Most vendors tend to ignore smaller markets in lieu of larger ones. Logically, this makes sense, but smaller markets with a vibrant economy can be much easier to penetrate simply because the competition is less. With fewer vendors rallying for partners, you get more attention.
Smaller-town partners are also more prone to embracing vendors who invest time to come meet with them. Most would probably never consider doing business with anyone without first meeting them face-to-face. These partners also tend to have deeper personal relationships with their end-customers and know how to navigate the local culture to close deals. They can also be more loyal because of their preference to personal relationships.
In many ways, being a big fish in a little pond does have it advantages!
Many vendors approach smaller markets like it was a conference. They usually want to know how many will attend, who are the attendees and how big they are. Other vendors simply want to know which other vendors are participating as they mostly follow their competitors. While these are some good marketing questions, it only speaks to a small fraction of the reasons for attending.
Here are five common mistakes vendors make when considering smaller markets:
1. They do not properly investigate the actual size of the market and types of companies in the region. They automatically assume that a smaller market means smaller companies and therefore smaller sales. They overlook significant activities like big Government investments and larger industry development in the region.
2. They assume it should be cheaper to expand into smaller markets since there is less sales volume, but more remote locations are further and therefore can actually be more costly to initially reach and develop.
3. They assume that these smaller-town partners will do business with them without meeting them first. Smaller-town companies do not do remote partnerships well. Many also prefer to speak on the phone instead of by electronic communications.
4. They send their less-experienced Sales Reps to work the smaller markets. Inexperience sales reps are not skilled enough to develop deeper relationships and mostly end up blurting out silly sales pitches, which turns off prospects (I should also mention that some “seasoned” sales reps also make serious blunders!).
5. They typically tend to ignore the special pricing, volume limitations and support needs of smaller markets. Being remote can take more time and add cost just for the transportation of the products. Volume pricing may also need to be adjusted to reflect the smaller market realities.
All markets can be good markets. It all depends on your budget, resources and goals. The key is to do your homework to better understand the sales potential of your product in every target market. In larger markets the competition is heavier so the pricing pressures are also greater. In smaller markets, you can generate more loyalty by being the first in the market and to some degree, get better margins. Sometimes, working smaller markets can actually get you faster growth traction in the channel.
When it comes to ROI and the decision to develop any market, the biggest factor may actually be the quality of the sales people representing the company. The fact is that if you put your sales rep in front of qualified channel prospects, they must be able to close! Their ability to communicate, present, build trust, develop relationships and follow up are all critical to the process. Always bring your A-Game to every market!
If you want to learn more about developing every size of market, ask us.[I got the inspiration to write this article after my recent ChannelNEXT conference in Halifax and speaking with about 30 local VARs and MSPs. I discovered an abundance of opportunities for vendors and this Maritime channel that went far beyond my expectations.]