Q: How has the business model changed in terms of marketing to small business?

Goodman: In the past it was very expensive for large marketers to address the small business market. So major companies, major hardware companies, major manufacturers ceded the small business market to either external sales force or to distributors or VARs. At the time -- 10 or 20 years ago -- that was a smart business model. Those large corporations instead concentrated on big customers. They had a sales force that took them to lunch and played golf and so forth.

Today with the advent of the Internet, it is very cost effective to market to small businesses. You don’t need to put a person on a plane or in a car to go meet with them. Instead you can serve them online.

But there are a few problems. Number one, most of those large corporations do not know who those small business customers are. So they don’t have databases of them. If they have lists of them that they bought from anywhere that’s available, they still don’t have personal contacts.

Even if they do have personal contacts, the loyalties of the small business are to the distributor or VAR with whom they’ve been dealing. The risk is that when the loyalty is to the distributor or VAR, instead of caring whether a small business buys A, B or C hardware, the small business just cares that it buys it from that distributor. So now it’s cost effective and the opportunities have opened up. Small businesses are very interested in additional information and additional opportunities to price shop and in some greater level of service that might be had on a very strong website.

How do you put that together? There are several ways. We are helping companies take their websites to the next level of much more defined targeting. In other words, understanding what are the needs of customers compared to what are the needs of prospects. We’ve been doing that for a number of years.

What is the difference between the needs of a small business versus a large business? A small business is very interested in value add, adding kinds of content or additional services that can help them with their business or help them make decisions. For example, the latest trends in a particular industry. Helping to give them access and tools to run their businesses better, templates for things, case studies. All those things are the kinds of information that large companies have but they’ve typically not been given out to these little companies because they weren’t going to spend the money against them. So that’s one major trend that we are seeing, the websites themselves. Some of the large companies are creating small business portals within the corporate website.

So you can build your website, but how do you get people to it? In the offline world, you need to market yourself to those businesses so that they understand that you are relevant to them. I think a fabulous example of that is IBM with its ebusiness campaign has taken great pains to reach out to small businesses on a global basis and not just to large enterprise. If the target customer believes that this particular company is relevant to them, which this campaign has proven, then they are likely to go to the website and check it out.

We are very big believers in making sure that the brand has an appeal to these companies. And then when they get to the website, there needs to be customized content for them. They need to be able to find information, do configurations, place orders, check orders. Because they have to be able to substitute the service level that they got from Joe Distributor in the past.

I’m attending Esther Dyson’s Barcelona conference at the moment. There’s been a lot of talk here about peer-to-peer marketplaces. At answerthink, we do a tremendous amount of work in digital marketplaces which bring together the smallest businesses and the largest distributor in vertical and horizontal networks. For example, one of clients is World Commerce Online for whom we’ve built a digital marketplace called Floraplex. Floraplex pulls together, without disentermediating anyone, everybody in the flower industry from the grower, the little guy on the farm, all the way through to the consumer who buys the flowers from a flower shop or buys them online. This reduces communication cost, rationalize inventory levels, vastly improve the speed of distribution. Flowers get places faster and have longer shelf life. If also allows the little growers to have much more opportunity to sell their products and to compete for better prices.

What we are talking about at this conference is that the next level of this is peer-to-peer where a small business can sell to another small business without having to go through a third party, a sales force necessarily. This is a very exciting trend that will extend from digital marketplaces. We’re starting to look into this area as well. I think it’s going to be one of the most exciting areas for small businesses who will increasingly be able to join a marketplace and be able to sell wares to one another.

Q: Do you have any advice for companies trying reach companies on a global scale?

Goodman: Small businesses in the US and throughout the rest of the world are suddenly waking up to the fact that they are playing in a global market. Small businesses were always relegated to the home market. If they received an order from outside of the home market, they would be able to deal with it anyway.

Now these companies are realizing it’s a global marketplace. They can play. They need to understand regulations. They need to have a website that’s in English so that people from around the world can address them. We are helping companies look around at other markets where they can play. And helping them look at what kinds of alliances might be necessary. That’s a big area right now, alliances. For a small business to acquire all the necessary skills in order to be a global player, it’s probably cost prohibitive. So with whom should they ally for distribution? For security and clearing?

Another issue is that markets are different culturally. So your product may appeal to a certain level of market in the US. But in other areas of the world, you product may be too exclusive or too pedestrian.

Q: What should large companies be doing in reaching out to small business?

Goodman: They have to consider how they can profitably reach out to these small companies, which today is on the Web. They need to assess how they are going to go after that market. Is their product line appropriate? Is there a channel in which the small business buyer is going to be comfortable? If you go to the website, does it feel like it is targeted to the purchasing manager of a Fortune 50 company? Or is it more open and welcoming and more capable of addressing the needs of small business? Those strategic questions need to be answered.

You need to make a home for them. It’s not just the look and feel but it’s the services and the logistics that fit behind it.

Understand what alliances you can use. Do you create a digital marketplace?

Track the trends. The average small business has its hands full running its business and may be less aware of what the trends are.