Here’s a piece of advice that very few B2B software vendors of any sort ever follow:
Vendors: If you have been targeting Mid-Market customers – then stay where you are!
Ignore the siren song of the high-end Enterprise.
This advice is especially meaningful for B2B vendors for Web Content Management (WCM) and Web Engagement Management (WEM).
From my experience, many of the WCM / WEM / CMS vendors seem to do very little market intelligence research and analysis to understand what exactly they are selling and to which customers/markets. Most WCM/WEM/CMS vendors seem to be milling around with no clear indication of how each vendor aligns to clearly defined solution, customer and market segments within a go-to-market matrix. The main focus of most of these vendors is on feature sets, and not on delivering authentic solutions for specific industry scenarios and business problems. When any sort of Mid-Market B2B software vendor persists with very horizontal solutions, it is in danger of “disappearing”.
The mid to upper tiers of the Mid-Market provide a fertile market for B2B vendors who are themselves SMB or Mid-Market companies. For the mid to upper tiers of the Mid-Market, annual revenue runs from $250M to just under $1B. Vendors will do better if they segregate this range into two segments ($250M-$499M and $500M-$999M respectively). Within those two segments, vendors should then select and learn a lot about specific customers and various solution scenarios that matter to those customers.
I’m specifically calling out Mid-Market customers for WEM (rather than “classic SMB”), due to the higher cost of implementing digital marketing solutions based on WEM platforms, which are likely out of reach for classic SMB companies. Once a vendor is committed to targeting Mid-Market companies, the next phase is to very specifically target segments of customers for mid-market offerings.
Drifting into the High-End Enterprise Usually Ends Badly for Smaller Vendors
I’ve seen too many SMB / Mid-Market software vendors lured by potential big money and big deals in the high-end enterprise; after taking the plunge, very few of these vendors do well or even survive. It is near-to-impossible for smaller software vendors to compete against large vendors when providing high-end solutions. When trying to compete with the “big boys”, sales engagements frequently deteriorate into pricing wars that can destroy the well-being and income of the smaller vendor. After crossing over, the smaller vendor spends all the time on “me too” development for what the high-end vendors are already doing. The smaller vendor becomes snarled up in feature bloat that leads to the bastardization of its original offering. And worse, the smaller vendor ends up alienating its original target markets of mid-market companies and loses their business.
The high-end enterprise is a very tough place for smaller software vendors: there is a much smaller field of potential customers, fierce competition for those customers, plus larger software vendors already have established extensive relationships in these enterprises. Large enterprise customers are also harder to please, bring on longer sales cycles that include more chances to fail. Even when a smaller vendor wins an initial deal with a large enterprise company, it is usually displaced by a larger vendor very quickly.
Conversely, when targeting the Mid-Market, very few high-end vendors go very deep into this overall segment (and rarely into SMB). For the most part, large enterprise software vendors still don’t really know how to win Mid-Market business or provide the right-fit solutions. And it’s not just about price but about understanding how Mid-Market buys software solutions . On the other hand, a Mid-Market vendor already has decent affinity for some of the concerns of its potential Mid-Market customers, simply by reflecting on what matters to the vendor’s own success.
Vendor-performed Segmentation Is Essential to Build WEM/WCM Solutions for Mid-Market
Mid-Market (and SMB) customers are overwhelmed by the large number of CMS offerings of all kinds and are not well prepared to figure out which ones are appropriate for WEM or even just WCM. WEM vendors targeting the Mid-Market have to do a much better job of marketing and engaging specific segments.
Vendors must take action to properly position themselves in segmentation to differentiate their solutions form the mass of WCM/WEM offerings. They must put focused thought and time into identifying and understanding specific customer segments in the Mid-Market. Then vendors must undertake further understanding of what the vendor solutions need to provide the best support for target customers. Vendors need to be clear on what the solutions are not, to avoid “market sprawl”. It will make a huge difference if vendors put good time into a conscious and rigorous go-to-market strategy that is continually fine-tuned.
Take time to properly segment target customers and markets for solutions:
· Know the target customer size – usually based on revenue ranges
· Identify who should use your solution and why – what problem(s) does it address (be very specific) – stay far away from the massive horizontal pack of “CMS” offerings
· Research and select one or two industries you’d like to work with; then select a segment in the industry that is a good bet for WCM/WEM solutions
· Analyze and build out specific industry scenario solutions that really work – again focus on real target customers and real customer problems/needs
· Keep in touch with the customers who are using the scenario solutions: fine-tune, improve, evolve into other focused solutions
· Assess the success of the above to make decisions about new go-to-market strategies that will add growth to the company
· Truly support customers throughout the lifecycle of the customer experience
No Illusions – Price is #1 Criterion for Selling to Mid-Market
I’m just calling this out plain and simple: for most Mid-Market customers, price is the first requirement to be met by prospective vendors. Most Mid-Market companies have very clear parameters for what they are willing to spend on software. But the Mid-Market also wants value for price. When I say price, I mean the total cost of the end-to-end solution that will be up and running and working properly – so price includes money, time and people.
Many Mid-Market companies have small IT groups, so the following capabilities are essential: ease of implementation, low maintenance, ease of use for non-techies, good to great performance, delivery on vendor promises. When selling to Mid-Market companies, publish honest prices on your corporate website. Revealing pricing is a part of marketing to and engaging the customer-as-buyer when dealing with the mid-market. Remember: Mid-market companies have no time or patience for long sales cycles and complicated pricing schemes.
Strategy for Providing and Selling WEM to Mid-Market Companies: keep it simple
Vendors must take the time to research, analyze and understand what comprises a WEM solution for target mid-market companies. They have to take a look at the overall WEM capabilities of their solutions, and then reconcile which capabilities matter to their Mid-Market target segments. CMSWire has had a recent series on WEM solutions that is a good starting point to help vendors with mapping a solution to the needs and requirements of desired customers.
Where WEM is heading for the Mid-Market:
· Product/solution capabilities that meet Mid-Market requirements
· Capabilities that support marketing strategies of most Mid-Market companies
· Inclusion of social media capabilities and/or integrations with social media and Social CRM apps
· Monitoring trends related to desires/needs of target markets and specific industry scenarios (identifying what Mid-Market segments need, not what big enterprise companies need)
· But continue to monitor Enterprise trends to watch for trickle-down effects – this is where vendor smarts and market intelligence must come into play
Innovate With Real Solutions for Real Markets
Smaller vendors for Mid-Market WEM solutions are frequently more agile (carrying less legacy and expensive baggage) when it comes to pursuing innovation that will benefit target customers. These vendors are better positioned to move quickly to embrace future trends that define where solution markets are heading.
Vendor success comes from continuous innovation that makes sense for its Mid-Market customers:
· Engage in continuous market intelligence processes to monitor target markets / customers, and what they want for future success – many sources for this information
· Innovate specifically for Mid-Market target customers – perform excellent research/analysis to understand which are the best markets/customers/solution scenarios
· Conduct continuous conversations with current customers, and with companies wanted as new customers – embrace Social CRM practices for better conversations, listening
· Keep an eye on what the marketing teams of Mid-Market companies’ will need from WEM solutions
· Monitor enterprise-level trends for WEM to determine if the trends are meaningful for Mid-Market companies; also follow WEM trends for consumer marketing for new ideas – but choose wisely for real market strengths
· Don’t follow in the footsteps of big WEM solutions just to land where they are now
o Jump ahead to new trends that make sense for target Mid-Market segments
o Pick innovation that is right for target customers and for the vendor: real differentiation will result
Jeremiah Owyang on Future of the Corporate Website
Recently at the Gilbane Conference 2010 in San Francisco, and on his blog, Jeremiah Owyang has set out some compelling predictions for the evolution of company websites and the potential new world of distributed web presence. He sees social sites driving far more customer connections and brand awareness than the traditional corporate website of past years. This is the sort of innovative thinking that vendors for Mid-Market WEM/WCM solutions should be monitoring.
A couple of Jeremiah’s slides from Gilbane Conference 2010 San Francisco:
Related Posts: About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side to customer-centric work in solutions consulting, sales and marketing. Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services Disclosure: From time to time, I contribute articles to CMSWire.
About the author: Julie Hunt is an accomplished market intelligence analyst, providing strategic market and competitive insights for the software industry. Her 20+ years as a software professional range from the very technical side to customer-centric work in solutions consulting, sales and marketing. Julie shares her takes on the software industry via her blog Highly Competitive and on Twitter: @juliebhunt For more information: Julie Hunt Consulting – Market & Competitive Intelligence Services
Disclosure: From time to time, I contribute articles to CMSWire.