How bills can help unlock the potential Small-Medium Business segment

Complex and diverse, the small and medium-sized enterprise sector (SME) holds huge growth potential as it embraces digitalization and automation. Yoram Timmer explains how CSPs can build their SME business by converging towards a segmentation based on their spend and needs, rather than on company size.

Traditionally, operators have segmented their B2B customers based on the number of employees and their products and subscriptions, into a large enterprise sector and a small and medium-sized enterprise (SME) sector. But while there are relatively few large enterprises, the SME sector is huge and varied. Success in today’s telecoms market is about offering customers personalized services and tailor-made experiences. So why are SMEs still treated as if they were all the same?

Number of SMEs in the UK, US, Netherlands, and EU

Source: Calvi

Note: A SME/SMB is defined as having fewer than 250 employees in the EU. In the US and Canada, it is usually defined as a company with fewer than 500 employees

The SME sector is a complex sector to segment and to address with value-added services. A 10-person business is very different in terms of its complexity, information communications technology (ICT) needs and billing needs to a 250-person business. Addressing the needs of these different size businesses means first seeing ‘SME’ as simply an umbrella term for three size-based sub-segments.

Complicating SME segmentation further is the way companies in this sector operate:

• not all have central business premises but may be working from home
• Some are highly mobile, and others are not
• Their needs vary according to the industry in which they operate
• They have different growth prospects and strategies
• They have varying levels of automation and digitalization
• Some opt for consumer packages rather than business packages, causing targeting challenges for CSPs.

The relative sophistication of firms within this sector varies considerably. While some have low ICT adoption and lack knowledge of ICT products, others are bleeding-edge adopters, highly automated or digitally native that use ICT to compete on the world stage.

For example, a high-tech SME may require the most performance high bandwidth, low latency connections, as well as sophisticated cloud applications, cybersecurity and business continuity services. Its workforce might be distributed and high levels of automation mean that while it has few employees (and is therefore categorized as a “SME”) its needs – and therefore ticket size - are more similar to those of a large enterprise.

How CSPs can use bills and  billing data to unlock value

1. Because of the way CSPs view SMEs and due to SME purchasing behavior, CSPs don’t often receive a single bill, rather multiple bills factored down by employee and line of business. This inflates the cost of bill processing for both SMEs and their CSPs. Calvi has seen examples of operators offering multiple self-service environments and bills with different layouts for each product. This multiplies the time, energy, and frustration for the SME to manage their bills, slows down the validation and payment cycle, and means the CSP often doesn’t have a  complete overview of spending or opportunities. CSPs should utilize their billing data to create a consolidated bill and use their bill presentment solution to provide an overview of their separately billed lines of business (this multiplies the amount of time and energy needed by a SME to manage their bills, creating unnecessary frustration and slows down the validation and payment cycle period, resulting in a situation where the CSP often doesn’t have a complete overview of the spend or the opportunity it could have provided).
   
   Billing data can also be analyzed to reveal characteristic patterns that indicate SME behavior – such as the use of certain business applications or characteristic calling patterns. Having identified a SME and its employees, the CSP can then target them with multi-product discounting, volume-based offers, increased support and more business-oriented services. Lowering the overhead of managing multiple suppliers and decreasing the effort of processing multiple bills offers a strong incentive for the SME to consolidate their spending with a single CSP.
   
   
2. Many SMEs are not just unaware of business services that could boost their productivity, but are actually wary of even trying them out. There is a tendency amongst SMEs to only consider mass-market consumer brands, and to perceive business services to be more expensive while offering little extra in the way of value add. This is an opportunity for CSPs who can take up the role as a business enabler and advisor - guiding and educating their SME customers. CSPs can also break down the barriers towards adoption by offering free trials of business services (promoted through bills) and build trust with their SME customers through increased cost transparency.
   
   
3. Research by UK regulator Ofcom, found that as SME decision-makers are often non-specialists in ICT they can have a very limited technical understanding of products and services, as well as the terminology that CSPs use. Their main focus is on their business needs, not on technology. CSPs often fail to recognize this. Calvi's research has shown that SMEs are frequently dissatisfied with their bills due to the difference between their contract and their bill but, due to their negative experience with the service desk, they often don’t even bother to dispute the bill. This runs the risk of creating silent churners – customers who vote with their feet by suddenly fleeing. To reduce the risk of silent churn and minimize SME frustration, CSPs should ensure their bills are easy to understand and that accessible language and terminology is used consistently from initial sales advertisement to billing, to customer care, in order to boost understanding and reduce frustration.

The SME sector is a complex one to address but offers huge opportunities for value-added creation.  Taking a new approach towards segmentation based on the complexity of the products SMEs need, and the budget they have available, rather than on the number of employees they have, is a better way for CSPs to go to market. Billing data can help unlock the potential of this sector in a sustainable way by helping CSPs identify their SME customers and their likely ICT needs. A consolidated and tailored view of a customer’s bill data can reveal the true potential of hidden SMEs, while simultaneously reducing the burden of bill processing on SMEs themselves.

To find out more about how you can unlock the potential of the SME sector, contact one of our business consultants!

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