Provocative title, but a not-so-easy topic. Why? Because most of you originating in this space are generalists in a general category of poorly defined businesses. What is middle market? $10-$500MM, $50-$500MM, $100MM-$1B, 100 employees to 1000 employees? The National Center for the Middle Market (our friends at GE and Ohio State) define the space as $10MM to $1B.
Now let me ask you, how similar are $10MM companies to $1B companies?
Everything from access to capital, global economies of scale, talent management and throughout the entire business spectrum the differences across the “middle market” are so varied, that it begins to beg the question, what are you doing? A salesperson calling on a $17MM plastic injection molder at 10AM could be calling on a $400MM software as a service provider at 3PM and just handed them both the same “flyer”. Hmm, how can that be bad? We would even argue that, independent from the lack of industry specialization and knowledge, the needs of the businesses are so vastly apart that you are really talking about wildly different business development philosophies. And further argue that these are different business development competencies trying to be successfully accomplished by the same business development approach.
Has the corporate decision to focus on “middle market” come from laziness? Let’s just throw business into 3 buckets: Small Ticket (small business to the non-financial types), Large Corporate (the public or big-enough-to-be public companies) and the middle market. We think all of these definitions are wrong and companies, particularly commercial finance firms, need to remodel their organizational structures.
The purchase decision process for financial decision makers is changing rapidly as they rely less on initial sales interaction and more with easily available information educating on specific needs from a variety of other resources. Whether through sales or great marketing content, these decision makers are asking for your expertise,not just of what you sell, but its potential application to their business. And the commercial finance business is failing here.
We talk too much about ourselves, do a poor job of really demonstrating our expertise and rely exclusively on sales to develop this credibility with the target audience with virtually no tools, resources and sales enablement support.
It’s time to dust off the old consultative selling hat and remember we are solving unique problems with customized solutions and connect one to one with the person you are selling and marketing to. As such, we believe specialization will pay off with huge ROI for business development.
Industry or Asset: You just can’t argue with the results. Our most profitable clients drive the most profit out of verticals. It’s funny, even in the ABL space where we support some very profitable supposed “generalists”, around 50% of deal origination comes from a strong private equity focus. Or the equipment finance “generalists” where better than 40% of the portifolio are transportation assets. Both of those are clearly a vertical means of business origination.
Size segmentation: Keep your three “buckets” of business categories, but slice ‘em up. Carve the middle market into $10-50MM, $50-150MM, $150-$500MM, $500-$1B and lose your over-attachment to geography. Give business development bigger pieces of land but more focused business sizes. But what about an explosion of T&E expense? I think you’ll find the ROI from increase in specialization will dwarf an increased T&E line.
Rev up the marketing engine: Ok so we are biased here, but the bias is based in empirical data and the fact that a robust marketing effort that builds great thought leadership content delivered in a consistent, effective way not only will bolster sales appointment activity, it will enable the sales force to have better, smarter conversations. Most of you have litterally no marketing effort that doesn’t involve bad sales flyers.
We encourage you to challenge the status quo. We encourage you to look at things differently and ask hard questions about your business development approach (sales and marketing). And we encourage you give us a holler if you ever wanna chat about how marketing can play a role in a rapidly changing world of customer decision making.