What Are SMBs’ Favorite Channels to Purchase SaaS?

What Are SMBs' Favorite Channels to Purchase SaaS? Localogy

As part of the ritual of examining local commerce and SMB SaaS strategies, Localogy goes right to the source: SMBs themselves. After examining why and when SMBs prefer to have live interactions with software salespeople, we switch gears this week to the broader question of their favorite channels from which to buy SaaS? When purchasing new software to help them run their businesses, do they buy online or from other sources?

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.

SMB SaaS Use and Purchase Trends, April 2023

Data Dive

– To recap previous findings, the biggest reason SMBs prefer to work with live sales reps is that they can have someone to turn to if there are questions.

– Several SMBs also had a gut reaction of preferring to work with humans versus machines.

– Panning back, this week’s featured data set shows that, among all places to purchase SMB SaaS, most (48 percent) prefer their existing cloud-based tech provider (e.g., Square, Gusto, Stripe)

– Though these are online sources, as opposed to a friendly local sales rep, they are trusted in that SMBs have an established relationship.

– Next on the list at 20 percent is SMBs’ existing marketing services provider, such as a marketing agency or local publisher.

– Here again, it’s a matter of trust, with a dash of convenience sprinkled in, given things like bundled pricing and cohesive billing cycles.

– Though this was the second highest answer, we should note that there’s a steep dropoff (48 percent to 20 percent) between the top two answers to this survey question.

– Coming in as the third-highest answer, 10 percent of SMB respondents prefer to purchase new software from their accountant or accounting firm.

– This is similar to the reasons stated above, involving a trusted existing relationship, but there’s an additional level of trust in that the entity handles financial information.

– Other results on the list include a wireless telephone carrier (8 percent), and an SMB’s bank (4 percent).

– The trust that’s inherent in one’s bank makes it surprising that it was the least-popular option, especially lower than a phone carrier, given that the latter are generally unliked among consumers.

– Altogether, these findings indicate SMB sentiments about their sales channels of choice, offering insights for SMB SaaS vendors about the local channels to partner with.

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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.

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