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 post-pandemic world? 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 pricing models under which SMBs procure SMB SaaS products, we switch gears to examine the impact of just one of those models: free trials? Can conversions be boosted by letting SMBs try before they buy? It’s a key question for the cash-challenged and tech-novice SMB segment.
Data Dive
– As we examined last week, the top pricing model for SMB SaaS is Freemium (29 percent)
– This involves free services with the opportunity to upgrade to a paid version with more features.
– Further down the list, but still prevalent, was monthly pricing with a free trial (22 percent)
– This is similar to the ‘try before you buy’ orientation of freemium offerings above, however the trial is limited in time as opposed to features.
– In both of the above cases, the model resonates with SMBs because free trials help them to allay any comfort issues that they may have with technology in general.
– Going one level deeper, the potency of free trials is validated by the fact that 59 percent of SMB SaaS buyers claim that they would not have purchased the product if a free trial wasn’t offered.
– Though the logic behind free trials is somewhat clear, this figure underscores the importance to vendors given that a considerable portion of sales hinge so definitively on the offer.
– Conversely, 38 percent of SMB SaaS buyers who took advantage of a free trial claim that the offer didn’t make a difference… they were planning to buy anyway.
– This is a meaningful share of buyers, however it’s mostly a moot point given the larger 59 percent who claim that a free trial was a definitive purchase driver. This makes it compelling enough for vendors to offer it to everyone.
– Lastly, 3 percent say that the free trial did indeed make it easier to buy, but they probably would have bought/licensed the software anyway…
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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.
