More on Segmenting the Small Business Market

Joe Wilcox, a Jupiter Research analyst, offers an interesting piece on his weblog about segmenting the small business market – it’s well worth reading.  He says:

“In talking to vendors trying to sell goods or services to small businesses, I see two common tactical mistakes: Segmentation, if any, is by number of employees, or sales approaches are similar, if not the same, as [for] enterprises. Both approaches ignore the great diversity of SMBs and the marketing complexity reaching them. “

He also points out that one of the most overlooked segments are small businesses that have no employees, i.e., no payroll. 

He says 70% of businesses have no payroll. 

The SBA figures suggest that in 2001 there were 17 million small businesses with no payroll.  That’s a large number, to be sure.

Keep in mind that these small no-payroll businesses operate as a hybrid between consumer and business. 

Their business needs are very real.  For instance, they will be very interested in features and benefits that are presented as business-oriented. 

However, the way you reach them is not like reaching a traditional business.  It is more like reaching a consumer.  For instance, these no-payroll businesses frequently work out of their homes.  The Internet is usually going to be a key channel to reach them. 

I might add that word-of-mouth recommendations are another way that the no-payroll business makes purchase decisions.  These microbusinesses simply ask someone they know whose opinions they respect.