In my first article for my BeyeNETWORK expert channel, I’m going to address marketing technology that is available to small and medium-sized businesses and what makes this marketplace and its technology different from their larger counterparts. As there is no official definition for small and medium-sized businesses, for the purposes of this article, we’ll refer to the small market as those companies under $100 million revenue and the middle market as those companies with $100 million to $750 million in revenue. Keep in mind, the majority of those businesses under $100 million are businesses with less than 35 people, making this market extremely interesting. Current statistics on the small business marketplace include:

• There is no consensus on how many small businesses there are in the U.S. There could be anywhere from 11 million (D&B) to 20 million (IRS) to 27 million (Small Business Administration) small businesses.
  
  
• Small business startups continue to increase in number every year.
  
  
• Small businesses supply approximately 50% of all employees in the private sector.
  
  
• Small businesses account for 98% of all businesses.
  
  
• Small businesses create anywhere from 60% to 80% of all new jobs.

With this type of market presence, you would think it would be a prime target for software companies. And it is; but like any market segment, the small business marketplace poses huge challenges for software companies to overcome. Some of these challenges include:

Smaller IT departments. Smaller organizations focus their technology resources on mission-critical systems like finance, inventory and order entry. Supporting a marketing system may not be in scope.

Massively disparate systems. Especially with small businesses, you may not find monolithic ERP or CRM systems that consolidate customer information. Small businesses typically have a variety of hosted, outsourced, in-house and manual processes that make up their data infrastructure.

Resource-constrained business organizations. Every organization is resource constrained; but, in some cases, small businesses may not even have a marketing department. As these organizations are most likely focused on operations, investing in marketing (beyond events and advertising) may be a luxury they can’t afford. Other organizations may be completely sales focused. Marketing’s role may be to solely support the sales function with collateral or possibly some inside sales calls.

Little or no dedicated resources. In very small businesses, the owner or partners may be in charge of marketing (along with the multiple other roles they are playing).

Huge number of potential customers. The sheer volume of small businesses makes it so that the software needs to be not only bulletproof, but also completely turnkey with a limited amount of services, configuration and customization required.

Small budgets. All organizations are cost conscious and cash conscious, but small businesses bring strict adherence to budgets to a new level.

Consequently, in order to play in this marketplace, software organizations need to offer the following:

• A flexible implementation model that can be hosted or on premises.
  
  
• Quick installation, configuration and customization.
  
  
• A method to combat the disparate information architecture.
  
  
• Low overhead of ongoing maintenance and support as well as a short learning curve.
  
  
• Pre-canned templates for horizontal and vertical offerings that help organizations accelerate value for their specific business model.
  
  
• A pricing model that works for companies under $100 million dollars that may have hundreds of thousands of customers.

Few companies have been able to master all of the aforementioned requirements, though many are trying. Siebel has probably developed six different middle market strategies over the last decade, but none have really taken off. Companies that are pursuing either small or medium businesses (or both) in earnest include the following:

Unica, the current enterprise market leader, unveiled their middle market program in 2008 with price points and subscription model that make sense for this customer segment. Unica has carefully identified implementation partners who supply vertical expertise and bundled service offerings. Unica’s primary focus for this segment is the middle market, as they don’t have an offering for small businesses under 50 employees.

Alterian has been a cost-effective offering for marketing service providers and outsourcers for years and unveiled their customer direct sales offering to the middle market this year. Alterian has an easy-to-use, intuitive interface for marketers and is building out their product and service offerings for verticals.

VerticalResponse truly focuses on small businesses and has an email marketing application used by more than 45,000 small businesses. To really show their understanding of the marketplace, users can create their emails using Microsoft Word. VerticalResponse provides templates for verticals like restaurants, wineries or realtors, as well as for typical campaigns like holidays or purchase follow-up.

Deluxe provides full service marketing capabilities to small businesses including web hosting, email marketing, search engine marketing, promotional products, logo design and apparel. Deluxe has in-depth understanding and access to the small business marketplace through its financial services products.

Genalytics provides on-demand profiling and prospect lists to organizations of all sizes. With the ability to turn around profiling and look-alike models in as little as 24 hours, users can upload their customer database and Genalytics will match their customers to demographics, create a model, and recommend a prospect list. Genalytics has special processing for business-to-business models as well as flags for consumers who may be in the market for things like heating and air-conditioning services.

It is safe to say that the small and medium-sized business marketplace is still an opportunity for software vendors. Organizations like Unica and Alterian offer power and functionality but fight perceptions of complexity, implementation time and high cost of ownership. What a multibillion dollar organization might call reasonable long-term costs might be outrageous for small businesses. Companies like VerticalResponse have mastered ease of use and, in some ways, have embedded consulting within the product with powerful templates. However, what software companies need to keep in mind is that just because a company is small does not mean it isn’t complex or does not wish to perform complex marketing. These types of software providers fight perceptions that their systems may not scale with increased marketing sophistication.

Many other software companies, especially in the email marketing category, also target the small and medium business marketplace. The good news is that clients have a decent amount of choice, but it is hard to understand the differences between their choices. Winners in this area will have to be able to provide packaged solutions for marketing organizations, quick implementation times, cost-effective pricing models, and the ability to scale in complexity as their clients’ businesses and marketing departments grow.

Recent articles by Larry Goldman

• Sales and Marketing: Web 2.0 New York
• Sales and Marketing: Feeling Frugal
• Sales and Marketing Trends in Social Media, Engagement, Enterprise Marketing Management and Business Intelligence
• Sales and Marketing: New Face of Web Analytics