Farming Beats HuntingBy Michael Vizard | Posted 2006-07-25 Email Print
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Opinion: Solution providers and vendors would be wise to sow some customer accounts with really small businesses early on, rather than hunting those that reach the 50-employee mark.
One of the central tenets of the book "Guns, Germs and Steel" by Jared Diamond is that societies that develop farming will eventually develop an economy that will overwhelm societies based on hunting and gathering.
That may not be all that insightful, but when the same economic theories are applied to the channel, an interesting parallel emerges. Vendors, and to a certain degree their allied solution providers, are forever going on about the need to create demand among SMB (small and midsize business) customers. The problem with this obsession is it presupposes that all these businesses are virgin territory where IT salespeople can hunt game at will.
Of course, the reality is that all of these SMB accounts actually already have a predisposition to IT because the vast majority of them grew out of being 5- to 25-employee shops that are below the radar screen of most IT companies hunting big game in the SMB space.
But rather than being completely uncharted territory, these companies typically already have some level of IT infrastructure in place. Usually that means they have some experience with PCs, perhaps a few servers, and any number of applications and services on the Web.
For example, it's not uncommon to find these sites using Quicken or Peachtree accounting software alongside spreadsheets and Outlook, but most vendors and solution providers will turn up their nose at the business because there usually isn't enough margin in the products sold to those types of customers.
And yet a few years down the road, it's these very same customers that solution providers are crawling over each other to get to when they reach the 50-employee or more level. So the question that comes to mind is: Wouldn't a lot of solution providers be a lot better off over the long haul if they took the time to farm some customer accounts by working with really small businesses earlier on? If they did this, then they would have the inside track on servicing that business as their IT needs grow.
Naturally, not all small businesses are going to grow into viable SMB customers. But just like farmers that plant enough crop to make up for any failures, solution providers need to develop a strong enough farm system to drive next generation streams of revenue.
A lot of solution providers, and vendors for that matter, will say they don't have the time and resources to develop an effective farm system. But over the long haul, it's the societies that develop effective farm systems that ultimately overwhelm their hunter-gatherer neighbors.