According to data from Techaisle, it is projected that the global IT expenditure of small and medium-sized businesses (SMBs) will escalate to a staggering US$1.35 trillion by 2024. Furthermore, this spending is anticipated to experience a compound annual growth rate (CAGR) of 5.7%, extending through 2028. Cisco is making a significant push into the SMB market, a segment where it has enjoyed steady growth. In fiscal year 2023, which concluded in July, the SMB segment was Cisco’s top-performing customer category for a third consecutive year. Cisco sees this segment as a $25 billion addressable market opportunity, captured with mid to high-tier SMBs transitioning to cloud and SaaS solutions. Notably, about 20% of Cisco’s SMB business comes from new customers every year, underscoring this segment's critical role in expanding Cisco’s reach and reflecting on the growing demand for technology amongst SMBs.

Cisco’s go-to-market in the SMB segment is partner-led, catalyzed with continuous partner-focused programs, initiatives, and marketing investments to foster robust relationships. According to the latest research by Techaisle, a significant majority of SMBs, 87%, depend on their partners for technology solutions. Furthermore, these SMBs channel nearly 89% of their IT expenditure through these partners. Cisco is, therefore, continuously enhancing its engagement with partners, revamping its marketing strategies, and adapting to the changing needs of its customers. A vital part of this strategy is the focus on the new “Scale” go-to-market initiative, aligned to engaging SMB customers and Partners in this space, as unveiled at the company’s sales kickoff meeting in August. This model offers partners and customers enhanced sales and marketing support, ensuring that SMBs receive expert advice in crucial care-about areas such as cybersecurity or hybrid work.

The concept of “digital transformation” has become a staple in corporate discussions over the years. While some may write it off as a fad, many, particularly SMBs, understand its importance. For these businesses, digital transformation involves adopting digital technologies to streamline operations, improve customer relationships, and position themselves as agile and innovative entities in their respective fields. Techaisle data reveals that 71% of SMBs are investing in digital transformation, and 37% have a holistic digital strategy. SMBs, once perceived as technologically behind, are actively embracing cloud solutions to meet their IT requirements. These technologies have become crucial to their digital transformation journey, enabling them to automate various operational aspects and gain a competitive advantage through essential business process automation tools, orchestration, and integration or advanced offerings like custom AI and analytics applications hosted on cloud platforms.

Focus on Business Outcomes

As SMBs embark on their digital transformation journey, they face many new challenges. Ensuring that applications run seamlessly, regardless of where employees access them, is crucial. One key characteristic of the cloud is its ability to deliver (and integrate) different types of systems, unlocking new business management options. Techaisle research shows that an SMB uses an average of 15.6 cloud application categories. Businesses must ensure quick load times to maintain user satisfaction. Additionally, with the increasing amount of customer data being stored in the cloud, data security has become a top priority. These businesses may not always have the necessary technical expertise, so they often rely on partners to meet their IT needs, including cybersecurity.

Techaisle’s research indicates that 76% of SMBs favor collaborating with IT suppliers and partners who are responsive to their business challenges and focus on delivering business outcomes rather than merely providing technology solutions. Grasping the concerns of SMBs is vital. As if on cue, Cisco underscores that SMBs are more interested in outcomes than specific technologies or solutions such as zero-trust network access, SD-WAN, or wireless networking. The company’s approach is to emphasize the outcomes of its solutions in discussions between partners and customers, concentrating on the following key outcomes:

Portfolio Positioning

Cisco offers comprehensive solutions, including network security, endpoint protection, cloud security, and threat intelligence solutions, to meet the diverse needs of SMB customers. However, the Meraki portfolio takes center stage, offering simplified, flexible, and secure cloud-based networking solutions with a subscription or license. The Meraki dashboard's integration with other Cisco networking products, such as the Catalyst line, enhances its appeal.

Cisco is also complementing its networking solutions with security offerings such as Cisco Umbrella and Duo, as well as the Webex platform, which facilitates secure and seamless collaboration, addressing the evolving needs of SMBs in a hybrid work setting. The company’s networking solutions are designed to be easy to deploy, manage, and scale, optimizing network infrastructure without extensive IT resources. Moreover, since cybersecurity is a crucial concern for SMBs, Cisco offers Small Business Security Solutions to protect their networks and data from cyberattacks.

Andrew Sage, Vice President of Global Distribution Sales, Cisco highlights that “Cisco has an extensive portfolio, and our SMB customers purchase across that portfolio, but much more than 50% of what our customers are buying from our partners is encapsulated by Meraki security and WebEx collaboration.”

A significant concern addressed in the strategy is the pricing complexity, which has been a pain point in the SMB segment. Cisco is, therefore, actively trying to simplify pricing, especially within the key product areas. The aim is to offer upfront and competitive pricing right from the start, reducing the necessity for lengthy negotiations and making deal registration for partners more straightforward.

Marketing Initiatives Tailored for SMBs

With its SMB segment already reporting strong sales, Cisco is strengthening its marketing efforts to ensure that customers are well-informed about its products and know where to procure them. Its approach involves expanding its marketing team, focusing on end-to-end marketing, optimizing its digital platforms to serve SMBs more effectively, and enhancing partnerships with sellers and partners globally to gain a better understanding of regional nuances and customer needs.

Cisco is also investing in end-to-end demand generation to reach customers who qualify as SMBs. An essential component of this is outcome messaging. The strategy highlights affordability, simplicity, and flexibility, ensuring the company’s messaging resonates with SMB customers. Talking about outcome messaging, Luxy Thuraisingam, the vice president of Global SMB Marketing and head of global partner marketing at Cisco, has said, “This is one of the areas we actually invested in early on, and we are really looking at our tone, and our voice and how we approach the customer so we can build that trust and confidence with our SMB customers.”

Marketing to and marketing through partners is a critical initiative that Luxy and her team have undertaken. They have the full support of the executive leadership team.

Realizing that SMB customers prefer digital engagement, Cisco has launched cisco.com/SMB, a dedicated webpage that serves as the face of its SMB business. The website allows SMB customers to connect with Cisco, transact with partners, and explore its virtual demand center, which makes it convenient for customers to engage with Cisco and its partners. This website is active in 16 languages, underscoring Cisco's commitment to a global SMB presence.

The company’s marketing strategy includes post-sale value creation compared to value addition, focusing on supporting SMB customers – from onboarding to enablement and growth. It aims to build loyalty and trust among its existing customer base, ensuring they choose Cisco for their long-term needs.

Support for Partners

Cisco's push into the SMB market is bolstered by its global network of partners, which collectively generate a substantial portion of the company's revenue. They specialize in serving SMBs and offer implementation, support, and managed services. They also help SMBs utilize Cisco solutions effectively and derive the maximum value from their investments.

The company introduced "Perform Plus Activate," a profitability program tailored for SMB-focused partners. This program incentivizes partners with cash rebates for achieving growth milestones and additional bonuses for cross-selling across different platforms. Additionally, Cisco provides local support to small partners through collaboration with distributors. This approach enhances partner engagement and fast-tracks their journey from Perform Plus Activate to the more advanced Perform Plus program.

Furthermore, Cisco has allocated millions of dollars to support its SMB-focused strategic initiatives in the fiscal year 2024. Its investment is driven by its confidence in the strength of its technology and partner ecosystem. The company aims to empower its partners with the tools and support necessary to thrive in the SMB market, the marketing support needed to serve SMBs through platforms like Marketing Velocity Central, and the field support requisite for exploring new business opportunities effectively. The goal is to generate increased demand within the SMB sector and expand its market presence.

Final Techaisle Take

Cisco’s strategy for the SMB segment reflects its commitment to the growth and success of these businesses. Cisco aims to help SMBs achieve their business goals and address their unique challenges by leveraging partners, aligning its portfolio with changing customer needs and investing in marketing efforts. Rather than focusing on the specifications of solutions or technologies, Cisco prioritizes delivering business outcomes through the use of its technology to benefit SMB customers.

The company’s strategy emphasizes enhancing its extensive product portfolio, particularly the Meraki suite. By focusing on end-to-end marketing and emphasizing affordability, simplicity, and flexibility, Cisco is refining its marketing approach for SMBs. It is also investing in tools, marketing support, and specialized programs to ensure the success of its partners, who play a crucial role in its overall success. This proactive approach has allowed Cisco to secure a substantial market share in the SMB sector and will contribute to the company’s growth in the future.

In this rapidly evolving AI-infused digital era, Cisco plays a vital role in facilitating the digital transformation of SMBs. The company has demonstrated a decade-long commitment to serving these businesses by understanding and addressing their unique needs. Cisco has experienced significant growth in the SMB segment and has adapted to its changing technological needs. The company’s strategic approach includes portfolio positioning, revitalizing its marketing initiatives, and strengthening its partner relationships to meet the growing technology demands of SMBs.