I've understood this passage as setting forth the necessity of being born again for salvation. Contrary to WT theology, it does not say go further and say that John the Baptist was excluded. The comparison is between those born of women (all humans) and those entering the kingdom of God. Kingdom of God and kingdom of heaven are interchangeable. And born again = born of the Spirit = born of God. The entirety of John 3 is about this requirement: John 3:3-5, Jesus telling Nicodemus you must be born again (born of the Spirit); John 3:15-17, believe in the Son for eternal life (also John 1:12-13).
So Jesus was in effect saying: John the Baptist is the greatest among natural born men, but even he would not enter the kingdom of God if he was not born of the Spirit. Other passages show that John believed Jesus for salvation (e.g., when he baptized Jesus in Matthew 3 and when he reiterated the same requirement for salvation in John 3:25-36), so John was born of the Spirit.