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 channels through which SMBs purchase Saas last week, we switch gears to examine purchasing & pricing models.
Specifically, the most popular purchase model is freemium, including upgrading from a free tier (36 percent). That’s followed by a monthly subscription following a free trial (21 percent), monthly subscription without a free trial (20 percent) and a one-time purchase at full price (18 percent).
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Data Dive
Going deeper, a few other insights jump out from these figures.
– It’s telling that freemium purchase models are the most popular way to buy SMB SaaS
– This purchase model is quite prevalent in the software world to ease users in.
– It stands to reason that this resonates with SMBs in particular, given their cost sensitivities and technical aptitude (or sometimes lack thereof).
– Freemium models de-risk software buying decisions by lettings SMBs try before they buy.
– The second most prevalent purchasing model holds similar dynamics: purchase following a free trial
– If we add up freemium services and purchases after a free trial, it accounts for 57 percent of SMB respondents.
– SMBs that purchase software without any trial or free tier account for 38 percent of total respondents.
– This represents a considerable portion of respondents that have enough confidence to buy without trying the product first. This is surprisingly high.
– Still, it’s outnumbered by respondents that want to try a software product in some way before buying: a demand signal that software players should take into consideration.
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.
