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. And we recently entered a new chapter of this series, with highlights from the latest wave (8.0) of Modern Commerce Monitor.

After examining the share of overall SMBs that are utilizing the full capacity of the SaaS tools that they pay for last week, we switch gears to examine the reasons they’re not. In other words, among those who aren’t utilizing SaaS tools to their potential, why not? This can be a key finding for SMB SaaS vendors.

SMB SaaS Use and Purchase Trends, April 2023

Data Dive

– As we examined last week, a slim majority of SMBs (51 percent) aren’t using the full capabilities of their SaaS tools.

– This should be concerning for SMB SaaS vendors because those who aren’t using their software’s full capacity aren’t getting its full value, and therefore could perceive less ROI.

– The above sequence could lead to customer churn in some cases.

– Going one level deeper, what are their reasons for not getting the most out of the software they pay for?

– The top reason (34 percent) is that the business believes they need more training to get the most out of their software.

– This is good news in one sense, as it’s a solvable problem… SMB SaaS vendors need to work towards better onboarding and/or training tutorials.

– It’s also a daunting finding for vendors, as it means that they have to now invest in better customer education and onboarding… or face the consequences noted above.

– The second highest response (26 percent) was that SMBs feel that some features don’t apply to their business.

– This could spell bad news for SMB SaaS vendors because it points to a mistargeted product/market fit. If SMBs are paying for software that partially doesn’t apply to them, the realization may sink in that they’re overpaying.

– Next on the list at 24 percent is the feeling among SMBs that they have every intention to get the most out of their software… but they just haven’t gotten around to it yet.

– This could be a positive outcome for SMB SaaS vendors in that the product/market fit is intact, but full adoption is just delayed and is only a matter of time.

– Then again, SMBs are often quite aspirational, so the blessed day of full-feature adoption may perpetually linger on the horizon.

– Further down the list, SMBs believe that they need to implement additional software/tools in order to get the most out of SaaS (8 percent), and others aren’t sure why they aren’t utilizing SaaS’ full potential (4 percent)

– All the above speaks to the need for more SMB education. Those who aren’t using the full range of SaaS capabilities could be educated on both how and why they should be using more features.

Long-Tail Opportunity

Stepping back, SMB online marketing – as well as operational and fintech tools – continues to grow rapidly.  SMB SaaS startups and online service 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 into digital transformation. This sent them into the arms of SaaS providers (where many have stayed) 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.