, SaaS platforms such as Salesforce.com are easy to set up, and provide great flexibility according to your needs.