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How does small business buying differ than how large companies buy?
A colleague of mine posted an article in our community research section (http://www.focus.com/ugr/research/marketing/white-paper-understanding-smb-buyers-recession/) explaining how small businesses go about buying compared to large companies. Sounds like small business act a lot like consumers (compared to Fortune 500 companies). I think a lot of this rings true. I'll also say that I've been in some SMBs that tried to act like they had Fortune 500 company resources and timelines to make a decision. This can be painful and frustrating when the name of the game for most SMBs is quick, agile, etc. On the other hand, SMBs can't make as many wrong purchase decisions as larger companies. Read the article and let me know what you think.
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2 Answers
As someone who talks to hundreds of buyers representing companies of all sizes, I often find that when differentiating between Small vs. Large business decision-making, what it boils down to is accountability; as in what small business have to be accountable for versus what large businesses have to be accountable for. Naturally, enterprise companies generally just have more components to account for when it comes to a shift in the status quo, like changing the company infrastructure. Smaller businesses have fewer components to account for, but are usually much more behind on product awareness: here, accountability becomes synonymous with due diligence.
For one thing, larger businesses have to account for more heads, both to convince and to accommodate, or if nothing else- to train. Large businesses are often migrating from already established ('off the shelf') software systems, and while they may have more of an idea of what type of solution they're looking for, they are usually seeking more specific functionality (i.e industry specific features, or system consolidations, or certain types of automation, etc). Often, they have been burned in the past with lengthy or costly implementations, or poor customer service, and are simply more wary of all the ways rushing into a decision can come back and bite you. Moreover, they usually have more integration requirements to account for, or if not more, they are at least aware of the existing requirements. Budgets, while perhaps larger than smaller companies,’ are a matter of convincing the right people it will be beneficial for the company, so budgetary concerns often reflect a more ‘make the right decision the FIRST time, so we don’t have to do this again in a year’ type of caution.
On the contrary, Smaller businesses are working with less resources, not only lower budgets but sometimes less (or no) IT staff expertise, less time to spare, etc. Often, many small business buyers are new to the purchase, even new to the idea. As first timers, they are more focused with wrapping their heads around the concept, the benefit, or the trends of the product, to confirm it's right for the business in the first place. User adoption is emphasized in both small and large businesses, but oftentimes only a few people will be using the systems in an SMB context, while the learning curve has to accommodate many more with enterprise companies. Although smaller companies may have less business components to account for, they do have to educate themselves. In fact, one of the biggest trends in many markets right now is this idea of Social Networking, and more access to a diverse and apparently objective array of online resources. Particularly for the first time small business buyer, asking lots of questions, doing lots of research, and synthesizing a real context for implementing a new [software system for example] is critical to making a considered purchase.
This plays into a greater trend in the market, in which buyers (of all sizes) are using online resources as much as offline, and shifting the inherent role and timing of the vendor. The paradigm has shifted, but the diversity of buyers has not; each company is different and has different pain points, requirements, and monetary budgets and expectations. All of these, and many more factors, play into buying decisions. But, the greater point to make here is that while both Small and Large businesses have to be highly accountable while making business decisions, what they have to be accountable FOR is where the nuances and disparities in buying behavior (as well as preferred research information, presentation of product offerings, perception of timeframe, etc) come in.
Most small business owners buy on price alone and don't consider the time it takes to learn how to do it themselves or the other variables you've mentioned.
For my smaller business clients I have to teach them how to "put the boss back into their business" What that means about buying is that other things like customer service, upbuying of the product already used, accountability, relationship with the buyer, who they can hire to "do it" must also be considered.
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