As part of the ritual of examining local commerce and SMB Saas strategies, Localogy goes right to the source: SMBs themselves. How do they feel about marketing and operational software? What features do they want? And how has their hunger changed in a pandemic? This is all a moving target.
Localogy’s Modern Commerce Monitor (MCM) answers these and other questions across the SMB SaaS product set, which we preview in this Benchmark Bytes series. And we recently entered a new chapter of this series, with highlights from the latest wave (8.0) of Modern Commerce Monitor.
After examining SMBs’ reasons for adopting (and not adopting) SaaS products last week, we switch gears this week to examine the degree to which these products have met their expectations. Is the technology living up to its promise, and how does that vary by specific products/functions?
Data Dive
– Diving right in, 48 percent of SMBs say SaaS tools have exceeded expectations while 25 percent say they have performed as expected.
– Breaking it down by SaaS function, the leading category that’s met expectations is supply-chain services at 53 percent of SMB responses.
– This was not only the leading category but one of the fastest growing, jumping from 41 percent of responses in Wave 7 to 53 percent in Wave 8.
– In addition to the software quality in this area, it can be seen as a sign of the times, as supply chain issues have boosted demand among SMBs.
– The second highest-rated software category was CRM. This represents a “tried and true” category as a fundamental SMB need (and an area where Salesforce has raised the quality standard).
– Like supply-chain services, this category saw a big jump over the past year, going from 42 percent in Wave 7 to 52 percent in Wave 8.
– In third place was point-of-sale or payment processing, a fundamental operational SMB need.
– Marketing and advertising software came next, with 48 percent of SMB responses.
– This ranking surprised us, as there’s a high bar to satisfy SMBs when it comes to marketing results. The fact that the category rose to the top despite this longstanding challenge is a testament to the quality evolution seen in the category.
– The remainder of the list includes accounting and finance (48 percent), payroll and human resources (45 percent), and communications and technology solutions (45 percent).
– As you can see from the SMB ratings, it was a tight field, with only 8 percentage points between the highest and lowest-scoring categories. This indicates a consistent quality standard across the board.
– However, it’s not all good news… about half of SMBs report that all these categories fell short of expectations, which is a signal to the SaaS world to keep improving.
– See the full data set in the chart below (Localogy Pro Subscription required to view).
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Long-Tail Opportunity
Stepping back, SMB online marketing – as well as operational and fintech tools – continues to grow rapidly. SMB SaaS startups and online services providers are correspondingly thriving as it continues to grow as a leading subsector of the broader SaaS universe. There’s a long-tail opportunity at play.
Meanwhile, new SMB SaaS users could represent permanent adopters – a concept that accelerated in the Covid era as SMBs were forced into digital transformation. This sent them into the arms of SaaS providers (where many have stayed) to accomplish a range of marketing and operational functions.
We’ll return in the next installment to go deeper into Localogy original survey research. That will include SMB goals and success factors. Let us know what additional insights jump out at you from the above data, and stay tuned for more breakdowns in our Benchmark Bytes series.
