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 SMBs attitudes on automated sales, we switch gears this week to look at their sentiments towards SaaS providers.
Specifically, when purchasing online services, most SMBs (52 percent) prefer to work with their existing cloud services provider. This sentiment is up from 48 percent in Wave V and includes cloud services providers such as Square, Gusto, and Stripe. These players have established lots of trust among SMBs
Next on the list of preferred providers for SMB Saas was online service providers at 16 percent of responses (down from 19 percent in Wave V). That was followed by advertising and marketing service providers (9 percent), accounting firms (6 percent), an SMB’s bank (6 percent), and wireless carriers (10 percent).
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What Does it All Mean?
Going a bit deeper, a few things jump out at us:
— It’s telling that SMBs prefer to work with their cloud service provider (such as Square or Gusto) for new SMB SaaS services.
— These entities dominated the results at 52 percent, with the next best response (ISPs) getting 16 percent.
— This stems partly from a convenience factor and having a “one stop shop” relationship.
— It also has to do with the trust that’s cultivated in some of these services, especially those that help SMBs manage finances (e.g. Stripe).
— That established trust with handling an SMBs transactions can then go a long way in being a trusted provider for adjacent services.
— For the same reason, it’s suprising that an SMBs own bank scored so low on this list (6 percent).
— It’s also suprising that internet services providers came in second place among entities selling SMB SaaS
— ISPs have a reputation for being difficult to deal with and overcharge for services, relative to newer online disruptors such as the companies mentioned above.
— Advertising and marketing services providers (e.g. newspaper, Yellow Pages, search agency) also scored relatively low at 9 percent.
— Though these providers in the aggregate tend to bundle adjacent services, SMBs seem to prefer other entities such as online cloud services providers.
— This means that advertising services providers have to do more to gain the trust of SMBs if they are to capture a greater share of wallet.
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 areas of SMB technology adoption. That will include the types of SMB SaaS software that resonate most. 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.
