Disruption cuts both ways as new competitors court SMBs.
I write this after chatting with a friend who owns a few fast-casual restaurants in the NYC area. He told me about a conversation with his current point-of-sale (POS) provider, a legacy company more than 100 years old, which highlighted a challenge for some SMBs in today’s fast-changing technology environment. He informed the POS provider that the marketing company he had just hired had said that his current system, only a few years old, would not integrate with their platform.
The rep’s reply seemed almost perfunctory. Something like, “No problem. Our newest system is compatible with the marketing platform you plan on using.”
“How much will that cost me?” asked my friend.
The quote was $30,000, all up front.
If you have spoken with any restaurateurs lately, you would know that they are getting crushed on all sides.
- Minimum wage increases, up to $15/hour in some markets, eat into already tight margins.
- There is a shortage of workers for some positions.
- Competition has increased, at least in the NYC fast-casual market.
For most restaurant owners, $30,000 is a huge amount of money.
New competitors, new business models
Being in the B2SMB space, I know of newer solutions that make money on monthly subscriptions rather than hardware, which is how the legacy company has buttered its bread. My friend knows this, too, and he told the rep just that.
Surprise! A more senior rep called and said his company realized they needed to compete, and offered a much lower upfront cost plus a monthly fee. It’s not clear if the rep got approval for a special pricing plan, or if the company is truly changing its go-to-market approach. Either way, my friend was offered something that was much more palatable, and competitive with the newer companies.
Overcome inertia and adapt
Suppliers have a million reasons for sticking with legacy tactics and business models. Most have to do with inertia and the comfort of sizeable margins. But today, customers have more options than ever, even for large-ticket items like a POS system for a restaurant. Switching is non-trivial for most SMBs, but it will happen more often if legacy companies don’t become more customer-centric. New competitors, unencumbered by legacy strategies, tactics, and platforms are eager to help, and they are marketing aggressively.
Disruption cuts both ways. SMBs are being forced to adapt and change, often by adopting new tools and techniques. Those same SMBs, who now enjoy state-of-the-art customer experiences from companies like Amazon, expect their suppliers to adapt as well.
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