ISPCON: Making the SMB Sale

In his ISPCON presentation, this experienced marketer showed not only how to sell, but also what to sell.

by Alex Goldman ISP-Planet Managing Editor [November 26, 2007]

In his ISPCON session, Marketing SaaS to Business: What Makes the SMB Buy, Paul Engels, executive vice president and chief marketing officer of Ft. Lauderdale, Fla.-based Hostopia, a provider of outsourced services to webhosts, gave a brief pep talk on how to describe to your customers exactly what it is that you're selling.

"SaaS is a broad term that covers e-mail, hosting, and e-commerce," said Engels.

But some people do manage to do it better than others. "We are able to find the best practices in our customers."

Selling these services isn't easy. "There are many losers and few winners in this market. Hosting, by the numbers, is unattractive. Many average growth rates of 3 to 9 percent, but some are doing 10, 20, or 30 percent."

So what's the difference. "Those that succeed are able to think through the eyes of the SMB customer. They don't buy products like hosted Microsoft Exchange. They buy a web presence, not a webhosting contract. A business can spend $3.95 per month on hosting but spend $1,700 to $2,500 per year on its web presence. The rest of the money comes from applications."

Few customers are able to describe the term "webhosting" when asked. "In a focus group, only 1 of 12 SMB owners was able to actually describe webhosting as 'servers in a data center connected to the internet.'"

Many dislike what they have
Many small businesses, Engels said, are still running brochureware and would like to do more with their website and don't know how to.

Such customers need to have it all explained to them. You need to walk your customer o the risks and benefits of e-commerce. You need to explain about the benefits of any specific product, such as Microsoft Sharepoint. "You cannot afford to explain this at $10 per month, but you can afford to if you are selling your customer a web presence for $2,500 per year."

Make sure that the services you sell actually have buyers waiting for them. "There are too many bright shiny objects being offered to the ISP," said Engels. "Remember Internet Call Waiting? Some ISPs invested heavily in that, expecting take up rates of 25 percent but the resulting demand was closer to 2 percent. If you outsource a service instead of building it yourself, you can not care about a 1 percent take rate."

Deliver the applications, and outsource what you're not comfortable building or what their may not be a massive demand for.

—End