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Straight Talk Service Provider

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They're fickle, demanding, and expensive to have around. Not least, there are just too damn many of them. That's the frustrating truth about smaller B2B customers, say those trying to serve them. Nevertheless, micro, small, and medium-sized enterprises are also the biggest untapped opportunity for revenue growth that digital service providers currently have.

Communications service providers know this problem well. They have decisively shifted away from legacy connectivity-centric revenues – but this is only true for their larger B2B clients. In 2017, higher-margin strategic services – such as managed mobility, unified communications, and managed network services – accounted for about 60% of telcos' mid to large enterprise revenues, compared to legacy voice and data services, according to Ovum's Telco-Managed ICT Services Forecast 2016–21 (TE0005-000938). But as many CSPs have shared with Ovum, barely a fifth of SME revenues are derived from strategic services, and this ratio remains common.

What, how, and who to sell to across the small business universe are unanswered questions for various digital service providers. A few years ago, cloud services for SMEs were expected to tip the balance. But many SME cloud initiatives have proved to be spectacular failures. Chastened, many service providers have simply defaulted to cost reduction to deal with their B2B problem child, automating and digitizing away human interaction and implicitly hoping the SME problem will just go away.

However, Ovum suggests a different perspective: customer support is actually a conduit to revenue diversification and growth, and a surprising number of small businesses will pay for business-class attention – even if they are buying consumer-class products.

Our research shows us the following:

  • Support is more potent than price as a value proposition to SMEs: 8 out of 10 smaller businesses that Ovum has surveyed will pay for support because they are struggling to navigate digital environments.
  • Offering conversations with digital "gurus" to small businesses is converting those interactions to a sale or upsell in up to 40% of cases.
  • The concept of "support" is evolving to serve a diversity of B2B needs – from premium customer service to inspirational business assistance – and each can directly or indirectly generate revenue.
  • The SME support opportunity is attracting various competitors, ranging across traditional office retailers such as Office Depot, coworking providers like WeWork, and gig economy platform providers like Managed by Q.

Not least, support is a Trojan horse for the wider opportunity: selling highly-productized, "snackable" managed and professional services to SMEs. Maybe it's time to reassess where the real problem lies: with the SMEs – or with how many service providers talk to them?

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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