UK Service Providers Ramping Up Focus on UK SME Market

R. Pritchard

Summary Bullets:             

  • Vodafone has published insights into the UK SME market – the latest move amongst service providers as they look for future growth in the business segment.
  • Service providers are increasingly understanding the importance of behavior, maturity, and small business strategies when addressing this vital, complex, and substantial market opportunity.

Vodafone’s ‘SMEs Like Me’ report examines attitudes, motivations, and challenges of British small businesses. The report’s publication is yet another indication that service providers’ focus is increasingly turning to small businesses as their best engine for future growth in the enterprise market. This is especially true when the multinational corporation, large enterprise, and public sector markets are over-supplied and, in many cases, flatlining.

The report identifies eight distinct small and medium-sized enterprise (SME) “personality types.” Vodafone correctly highlights that “SMEs are a community defined by their differences” and sums up both the positives and negatives of running a small business, as well as the key attitudinal aspects of the various SME cultures, strategies, and leadership approaches. GlobalData agrees with the observation that SMEs and small office/home offices (SOHOs) also face the same technology challenges as larger corporates, including security, cloud-based services, and mobility – that’s where much of the opportunity lies.

It is also clear that macro trends are impacting the small business market from COVID-19 to flexible working and, increasingly, attention to environmental, social, and governance (ESG) issues. The pandemic has also given rise to the ‘Great Resignation’ as many people have changed their career option and started a business, although statistics show that approximately 60% of new businesses fail in their first three years and 20% in their first year.

Vodafone is not alone in chasing this market: BT launched a new SOHO unit in June 2021, Three launched a new small business proposition in May 2022, and Virgin Media O2 Business has historically reported substantial growth in the SOHO segment. In addition to these direct initiatives, there is a wide range of niche service providers, resellers, and agents (including a growing number of master service agents) also fighting for market share.

Whilst SMEs and SOHOs may be flattered by this sudden interest in them, there is the risk of sales and marketing ‘overkill.’ Dealing with a small business owner is not the same as having a dedicated account manager for a large enterprise. The trick is to get the right balance between personalization (i.e., understanding the customer’s needs and drivers) and the cost of customer acquisition, support, and retention. This requires a combination of mass customization and automation to work efficiently. Until now, this has traditionally best been executed by resellers with their success being predicated on winning and keeping customers; failure poses a potential existential threat. The aspirations of larger service providers are worthy, but still reside within a corporate culture mindset, which must be challenged to ‘think small.’

However, the fact that the likes of Vodafone, BT, and Virgin Media O2 Business are looking to understand and serve these customers from more than just a product perspective indicates a potential new wave of small business propositions. It will take a combination of smart segmentation, optimized channels to market, and efficiency in customer service and support – but the potential rewards are very attractive.

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