Op Ed: Mat Orrego On Lessons Learned From Chasing Corporate Travel’s SMB Market

Mat Orrego, CEO of Cornerstone Information Systems, shares some pointers that might help new entrants or other tech companies in travel or expense management as they pursue the small and medium-sized market.

The small and medium-sized business (SMB) market within corporate travel is an enticing prospect for many companies in our space. This segment seems ripe for expansion, with many potential customers eager to optimize their travel processes and embrace new technologies.

However, despite the apparent opportunities, the SMB market presents unique challenges that can trap travel technology and services companies in a tangle of bureaucracy, limited resources, budgets and diverse needs.

The Allure Of The SMB Market

The SMB market is the sweet spot between small businesses, which may lack the resources to adopt sophisticated travel management solutions, and large enterprises, typically entrenched with legacy systems. On paper, SMBs appear to be the ideal target — companies that are agile enough to adopt new technology yet substantial enough to justify meaningful investment. According to the U.S. Small Business Administration, there are over 33 million small to medium-sized businesses in the United States alone, so the potential is enormous.

However, this perception can be misleading. The reality is that there are only 220,000 businesses with 50 to 500 employees, and only 18,000 with over 500 employees. While the number of mid-sized companies far exceeds that of giant corporations, the revenue potential must scale accordingly. For example, the average employee count for mid-sized companies hovers around 119, while large companies average 3,100 employees.

Given that the effort required to sell to an SMB is nearly as great as selling to a large enterprise, the return on investment is considerably lower. 

If you’re working on a subscription or transactional model, this challenge grows as you juggle a smaller number of transactions to hit your numbers.

The Paradox Of SMB Bureaucracy And Budgets

One of the most significant hurdles is the paradoxical nature of mid-sized businesses. Although less sprawling than large enterprises, many of these companies have already developed internal processes, layers of management and bureaucratic structures that complicate decision-making. This bureaucracy slows the adoption of new technology, as implementing an online booking tool or expense and spend management system requires extensive coordination and retraining.

Folks wear multiple hats, and asking them to add another may be a stretch. When these key players leave the organization, the systems they managed often stumble, leading to costly cycles of reinvestment and retraining.

Moreover, SMBs often operate with tight budgets. They may recognize the benefits of robust managed travel solutions but need help to justify the cost. Compared with larger companies that can absorb the expense, SMBs are more cautious about investments that require substantial upfront costs and ongoing support. This combination of bureaucratic complexity and budget constraints creates a “worst of both worlds” scenario — long sales cycles with limited financial reward.

The Diversity Dilemma

Another challenge in targeting the SMB market is its lack of uniformity. Mid-sized companies vary widely depending on their industry, operational needs and maturity levels. For instance, a 100-person tech startup will have vastly different requirements than a 100-person manufacturing company. The former might be eager to adopt the latest tools and technologies, while the latter may be more conservative, with limited IT support and a preference for stability over innovation.

How an SMB uses its tech directly impacts how quickly and effectively it can adopt your solution. APIs, single sign-on and information security protocols aren’t just nice-to-haves — they’re must-haves, just like for larger customers. Seamless integration is essential to making your solution stick and increasing a customer’s lifetime value.

Diversity in this segment means that managed travel solutions must be highly customizable, which can erode profitability. A one-size-fits-all approach doesn’t work in the SMB market, and the cost of tailoring solutions to fit each unique customer can be prohibitive. Additionally, marketing efforts become more complex as segmentation by company size fails to address the nuanced differences driving purchasing decisions.

Strategies For Success

Despite these challenges, companies can succeed in the SMB market with a strategic approach. First, it’s essential to recognize that “mid-sized” is not a market segment. Instead, companies should focus on specific industries, pain points and customer profiles, creating solutions tailored to each segment’s unique needs.

Second, automation and scalable service models are crucial for reducing the cost of customer acquisition and ongoing support. By streamlining operations and leveraging AI-driven self-service options and open APIs, companies can serve smaller accounts more efficiently, making the economics of the SMB market more viable.

Finally, patience and persistence are key. The sales cycle in the SMB market may be lengthy, as is the implementation process when customer resources are often multitasking many job responsibilities. Still, with a clear understanding of the customer’s needs and a tailored approach, companies can successfully navigate the challenges and carve out a profitable niche.