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 during a global pandemic that has hit local businesses hardest?

Localogy’s Modern Commerce Monitor (MCM) wave 6.1 answers these and other questions across the SMB SaaS product set, which we preview in this Benchmark Bytes series. After the last installment examined SMB’s reasons for adopting online services, we switch gears this week to examine which services resonate most.

Of those that meet or exceeded SMB expectations, marketing and advertising tools are in the lead at 54 percent. That’s followed by CRM (52 percent), payroll & HR (51 percent), communications & technology (47 percent), POS/Payment processing (46 percent), supply chain (45 percent), and accounting & finance (44 percent).

These data were gathered in January and February so have some Covid-influence.

Localogy members can access full charts and SMB survey reports.

What Does it All Mean?

Going a bit deeper, a few things jump out at us:

— First, these data are on a category-basis so don’t speak to any specific providers, but they do provide some insight on which functional areas are doing the best job with digital tools to scratch the SMB SaaS itch.

— Marketing & advertising’s lead among online services makes sense as it’s a hyper-competitive area. This has bred lots of innovation and product refinement among ad tech players.

— This category is mostly on par with MCM Wave V results, with slight growth over the two waves from 41 percent to 54 percent.

— CRM’s second-place positioning likewise isn’t surprising as there’s been a big push over the past few years by Salesforce and others to better accommodate the SMB segment.

— On the other hand, CRM software is known to be inherently frustrating to use (especially for tech-averse and time-starved SMBs). The fact that it’s satisfying SMBs despite that challenge is a strong sign.

— CRM also grew in satisfaction from Wave V (44 percent) to Wave VI (52 percent).

Supply chain, and accounting & finance are lowest on the satisfaction ratings. The latter is somewhat surprising given the competition and product evolution in fintech over the past few years.

— Despite the performance of top players like Intuit, this low rating could be a result of the category’s inherent challenges and connotations with undesirable work (e.g. taxes & bookkeeping).

— The biggest movers among online services were payroll & HR and CRM, both growing 8 points from wave V to VI.

— The biggest decline was seen in communications technology, which fell from 72 percent to 47 percent.

— This could be due to communications technology’s inability to stand up to the “stress test” of a pandemic, during which SMBs need greater digital communications to counterbalance the loss of in-person customer interaction.

— This should be a call to action for digital communications providers like Google, Microsoft and Zoom to more effectively carer to SMBs.

Time to Shine

Stepping back, SMB online services adoption tracked by MCM continues to grow rapidly.  SMB SaaS startups and online services providers are correspondingly thriving with exit velocity, funding, and public-market performance. SMB SaaS is becoming a leading subsector of the broader SaaS universe.

Meanwhile, new SMB SaaS users could represent permanent adopters — a concept that’s accelerated in the Covid era as SMBs are forced to boost their digital transformation. This sends them into the arms of SaaS providers to accomplish a range of operational and marketing functions.

We’ll return in the next installment to go deeper on other pandemic-driven areas of SMB technology adoption. That will include top goals and what types of SMBs are adopting. 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.