July 15, 2024

Small but powerful

Scott Davies, Chief Executive of ITM, shares his thoughts on why suppliers are so obsessed with the SME market

Having worked for various supply side organisations who proudly announce their intention to grow their presence in the magical SME market segment, I’ve often wondered how the targeted customers feel about being labelled this way. Does anyone aspire to own, run, or work for an SME?

Of course, many will find that the somewhat formal, political and corporate working environment of a multinational PLC is stifling, bloated or inflexible (no offense intended), and therefore those individuals will aim for the agile, flat structure of a smaller business. But the reality is that, in business travel, our suppliers effectively decide for themselves who is and who is not an SME. And it will be framed by their travel spend rather than their turnover or headcount.

So why do CCOs and associated strategists obsess over competing in the small and mid-market?

“The lovely SME requires basic account management, generic or sometimes even no deal/discount and a much lower risk profile”

The answer mostly lies in the relative complexity and volatility in the other segments, primarily being large/global customers and those in specialist segments like the public sector. These customer groups require skilled, well-trained account management resource, senior leader sponsorship, tailored deal structures and perhaps most disappointingly, large discounts. A former boss used to remind us that when we positioned a ‘strategic’ discount, this was code for ‘a really big one’.

The attractive element of the enterprise segment is, of course, the large chunk of volume collected in one go, but if the customer is subsequently lost, the pain is felt across the business and may mean downsizing.

By comparison, the lovely SME requires basic account management, generic or sometimes even no deal/discount and a much lower risk profile. Not rocket science is it? Although I’ve heard some very well-paid consultants paint it as such.

Ironically, the pandemic made even the very biggest client an SME in spend terms for a little while. Equilibrium has now been restored and I guarantee you that, in a boardroom near you, a strategy is being cooked up to next year ‘target the SMEs’. Genius!