What are service providers saying about the SOHO/Microbusiness/SME market?

Just how important is the SOHO/Microbusiness/SME segment for communication service providers’ revenue growth? In a recent webinar poll, 76 percent of service providers in North America and Western Europe said they foresee strong potential growth in this market. However, in the same webinar, only 8 percent stated that this is a cash cow today. Find out more about how they view the business opportunity, here.

Communication-SME

Last week I published a blog post called three ways to increase your SME business. The post explored how service providers can successfully position their offerings to capture the growth opportunities in the SOHO/Microbusiness/SME market. A key finding was that there’s a lot of money at stake for all parties, but is this market segment viewed as an opportunity by service providers today?

The ideas highlighted this previous blog post were presented in a webinar hosted by Ericsson and STL. Over 100 participants joined the live event, and the majority of them represented service providers in Western Europe and North America, working in various enterprise marketing roles. Throughout the webinar we invited the audience to answer some crucial questions about the SME opportunity. Here, we summarize the key results.

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Service provider attitudes to the SME market

In the middle of the webinar we asked the audience:

Which of the following best describes your organization’s attitude towards SOHOs and SMEs?

  1. Growing importance: forecasting fast future growth
  2. Tough segment: we tailor solutions but it’s hard to do profitably
  3. Little focus: we offer them consumer or corporate solutions
  4. Cash cow: we already focus here and can do little extra

The majority (42 percent) of participants voted for 1 - Growing Importance –and only 19 percent voted for “little focus”. Now, we have to remember that the question was about the organization’s attitude, which necessarily is not the same as behavior. The only alternative that actually showed a clear targeted offering was alternative 4 – which only had 8 percent of the votes.

 

STL report image

I drew two conclusions from these answers: one is that for 92 percent of the service providers who participated there’s still room for growth, and the other is that 81 percent think this is an important growth segment.

Also, if we compare the votes from the service providers with the votes from the others (various vendors, analysts and other companies) then we see that the order of the alternatives is the same – with “growing importance” coming in the top and “cash cow”. at the bottom. The major difference was that “growing Importance” was higher (58 percent) and “cash cow” was lower (0 percent).

So, we all seem to agree that there are very good growth opportunities in the SME/microbusiness market segment. The questions that remain are:

  • How big is that growth?
  • How can that growth be realized?

In our final question to the audience, we asked them how big they believed this opportunity is:

What impact could enriched communications and improved customer experience have on your SOHO/SME revenues?

  1. Greater than 20 percent increase
  2. Between 10 percent to 20 percent increase
  3. Between 5 percent to 10 percent increase
  4. No impact

Here, 76 percent of the service provider participants voted that it would increase in revenues. The most popular answer was 3 – Between 5 percent to 10 percent increase, followed by “greater than 20 percent increase” and “no impact” which both received 24 percent of the votes.  

 

STL report image

 

Want to try out our revenue calculator to learn about the Ericsson Communication Accelerator business case?

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How about the correlation between the two poll questions? All but one of the people that voted for “no impact” on the question on impact on SOHO/Micro/SME revenues also said that their organization’s attitude was that the sector was of “growing importance” and they forecasted fast growth in future.

Could it be that people believe in growth, but don’t believe the service provider they work for can capture that growth?

Most service providers I have worked with in the area of SOHOs/Microbusinesses/SMEs agree there will be growth in this sector, but recognize there’s a problem when it comes to reaching these enterprise customers. Most of these sales, apart from consumer packages, are made in the retail shops. How many SOHOs/Microbusinesses/SMEs are even aware of services other than voicemail exist for businesses? And how many of them are aware of how company packages can increase their sales, and their effectiveness?

 

A new business reality requires new ways of working

 Today, a new business reality is emerging. People are conducting business online more than ever before, and people and companies are increasingly aware of the changes needed that can occur quickly due to the changed habits, so total flexibility is key. The increasing number of online businesses is also heightening competition, while at the same time we see technologies like cloud communication, and business models like “as-a-service” being introduced.

In this new business landscape, service providers can no longer rely on sales in retail stores and basic company packages with lock in contracts. A new business reality requires new ways of working. The picture below shows what we believe will be necessary – but not enough.

 

new business reality

Before explaining why some of the sectors in the circle are green, let me touch upon what I mean by not enough.

The most difficult part, in my view, is sales. You need to make thousands and thousands of companies aware of how their business can improve with the right telecommunication and IT tools. A way forward is for service providers to develop easy to use revenue calculators, where the revenue calculator is developed with industry associations and lets the user (if consent is given) see their own performance.

Let me explain a bit more. Say that you target house painters in the country. You must work with the house painting organization to understand the problems they face and the opportunity this presents. You can then tailor the revenue calculator based on this, and again, work closely with the industry association to reach the individual companies.

For an individual company that access the revenue calculator, ask if they want to see their own data the last, for example, three months in terms of missed calls, customers not being called back, and customers being rejected although they lived very close to another job that you recently completed etc. This is all data that can be used to provide a customized insight into the business opportunity.

Then, with cloud communication, offer try and buy. With instant access, SOHOs/Microbusinesses/SMEs can start exploring value-add services today. Continue to measure the impact and at the end of the trial period inform the user about the outcome. And the best news is, all of this can be done by machines – not a single person needs to be involved.

So, lets come back to why some of the sectors are green. The reason is not just that they are super important, the reason is that this is where Ericsson Communication Accelerator can help unlock the SOHO/Microbusiness/SME opportunity.

 

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