Selling to midsize B2B customers poses a significant challenge for numerous large multinational corporations. Despite midsize enterprises forming a vital part of their supplier base, larger companies often struggle to effectively engage with them. However, tapping into the potential of these middle-market customers can present new opportunities for growth, both during and after periods of economic slowdown.

For instance, we encountered a media company that derived around 80% of its revenue and 10% of its profits from the top 1,000 accounts—predominantly fellow multinational giants. Surprisingly, only 20% of revenue and approximately 5% of profits came from 10,000 small-to-midsize customers. Among these, a mere 3,000 midsize clients contributed to a mere 3% of the media company's total sales—significantly lower than anticipated, considering the company's success with other customer segments.

This pattern is prevalent across various industries, as large corporations frequently struggle to effectively connect with and capitalize on middle-market customers. Through our work across sectors such as financial services, industrials, and technology, we have identified two recurring problems that we consider systemic in nature.

The Problems — and Opportunities

The primary challenge lies in the inability of many large companies to effectively penetrate the middle market and generate revenue that aligns with its market potential. For instance, in our engagements with technology companies, we consistently observe that less than 20% of their revenue comes from middle-market businesses, despite these companies representing a significant portion of their target market.

The second systemic issue pertains to the inability to capitalize on middle-market sales and achieve profitable margins. Surprisingly, multinationals often experience lower profit margins when selling to midsize companies compared to sales made to larger enterprises (despite the latter having more bargaining power) or small businesses (despite the additional administrative demands associated with serving them).

Nonetheless, the opportunity presented by the middle market is immense. In the United States alone, middle-market companies contribute to over $6 trillion in annual purchases of goods and services, equivalent to the entire purchasing power of Germany's economy. Moreover, studies conducted by organizations such as Visa, the National Centre for the Middle Market, and Dun & Bradstreet consistently indicate that the middle market not only boasts substantial size but also exhibits faster growth compared to large and small businesses. Companies that establish a robust middle-market customer base can experience synchronized growth alongside their clientele.

Mastering the Art of Selling to the Middle Market

Let's delve into three distinctive strategic approaches that can be implemented:

1. Unicorn Hunter

In the first strategic approach, the focus is on targeting fast-growing middle-market companies. Sellers recognize the middle market as an opportunity to nurture companies that have the potential to evolve into major accounts. They employ simple segmentation criteria based on revenue and growth to identify high-potential clients.

2. Segment Specialist

Instead of creating a broad mid-market category, this strategic approach recognizes the diverse nature of middle-market companies and their unique needs. It involves a highly segmented approach, where specific middle-market segments and corresponding products are identified.

3. Middle Market Optimizer

The third strategy focuses on the entire middle market and emphasizes operational efficiency. It involves establishing a dedicated middle-market sales team comprised of business development and inside sales professionals to effectively target and serve these customers.

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