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) Wave 6.1 answers these and other questions across SMB SaaS, which we preview in this Benchmark Bytes series. After examining the most prevalent purchasing & pricing models for SMB Saas last week, we drill down on one of those models: freemium.
Specifically, how important is a freemium option to SMBs that are considering new software purchases? 49 percent say that they would not have purchased a Saas offering if there wasn’t a free trial. Meanwhile, 44 percent say that a free trial wasn’t impactful… they were going to buy the software anyway.
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Data Dive
Going deeper, a few other insights jump out from these figures.
– The split between freemium models being critical versus irrelevant is fairly even, with 49 percent and 44 percent respectively, as noted.
– The remainder (7 percent) reported that a freemium offering made things easier but it wasn’t critical in their buying decision… they may have purchased anyway.
– This middle ground can effectively be lumped in with the 44 percent of respondents that said freemium offers weren’t necessary, giving the slight lead overall to the latter.
– Still, the 49 percent that reports freemium software’s influential role in buying decisions represent a more important and impactful cohort.
– In other words, though only half of the survey universe, this subset reports that a freemium offer is critical to their adoption decision.
– Therefore, freemium software has an outsized impact on this more-discerning segment of SMBs.
– Furthermore, having a freemium offer didn’t negatively impact buying decisions for the other half of the sample… it was just extraneous.
– These SMBs survey sentiments aside, it’s also important to offer freemium subscription tiers, given that competitors may gain an edge by offering it.
– This competitive imperative is growing as freemium is increasingly prevalent in the enterprise software world.
– This is amplified in SMB Saas, given risk-averse and technically-novice buyers that sometimes need a test drive to gain confidence.
– Synthesizing these variables, all signs point to the strategic importance for SaaS players to offer freemium packages to entice and onboard SMBs.
Time to Shine
Stepping back, SMB online marketing – website-based or otherwise – 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’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 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.
