Thorny Marketing Challenges for SMBs

by: Doug Michaelides

Recently a colleague asked me to rhyme off some of the top marketing issues faced by small and mid-sized businesses.  As I thought about the question, I realized these thorny marketing challenges fall neatly but painfully into three CFO-friendly categories.

I. Growing Revenues

Lead Generation: This topic is almost always at the top of the list for SMBs.  Obviously volume and quality of leads is important but consistency and predictability of lead generation has a tremendous impact on cash flow and the ability to plan operations.

Awareness:  SMBs compete against larger competitors, often by levering the web for awareness and demand generation.  This requires an understanding of relatively specialized web marketing topics like website analytics, SEO, social media presence, etc.

II. Optimizing Spending

Measuring ROI on Marketing Investment: Balancing spending on selling vs. spending on marketing is always a dilemma.  The quota assigned to a new sales person gives the illusion of a “hard” return on investment compared to the harder to measure impact of more marketing.  Yet spending on awareness and lead generation can enable an existing sales force to deliver better results than what’s possible from more sales headcount.

Optimizing Product Development Spending:  With limited funds available for product improvement, effective investment prioritization is essential.  Is it time to invest in new features or quality and performance improvements?  Should functionality for new markets be added or modifications demanded by a lead customer?

Prioritizing Investment in New Business Opportunities:  The decision to commit scarce funds isn’t limited to product development.  There are endless competing demands for marketing funds to grow revenues.  These include product launches, new market entries, promotional campaigns, events, etc.

III. Managing Profitability

Distribution/Selling Model: SMBs often start out with a direct sales model (either personal selling or on-line) but eventually consider using channel reps or distributors.  The use of indirect channels can expand market reach (particularly in foreign markets) but at the cost of channel management expenses and reduced selling margin.  Understanding the trade-off between increased sales volume and reduced margin is key to a profitable growth strategy.

Commercial Strategies: Pricing options include up-front outright purchase or recurring subscription/licensing models.  How much revenue should come from the product purchase (usually upfront revenue) vs. ancillary support and professional services (often recurring)?   Finally, there’s the whole question of managing discount structures for volume purchases (not to mention “freemium” pricing strategies).

I realize I haven’t offered any solutions to these thorny marketing challenges. But they do exist.  And trust me, when you figure these things out the rose among the thorns will be a growing business!

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