Why Mid-Market Firms Are Loving Smaller Social Collaboration Providers

In business, you expect the big guys to win.  Huge companies, such as Wal Mart, are notorious for putting smaller stores out of business when they come to town.  Local governments trip over themselves wooing big businesses with incentives and lucrative tax breaks.  And the Wall Street Journal recently reported how the Federal Gov’t and Big Business Squeeze Entrepreneurs.  With the deck stacked against them, small businesses are struggling to survive.

But that’s not what’s happening in the quickly emerging enterprise social software space, particularly in the fight for mid-market customers.  Here the trend is the exact opposite.  Smaller firms are out-innovating, out-performing, and outselling the big guys, accounting for a whopping majority of the market share (see Best Enterprise Social Software Vendors for market share breakdown).  Apparently, nobody told them the big guys are supposed to win.

MangoApps and it’s 65 employees should have no chance of competing against Microsoft and it’s 95,000 employees, or IBM and its 400,000+ employees.  But MangoApps is having success, earning the #163 spot on the 2012 Inc500 list. And with mid-market customers, MangoApps wins nearly every time.

So how are they doing it?  Why are mid-market companies (100-2,500 employees) choosing social collaboration solutions like MangoApps over the offerings from the big guys? Yes, the employees at the newer, smaller software companies are more passionate, more determined, more innovative, and willing to do “whatever it takes” to satisfy customers.  But, it’s more than just an attitude.   There are also real concrete reasons they are winning over mid-market customers.

Security & Choice of Deployment Options

Multi-tenant share could social collaboration networks have become popular, like Microsoft’s Yammer or Salesforce’s Chatter. These shared cloud solutions have huge economies of scale and are cash cows for the software vendor. However, given the choice, mid-market companies prefer the higher level of security provided by Private Cloud and On-Premise deployment options.  These options require more work and cost for the vendor, cutting into profit margins, so most social software vendors have chosen not to offer these advanced deployment options.

MangoApps has found success in letting the customer choose between all three options….Shared Cloud, Private Cloud, or On-Premise, depending on the customer’s security requirements. IBM, SAP, and other “big guys” do offer on-premise and private cloud social collaboration solutions to satisfy security requirements, but they end up losing on the next three points.

Customization

Mid-market customers want to be treated like Fortune 100 customers.  When they ask for a few customizations, they want the vendor to happily comply.  MangoApps routinely includes customizations for mid-market customers as part of the implementation. The big guys, on the other hand, are typically only interested in performing customizations for large enterprise customers.  They push back against customizations for mid-market, or they quote an incredibly high price,  both resulting in the client going elsewhere.

Integrations

Mid-market customers want their core business systems integrated with their new enterprise social collaboration network.  Again, the big guys typically charge a handsome premium to perform professional services work for what they consider a “small customer.” The cost they quote to perform integrations is financially prohibitive, forcing the budget conscious client to find other options.

Price

The big vendors also lose mid-market clients on price, as they are typically priced 40-50% higher than solutions like MangoApps.  Big vendor pricing seems overly complicated too, versus the streamlined all-inclusive pricing of newer vendors.

In the end, mid-market companies prefer being treated like big fish in a small pond.  This is exactly what they get with companies like MangoApps.