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 the SaaS functions that SMBs are drawn to last week, we switch gears this week to drill down into their biggest reasons for adopting. What are the attributes of SMB SaaS that resonate most and what are the driving factors for SMBs to adopt? And how are these reasons shifting over time?
Data Dive
– Diving right in, the leading reason for SMB SaaS adoption (61 percent) is that a given product has more features and capabilities than a previously-used product or operational method (e.g., pen and paper).
– This was not only the leading category but it grew the most, up from 42 percent in Wave 7 and 44 percent in Wave 6.
– This represents a “back to basics” sentiment for SMBs: product capability and features are foundational and critical.
– The second highest-rated reason for SMB SaaS adoption (37 percent) is efficiency and saving time
– This stands to reason as time is one of the biggest scarcities for SMBs.
– Simplicity and user-friendliness came in third place at 32 percent.
– This likewise stands to reason as SMBs are famously tech-averse, so simple and user-friendly UX design is the name of the game.
– Further down the list are factors such as mobile/app access (22 percent), cost relative to previous methods (18 percent), remote work enablement (9 percent), and security (2 percent).
– Of these factors, the biggest change from the previous wave was seen in remote work compatibility, dropping from 36 percent in Wave 6 and 18 percent in Wave 7 to 9 percent in Wave 8. This drop stands to reason, given the emergence from a pandemic.
– All the above is important for SMB SaaS players to recognize SMB preferences and demand signals. Product development can accordingly work towards those targets.
– This is particularly important because of a takeaway in a previous Benchmark Bytes installment: overall industry growth is maturing so growth for any one player will increasingly come from zero-sum market share gains.
– That means competition will heat up and the name of the game will be product differentiation. And that in turn should take the above SMB demand signals to heart.
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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 to boost their digital transformation. This sends them into the arms of SaaS providers 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.
