Penetrating the SMB Market Requires Channel Partners

According to a report by the Yankee Group, a telecommunications and networking research firm, sales optimism and activity picked up in the small and midsize business channel in the last six months.

Despite this optimism, the SMB market dynamics are still challenging. The sales cycle remains long and “the channel must creatively and persuasively sell to customers with tight budgets.”

There are 5.9 Million small and mid-sized businesses (defined by the Yankee Group as having 2 to 2,500 employees) in the United States. Because the market is fragmented, it is cost prohibitive for many large telecomm and networking vendors and service providers to sell directly into SMBs. Instead, they must rely on local solution providers to sell into this market.

“Vendors depend on the channel more than ever to push new products into this market,” says Helen Chan, Yankee Group Small & Medium Business Strategies senior analyst. “Competition is always increasing, as even enterprise-focused vendors attempt to move downmarket. This inundates the channel with a confusing choice of vendors and products. Vendors must understand the needs of the channel in order to cultivate long-term, profitable relationships. By providing more than just the traditional product rebates and volume discounts, vendors can help channel partners transition to a services revenue model.”

Read the full press release.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.