If you own or manage a VAR, MSP, or consultancy that works primarily with SMB customers, and you’re wondering whether your IT marketing should target the B2C (Business to Consumer) segment or the B2B (Business to Business) segment, you’re in good company.
Many in the IT channel frequently get their targeting completely wrong. In this article, we’ll look at how IT marketing and customer acquisition costs impact your decision on where to target.
How Important is Targeting?
If you’re new to IT marketing in the SMB space, there’s a good chance you haven’t thought much about targeting or segmentation, and in turn, are trying to market to “everyone.”
But there’s an inherent problem that’s much bigger than B2C vs. B2B when targeting is an afterthought:
When you fail to come up with your own targeted IT marketing plan, a “marketing plan” will be assigned to you by the marketplace...the “default” configuration.
The “Default” IT Marketing Configuration (and Why It Sucks!)
What in the IT world do we know about “default” configurations that happen when you click “Next, Next, Next, Apply, OK”? Sometimes these default settings work out OK. Other times, there are massive performance and security problems that may not immediately be apparent.
So getting back to your “default” marketing plan, what does this mean? Like they say in court, “If you do not have an attorney, one will be assigned to you.” For IT marketing, if you do not employ targeting or segmentation in your campaigns, you will be “assigned” customers:
And just all-around jerks (to put it “nicely”). Nasty, nasty people that you certainly don’t want to build a business around.
How do you end up with such a bumper crop of customers that no one else wants?
Because without a decent IT marketing plan that targets, that’s exactly what you end up with: customers that no one else wants!
Why Marketing to “Everyone” is Like Marketing to “No One”
Now, unless your marketing budget rivals the size of the marketing budget of industry leaders like Dell, Intel, or Microsoft, you’re barking up the wrong tree if you think your company can successfully market to “everyone.”
The 3rd Grade Math that Makes Marketing to B2C Nearly Impossible to Do Profitably
Marketing IT services to residential users, or the Business to Consumer (B2C) market, is extraordinarily difficult to do profitably.
Why? The lifetime value of an average home user purchasing IT services is likely in the low triple digits: $100 to $300 perhaps, or adjust for your local currency. It takes an awful lot of $49 or $99 service calls to recoup your customer acquisition costs. The flip side?
Why Even Relatively Tiny SMB Customers (B2B) Are Better Targets Than B2C Customers
A B2B buyer, or more specifically an SMB customer, may spend upwards of $500 to $5,000+ each and every month of the year on outsourced IT services...pushing their lifetime value into the five- and perhaps even six-figure range over a number of years.
So the 3rd-grade math is simple:
B2C: How much can you afford to invest in IT marketing campaigns to attract residential B2C customers with an average lifetime value of $300? If you answered, a lot less than $300, you’re on the right track.
B2B: On the other hand, how much can you afford to invest in IT marketing to acquire SMB clients with an average lifetime value in the range of $20,000 to $100,000 or more? Well, now there’s a potentially profitable client if you know where to look...hence the critical need for targeted B2B marketing.
In this article, we looked at IT marketing decision-making and whether your VAR, MSP, or consultancy business should be targeting the B2C or B2B segment. Now granted, there are some IT channel companies that do figure out a way to market profitably to residential customers.
But for every one of those exceptions, there are a ton of frustrated entrepreneurs scratching their heads trying to figure out why their marketing isn’t paying off. The simple answer in many cases: You can’t afford to spend $300 to acquire a customer that will spend $300 with you for the entire lifetime of that relationship.
However, change your targeting from B2C to B2B, where even your smallest customers may have annual IT budgets in the $5,000 to $10,000 range, and now you’re back in business.
What’s been your experience with IT marketing? Does your company target B2C or B2B? Please share your tips in the Comments section below.
And to follow through on the tips introduced in this short article, especially if you also want to sell and support SaaS and IaaS, be sure to enroll now in our free 7-day eCourse: Go-to-Market Strategy 101 for B2B SaaS Startups and Scaleups.
Topics:- B2B Digital Marketing Strategy