Segments of the Middle East – Small and Medium Enterprises

The last in a series around the most common and important market segments observed in the Middle East and strategies & tactics to acquire and serve them effectively…

You can download PDF version of this whitepaper here.

Our fourth market segment studied in this series is small and medium enterprises (SMEs), which is a key, relatively under-served segment in most Middle Eastern markets, since enterprise marketing teams primarily focus on large corporate accounts and the retail / residential marketing teams cannot cater as effectively to their needs. Considering the amount of investments and support the Middle Eastern governments have been providing to this segment for development, targeting these types of customers should be among the top agenda items for companies across various industries.

Acquiring the Segment

Small and medium enterprises usually fall in the cracks between mass and one-on-one acquisition efforts, as their relatively low value compared to corporate accounts make them less attractive for dedicated sales managers and their relatively higher value and expectations make mass marketing less effective on them (compared to retail / residential customers). Having more visibility and accessibility compared to the individual customers, this market segment actually provides vast opportunities for targeted acquisition in groups. A couple of such opportunities are:

  • During Startup: All companies go through similar steps during the establishment phase, visiting the same government entities for the same procedures. This stage is where all the basic needs come to the surface for the first time – such as their first bank account, first phone line and first office. Thus, reaching out to SMEs at this stage provides a great opportunity for becoming their primary supplier, which can be seen as a first-mover advantage. Companies can tap into this opportunity by making themselves visible during the establishment process – for example, by providing how-to guides on company establishment, by placing billboards in company registration offices, and by offering specific solutions to meet the needs of companies at this stage – such as the start-up company package offered by HSBC.
  • Through Associations: Especially in the Middle East, where most chambers of commerce are public (mandatory membership) in nature, they, along with various other business associations, councils and groups, provide a perfect means for reaching out to the SMEs. These entities can be leveraged to promote various offers, especially if tailor made for the members. An example is the preferred pricing offered by Bell on mobile voice and data services to the members of Ontario Chamber of Commerce. Other opportunities to capitalize on with such entities are advertising on their web sites, at their events or in their newsletters (which reach their members frequently), or using direct marketing services, offered by some.
  • On-site Visits: With business districts, industrial zones and free zones, most SMEs cluster quite nicely for door-to-door sales activities. Various leading companies, especially in banking, telecommunications, insurance, and utilities, use door-to-door visits as a key practice in SME sales. A relatively more innovative example is the case of Bancolombia, which utilizes students in their last semesters of study to visit local businesses as ‘credit executives’ to promote micro credit offerings of the bank.
  • Through Directories and Web: For marketing purposes, most SMEs have some footprint in many of the available channels – be it the yellow-pages, web-directories, social media or simply their own web page. Hence, building a database of leads is almost free, making sales through e-mail or phone a low cost and must have alternative. The key success factor is, of course, to avoid spamming, by making use of whatever information is available regarding each company – industry, size, location – and communicating only the relevant offers.
  • Business Events: Trade fairs, exhibitions, seminars and networking events provide great opportunities to reach out to SMEs, which focus on specific areas or are within the same sector, at once. Companies can reach out to the key decision makers in SMEs in masses during these events, where they can either make themselves more visible through sponsorships, speaking opportunities, or open up stands for more active sales activities.
  • Through Partners: Most SMEs have common needs for conducting business, such as having a bank account, a phone line, and an accountant, all of which can be considered as potential partners for joint promotion and sales activities for companies across industries. A telecoms company can easily partner with a bank to promote its broadband services to those using Internet banking, or an insurance company could team up with a property developer to offer office insurance products to all its tenants. For example, CA partners with various computer technical service providers, such as Geeks on Call, which receives benefits for leads generated for CA product sales.
  • Through Employees: In case of companies, which provide not only B2B products and services, but also have consumer offerings, employees can become a significant source of referrals and sales for the SME segment. Some of the individual customers would be the key decision makers in the targeted SMEs or could gladly refer the products and services to those where they work, if companies come up with cross-segment referral and sales programs.
  • Through Each Other: Last, but not the least, SMEs usually build and rely on strong professional networks, and are quite responsive to each other’s recommendations, making B2B referral programs attractive solutions in most industries. An example is AT&T offering a $250 reward for successful referrals to its managed internet services.

Serving the Segment

Although all SMEs have somewhat similar sizes and face some common challenges (resource limitations, operational inefficiencies, etc.), there exists great variations in terms of their product specific needs. Most service providers consider these differences only based on the industry of practice of the SMEs, hence classify and try to appeal to them solely based on this dimension, which is a fatal stereotyping error in regards to this market segment. Although industry is a key differentiator, in terms of the needs of SMEs, it does not specify their needs as clearly as it does in the corporate market segment. Two corporate-sized customers in the automotive industry may have quite similar needs and expectations from a telecommunications operator or a bank, however, two SME-sized customers in the same industry would have great differences, based on various other dimensions, such as their sub-industry, target market (international vs. local), company and management culture. One of our previous studies has statistically proven that there were no direct correlations between the needs segment and the industries of SME-sized companies in banking. This, in fact, calls for a detailed study of SMEs needs and micro-segmentation of them based on various dimensions, in order to develop appealing value propositions for them and communicate with them effectively. However, there still exists some common opportunities for serving this market segment, addressing the needs common to almost all. Some of these opportunities:

  • Cost-efficiency is one of the key success factors for all companies, regardless of their size; hence the SMEs with their relatively limited budget and resources are no exception. As most smaller enterprises are run by owners rather than professional managers, more consumer-like tactics such as price discounts, promotions and various campaigns are effective tools for keeping this segment loyal. Companies can tap into this opportunity by offering long-term commitment-based value offerings, such as 3 year tariff plans in telecommunications with discounted rates, or 5-year utility agreements with 10% discount.
  • Similar to financial constraints, SMEs have human resources constraints, which they have to keep focused on their core business functions, to keep their overhead costs manageable. As a consequence, service offerings and benefits which assist them in terms of their support functions, such as IT, finance and administrative would be more than welcome by this segment. Various telecommunications firms offer managed data center services and even BPO solutions today, and banks try to take off the workload from SMEs by equipping them with accounting tools focusing on this need.
  • As SMEs have relatively less resources and HR development budgets, any proposition that includes training and development of their resources is considered a valuable offering. Such educational activities not only add true value to the business of SMEs, but also create great opportunities for sales pitches for products and services, as the topics of discussion are usually related to the offerings of the service provider and the attendees already have interest. Similarly, one-to-one advisory services and dedicated specialists providing guidance to the SMEs and their employees are effective means for creating awareness, as well as extra need. An example value proposition is ‘Turuncular’ (orange, as in the color) by Denizbank, a program whereby bank employees serve as financial consultants to the SME market, providing their employees training and support, while promoting the bank’s products and services.
  • Service providers tend to forget about the employees working in a company when it comes to B2B sales; however, the decision makers and influencers also have specific needs, needs which are not always the same as the commercial needs of their employer. An employee would be more interested in a mobile line which provides discounts during their after-work hours and weekend calls as well or a salary account which offers a better interest rate and a no-fee credit card attached to it, whereas these benefits do not serve any direct needs of their employer. However, service providers have to listen to the employees as well and take into account such needs in developing value propositions for SMEs, since they can make employees the insider advocates or enemies of the brand easily. An example is the HSBC ‘Corporate Employee Program Account’ which offers waivers on non-maintenance fees, provides access to wealth management services, and gives special offers on HSBC credit cards and preferential pricing across loans.

All in all, what all SMEs want is a true business partner, who not only comes up with solutions relevant for their needs segment, but also can be flexible enough to tweak them based on their specific needs, making modular and parametric services and products a key value proposition for the segment. Companies which can start looking beyond the corporate-accounts and industry-based solutions and serve such specific needs will realize significant opportunities exist to capitalize on and gain customers in this market segment.


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