SMB market holding steady, providers say

Some providers argue that macroeconomic pressures are actually working in their favor. Ring Central, which offers hosted telecom services to SMBs, says it’s benefitting from belt-tightening in its customer base, seeing a record sales surge in recent weeks. Not everyone agrees with that notion, however.

“In tough times, we like to comfort ourselves with thoughts that customers will keep buying because our products save them money or drive their productivity,” Kainer said. “Mostly, spending slows appreciably, despite these often well-founded claims.”

One of the more fertile areas for upselling to SMBs for CBeyond these days is mobile handsets and laptop cards. That coincides with a report released this week by ABI Research concluding that mobile broadband adoption is higher among SMBs than large enterprises.

Others point out that execution issues and geographic factors can be as influential as the macroeconomy. CBeyond, which often holds up its 40,000 customers in 11 markets as a fair barometer of the SMB market for telecom services, pointed out that its third-quarter churn was significantly impacted by Hurricane Ike’s entry into Houston, one of the company’s largest markets. The 5% growth in new customer contracts CBeyond saw in the third quarter was 8% excluding Houston. Sales efforts have “started to bounce back there,” Geiger said of Houston last week.

CBeyond’s strongest markets these days are Atlanta and Dallas, and its weakest are Chicago and Detroit. But in terms of new contracts signed in the third quarter, CBeyond’s top three markets were all in California. “We’re excited about California,” Geiger said.