To develop a scalable sales model for your own business, you need to know what kind of customers you’re dealing with. There are three main segments in all. Let’s dive deeper into Small and Medium Enterprise (SME) sales.
Competition is particularly fierce for SMEs. The market is saturated, which means there are lots of similar solutions available. But it’s not only the overcrowded market that makes things hard, cost sensitivity also plays a huge role in this kind of sale. So it’s really crucial to set yourself apart from the rest. The good news is that success can be achieved more quickly than in enterprise sales, for instance.
Short example
- want to gain 100 customers in the first year;
- need 10 personal visits to gain one hairdresser;
- can complete a maximum of 5 visits/calls per day;
- a sales rep will cost you CHF 500 in salary and expenses per day
In order to achieve your target, you will complete 1,000 visits, which will take you 200 working days and cost CHF 100,000. Each new customer represents a CHF 1,000 acquisition cost. With existing competition in the market (e.g. here,) you will not be able to charge much more than CHF 200 per year. So, in that scenario, any customer would only be profitable after 5 years. Plus, if you gain 100 customers in Zurich, you may already have captured most of what is available…
Conclusion
Addressing SME markets is costly due to the highly fragmented and often small industry segments. In most cases, there is a reason why the market is not captured – and the reason is not that your app with a great UI is not around.