What Functional Areas Represent SMBs’ Greatest SaaS Needs?

Private SaaS

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. After examining SMBs’ SaaS adoption likelihood last week, we switch gears to look at the functions in which they’re most interested.

In other words, among all of the SMB functions that are addressed by modern Saas offerings, which resonate most? We’re talking about everything from Payment processing to payroll to CRM. It consists of a mix of horizontal categories that range from operational tools to sales and marketing.

How Likely are SMBs to Adopt SaaS Tools?

Data Dive

Going deeper, a few insights jump out from these figures.

– To reiterate last week’s findings, 45 percent of SMBs who don’t currently use online services to run their business plan to start doing so in the next year. 65 percent of current users plan to increase SMB Saas spending.

– The SaaS functions that SMBs are most attracted to are finance and operations, at 40 percent of responses.

–That’s followed by supply chain (38 percent), CRM (38 percent), and payroll & HR software (35 percent).

– Finance and operational software’s leading position in these results is logical, as they support “mission-critical” day-to-day functions.

– This is a key tenet of SMB SaaS… going beyond functions like marketing to reach deeper into SMB operational needs.

– Not only are such functions critical to day-to-day operations, but they have greater retention as it’s harder for SMBs to turn them off or switch providers (also known as switching cost).

– The functions that followed in SMB affinity likewise possess operational importance, including supply chain software.

– Supply chain software’s need has amplified in the past year as global supply-chain impediments compel it.

– CRM and payroll come next, the latter arguably having more of a core operational role, though CRM can have several points of value, from marketing to customer service.

– Marketing and advertising software scored lowest with 38 percent.

Localogy members can access full charts and SMB survey reports. Non-members can purchase reports.

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.

And don’t forget that MCM, Wave 8 will be available soon…

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