What does “enterprise” and “midmarket” really mean for CEM?
Traditional market segmentations – by gross revenue or number of employees – are useful for sizing a market and calculating technology spend. But what does “enterprise,” “midmarket,” or “SMB” really mean for software solutions?
DCG has just released two Insight Papers that address this question and attempt to pin down the enterprise and midmarket requirements for customer experience management (CEM). Both Insight Papers are available for free download; here is a brief introduction for each.
It’s Time to Rethink “Enterprise” Software: Look for the Answer in the Business Process, not the Application
(Download this Insight Paper here.)
Say you work for a large company with over $1 billion in revenue. You should look for “enterprise” software solutions, right? Or say you’re a vendor that sells to such large companies. By definition, you offer “enterprise” applications, don’t you? Well, not so fast. When it comes to what counts as enterprise (or “enterprise-level”), the criteria are extremely muddled. Everyone talks about enterprise software, yet it is notoriously difficult to define. Software marketers love the term “enterprise” almost as much as “with just one click.” Buyers stipulate it as a requirement without further explanation. And analysts act as if they can clearly differentiate enterprise and non- (or not yet?) enterprise products. Yet, what does enterprise really mean?
The established definitions are either too broad (“Software used by companies.”) or too narrow (ERP suites). Most people would agree that “enterprise” indicates that the software has certain characteristics or capabilities, such as scalability, extensibility, portability, etc. However, since there are no agreed-upon criteria to determine when the “enterprise level” has been achieved, the term is widely abused by vendors – in many cases, it expresses nothing more than their aspiration to sell to enterprise clients.
Today, more precision is called for. The solution lies in the realization that no amount of analysis, no set of performance metrics, no list of product features and capabilities can establish a software application as enterprise-level until it has been put to work and has successfully supported complex enterprise information and business processes. In short, whether a software product is enterprise-level is not determined by the capabilities of the software, but rather by the nature of the business challenges it supports or addresses.
Addressing the Midmarket’s Requirements for Customer Experience Management
(Download this Insight Paper here.)
Midmarket companies may find it particularly challenging to master CEM. Consumer expectations of such firms are no lower than for enterprises, yet midsize companies lack the resources of an enterprise, whether in terms of cash, funding, expertise, or a large, redeployable workforce.
Nevertheless, studies show that top performing midmarket companies exhibit the core qualities of superior customer engagement: A focus on innovation, strong, engaged management, and a culture of customer-centricity.
The National Center for the Middle Market has identified the top 20% of midmarket companies by growth as the “growth champions.” Between 2005 and 2010, these firms grew at an annual rate of over 26% — about 10 times that of GDP growth during the period. Among these top performers, 70% said they perform well on innovation (versus 39% of all midsize companies); 50% said they invest to improve sales and marketing (versus 35%); 41% said they have a social media strategy (versus 20%); and 53% said they have a digital strategy (versus 31%).
The midmarket enjoys the dubious distinction of being the most volatile and stressful business environment. Losing a single customer, or a momentary lack of focus on execution, can mean financial ruin. Midsize companies do not have the time or attention to evaluate, vet, and manage numerous potential product and service vendors for their CEM solution.
Given the overriding need to reduce complexity, midmarket companies should look for CEM product vendors and services partners that:
- Offer multiple solutions that can be deployed over time as required – but that also integrate easily with existing systems,
- Provide (or partner with) services teams that have proven expertise with the chosen products – as well as non-technical design and strategy resources,
- Work well with internal teams – and with other service providers, and
- Have proven success serving the needs of midmarket firms – which can be verified by multiple references from current or former customers.
Midmarket companies have survived, and even thrived, in the recent very challenging economic conditions. The new challenge is to master CEM, and consistently meet or beat the demands of empowered consumers. Those midsize firms that get it right will continue to be “America’s critical growth engine.”