Many suppliers are interested in selling to the fast-growing Mid-Market customer segment. IDC predicts the SMB market will reach $630 Billion in technology in 2019. They expect medium sized businesses will focus in 2019 and beyond on AI, analytics, cloud (and integration of cloud and on premise), and digital transformation; all in an effort to improve productivity and increase competitiveness. 

If a supplier has mastered enterprise selling, doesn’t it make sense they’d be able to easily enter the mid-market? 

Well… no. Mid-market companies are looking for solutions, support, and services designed specifically for them. They don’t want dumbed down enterprise solutions, and they don’t want to grow out of a solution that is too small. Technology is a big investment for mid-market customers, and they need to get it right the first time. 

So where do suppliers go wrong? Here are 6 mistakes we’ve seen companies entering the mid-market space make, again and again. 

Mistake #1: They Approach the Mid Market with a Small or Enterprise Model

What we see most often is suppliers either attacking the mid market with a “small business” Go To Market (GTM) or with an “enterprise GTM”.  The small business approach fails since mid market customers want more than pure transactional selling attention and/or solutions built for small companies. At the same time, the enterprise approach also fails as the cost of sales is too high for the vendor to maintain accretive economics. 

These mistakes and misperceptions are common since the mid market represents such a paradox: Mid-market companies have the same technology needs and face the same IT challenges as Fortune 500 companies. However, relative to enterprise, the mid market customer budgets are limited and their buying cycles are less frequent. 

The net-net is that it’s difficult to profitably win in the mid-market, and a carefully designed GTM is required.

Mistake #2: They Don’t Offer Solutions Sized for the Mid Market

One supplier we worked with marketed their software solution that “scaled down to 1000 seats” to their mid-sized customers. However, none of their target mid-market customers had anywhere even close to 1000 employees. 

This was a non-starter. The customer couldn’t afford - and didn’t want to pay for - functionality they would never use.

When a manufacturer tries to position their enterprise solution into the mid-market they send the message, “We’re not interested in your business.” The customer also hears “Our solution is going to be expensive, complicated to install, and complex to manage.” These messages indicate the supplier has completely missed being empathetic to the mid sized customer’s size or needs.

When developing solutions for the mid market, keep in mind that they often have a small IT staff, an outsourced IT department, or a hybrid of the two. They don’t have the IT “bench strength” of the typical enterprise customer, and they don’t have the specialist staff that you will find at a large firm. 

The mid-market customer is looking for products that are specifically built for them. This is what makes serving the mid market such a paradox. They want customization, but can’t afford it. 

We’ve seen some companies create a line of products that address the quantities, functionality, features, and price points appropriate for the mid market customer. This could be software with modules that enable the mid market company to add functionality or scale as they grow. It could be hardware with features designed to be affordable to the mid market. It could be services that are intentionally designed and priced for the mid market.

Mistake #3: Their Programs and Policies are One-Size-Fits-All

One company we worked with had a software contract that was over 100 pages. It was written with a large customer in mind, and took legal teams from both companies weeks to negotiate all of the terms. 

They used this same contract for their mid-market customers who did not have a legal team on staff, and who could not afford to hire outside counsel for every purchase. 

Complexity in policies and processes is another signal that you either don’t understand the mid-sized customer, or don’t have empathy for them. They expect the companies they purchase from to understand the nuances between enterprise and mid market. 

The mid-market customer is looking for a “right sized” experience from beginning to end.  They want to feel that you “walked in their shoes” when you developed your end to end processes. They want to be assured of an outstanding customer experience.  

In the product selection phase, they want to read information that tells them the vendor’s solution will work for their size of company. In the product selection and configuration phases, they expect a simple and logical experience that doesn’t require a team of people. 

When it comes to purchase, they expect this phase to also be simple in terms of understanding the pricing structure and ease in transacting business. In the deployment phase, they are seeking a solution that can be implemented with no surprises. 

Ditto in the use, support, and end of life phases; where you need to put yourself in the customer’s shoes to see if you are providing an unforgettable customer experience.

Simply put, the mid market customer wants a simple and delightful experience, yet few suppliers can offer this frictionless experience downstream to the mid market.

Mistake #4: They Treat all Mid-Sized Customers as One Homogeneous Group

The mid-market customer is defined differently by different organizations. Some use employee counts, most typically between 100 to 999. Others use revenues, ranging from $50M to $1B. 

Obviously the technology needs of a mid market company on the lower end of either of these metrics will be vastly different from those of a company on the higher end.

Similarly, the needs of the mid-market customer will vary by industry. A 1,000 employee construction firm will have different technology requirements than a 150 person local bank. 

All of this translates to the fact that suppliers need to target specific customer segments within the mid market universe, and tweak their solutions and messaging to meet the discrete needs of each.

Mistake #5: They don’t understand their cost to serve the mid-market customer

While the mid-sized customer has many similarities to the enterprise customer, their budgets are usually limited as compared to enterprise, which means their transactions will typically be smaller, and they will most likely purchase at a lower frequency as a large enterprise.  

If a supplier approaches the mid-market the same way they sell to enterprise customers, they will have a higher cost to serve which quickly becomes unsustainable. Simply put, the model used in selling to large customers typically cannot scale down to the mid-market. 

Companies need to create the right Go-To-Market strategy that reflects their cost to serve the various segments they plan to address.

This is why selling to the mid market segment is such a paradox: the mid market customer expects to be treated like a strategic, significant, and relevant customer; yet many vendors can’t afford to deliver an “enterprise-like” experience into the mid market. 

Mistake #6: They Try to Go it Alone

Suppliers often have only one piece of the puzzle: their own product. However, many customers are looking for a “complete solution” where your products and services are just one of many components required to be stitched together to solve a business challenge. Partners can complement your piece of the solution by surrounding it with their hardware, software, and support elements. 

Partners are also adept at meeting other mid-market requirements. They know how to creatively structure deals for this customer segment, they can effectively reach them, and they can offer financing and other tools to meet their needs.  

Recruiting and working with the right partners can help you exponentially grow and scale your mid-market coverage. 

Many partners cannot afford to effectively scale down into the mid market segment, so you need to know which of your partners have done the financial modeling and strategic work to understand how to profitably serve this market.

6 Simple Solutions for Mid-Market Sales Success

The mid market represents a huge opportunity, yet serving this segment can be paradoxical. Cracking the mid-market code can open new revenue streams and make you essential and irreplaceable to your mid-market customers’ successes. These steps will help you break in:

1. Develop a portfolio of solutions tailored for the mid market.

2. Design programs & policies tweaked to the mid-sized customer.

3. Define which mid-market sub-segment you are targeting, and develop specific solutions and messaging targeted to each (e.g., industry vertical, headcount, IT spend, revenue).  

4. Evaluate the customer experience you are creating for your mid-market customer across each stage of the customer lifecycle and identify concrete steps you can take to reduce complexity.

5. Understand your cost to serve the mid market. Can you reach this market segment directly or do you need channel partners? Work with channel partners who complement and surround your products with relevant sw, hw, services & support offerings to create a complete solution that solves the mid-market customer’s pain points.

6. Be intentional about selecting the right partners to represent you and extend your reach into the mid market.

Good selling!