After years of examining the SMB market, it becomes clear to anyone that there are several ways that things are bought and sold. The primary channel used to be feet-on-the-street sales reps from local media giants such as yellow pages and newspapers. These sales reps have worked hard to develop SMB loyalty. Several alternate channels have since emerged.
One of those channels is retailers. Big box stores like Home Depot and Costco increasingly sell services to SMBs. And it’s not just selling products off the shelf, as they can also serve as reseller channels for higher-ticket items like insurance. They can be effective in this role because they’re trusted entities.
Now the latest player has joined the mix of retailers catering to SMBs: IKEA. The company last week launched the IKEA Business Network Loyalty Program in the U.S. Free to join, it offers SMBs several perks including 5 percent discounts store-wide. It’s available to both businesses and their employees.
Strategically Sound
Though different from some of the channel relationships noted above from the likes of Home Depot, IKEA’s move here is still strategically sound. It carries the same strategic logic of any enterprise bulk discount program: Offer discounts to large buyers to incentivize greater volume purchases over time.
This makes particularly good sense for home services SMBs – namely contractors and designers. By offering a loyalty program to such businesses, IKEA can remain competitive when these pros decide how to outfit a customer’s home. It could also work for real-estate agencies that need staging furniture.
Speaking of designers, SMBs that sign up for the loyalty program get access to IKEA interior design services starting at $299 per room. Theoretically, local contractors could take advantage of this offer to lower the cost of design services that they otherwise subcontract to local professional designers.
Other notable benefits include access to the “Learn with IKEA” business training program, which includes classes in business fundamentals. This could be highly valuable to some SMBs. There are also discounts available on health & fitness, travel, and other affiliate services through IKEA’s BenefitHub.
And to add icing on the cake – or sauce on the meatball – IKEA SMB loyalty members get a free cup of coffee or tea every time they visit IKEA’s in-store restaurant. That’s the kind of perk that has a low ROI practically speaking, but high perceived ROI. It’s all about easy ways to make someone feel like a VIP.
Supplies to SaaS
Back to the concept of SMB channels, retail will continue to be a sleeping giant. As noted, big box retailers’ strength as a sales channel is boosted by their “known quantity” status. There’s an implicit degree of security in doing business with a company like Costco or IKEA, as they are established.
This logic doesn’t always pan out, but it still overhangs SMB buying decisions as a sort of security blanket. Part of this comes down to the notion that these large retailers have high-stakes reputations to uphold. So expect to see more retailers cater to SMBs by acting as resellers and loyalty programs.
Panning back even further, the notion of a local sales channel is getting less relevant than it was a decade ago. As we heard from Yelp’s Chad Richard at L23 (reproduced on a recent podcast episode), SMBs today are more digitally native and are increasingly self-serving for digital marketing needs.
This interplay between self-serve, direct SMB sales, and “assisted sales” will continue to develop. And that falls under the broader question of where SMBs are buying things – everything from supplies to SaaS. It will be a moving target as SMB savvy, habit, and underlying tech continue to evolve.
