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Allison Mnookin, VP of Intuit’s Small Business Division, gave a keynote address on Friday at The Kelsey Group’s ILM:07 conference that started with a recap of Intuit’s segmentation approach to the SMB market. (Kelsey conference regulars have heard an earlier version of the Intuit-ive approach at previous TKG events.)

Intuit has a huge roster of SMB customers — 7 million in the U.S., according to Mnookin. Through studying its own customer base, it has identified three main segments to the SMB market:

  1. “Personal” businesses (about 22 million).
  2. “Main Street” businesses (about 3.2 million).
  3. “Middle Market” businesses (about 0.6 million).

The single biggest challenge facing all these small businesses is getting new customers.

To that end, as a group, SMBs spent about $110 billion on marketing last year. But only 22 percent have done any online marketing (in the past 12 months), and less than 5 percent of their marketing budgets are spent on online media. Finally, although 95 percent of SMBs say they want to have a Web site, less than 50 percent currently do.

To improve this situation, Mnookin emphasized that vendors and service providers will need to follow several simple but crucial principles in serving SMBs:

  1. Solutions for “experts” don’t win (e.g., QuickBooks was the first small-business accounting solution that didn’t require the user to enter debits and credits). Mnookin pointed out that SMBs want to focus on their BUSINESS, and not have to become experts in accounting, computers, etc.
  2. A vendor should provide help, then let customers do it themselves. Intuit calls this the “do it with assistance” model. Someone helps the customer with product set-up (either in person or by phone) and gets the user started.
  3. To be successful, a product needs to solve integrated problems well. For example, a key customer dissatisfaction with existing payroll systems is that businesses would have to enter the same data more than once — because the payroll system didn’t automatically take data from the accounting system. By integrating these two systems, Intuit eliminated the need for redundant data entry. As a result, they have become the No. 1 payroll system provider to businesses in the U.S., with more than 1 million SMBs customers.

Mnookin described how these principles are guiding Intuit’s own product development and M&A initiatives, talking briefly about its acquisition of StepUp, which powers the QuickBooks Listing Service by which SMBs can easily get placement on services like Google’s Froogle.

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