Why a Hybrid Model of People and Technology Infrastructure Makes Sense
People throw statistics at us every day. 63% of all statistics are made up. But the right statistic, at the right time, can drive a business. Here’s my current favorite: of the 17.5 million businesses in the U.S. with a payroll, 88% have fewer than 50 employees (NAICS Association, 2021). If you are a B2B technology reseller, this statistic is one that should change your strategy. How?
This SMB market is the battleground. If you are a print and technology reseller, it's been a great battleground for you, for decades. OEMs and large account resellers like Xerox, HP, Staples, and CDW have tried to grow their revenue within the SMB market. Amazon has come in aggressively as well. They have had some degrees of success. The SMB landscape, though, is hard to navigate:
Revenue for each client is too small for national players to directly manage, but it's also difficult to fully automate with e-commerce.
Let’s crunch some numbers. A good benchmark is that companies spend $7500 per year on IT for each employee. That is a great number, but before you get too excited, remember that includes everything like software subscriptions, hosting, telephony, office print and hardware. What IT lanes do you play in? Not all lanes are the same size and straight up, office print is getting smaller, subscriptions and telephony take up a big chunk as well. For simplicity, the average employee has an annual spend of $5,000 on technology which in turn generates $1000 in gross margin for your business.
When you consider just how many SMB customers you have in your customer base that look like this, it is a battleground worth fighting over. Can you win?
These are your advantages in the SMB battleground over OEMs, CDW and even Amazon:
- They are existing customers.
- You have a relationship.
- You have a local presence.
- You have a local sales and service infrastructure.
- Your business understands technology financing with partners to help manage it.
The big disadvantage? Your digital infrastructure. Stop telling yourself that your customers prefer to phone and email orders in. Jeff Bezos has $1 trillion dollars worth of market capitalization to argue that point. When your business contact is replaced with a younger employee, that preference will be put to the test.
The reality is that you and your competitors have serious holes in your strategies. You need digital infrastructure: e-commerce and automated processes. They need a personal relationship and local infrastructure. They need to build a relationship with your customers.
I don’t ever see those organizations getting local. This battle could go on for a long time as they win based on customers eventually turning to them as e-commerce continues to grow.
What can you do to tip the balance in your favor? What if you negated their advantage by offering customers e-commerce as well?
SMB is the right battleground for you to start your business comeback. MPSToolbox can build your e-commerce infrastructure.
We can help craft a winning strategy, based on the weapons you have in your arsenal. Let’s get to work. Contact us today.