As part of the ritual of examining local commerce and SMB SaaS strategies, Localogy goes right to the source: SMBs themselves. After examining the SMBs that consolodate SaaS services into one provider, we switch gears to look at the types of vendors they choose. Are they vertical-specific or more broad?
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.
Data Dive
– To recap last week’s findings, 44 percent of SMBs that have consolidated software vendors have done so with just one solitary provider
– 53 percent of SMBs haven’t yet consolidated down that level, while the remaining 3 percent aren’t sure.
– This 53 percent represents an addressable market for software vendors that can get SMBs to consolidate… we already know they largely want to do so, given SMB sentiments examined earlier in this series.
– But focusing today on that 44 percent of SMBs that have gone down to one provider, it raises questions about the nature of those vendors.
– For example, do they specialize in a given vertical, or are they broader in scope?
– It turns out that the former is a more popular choice among SMBs, to the tune of 56 percent of respondents (these respondents are a subset of the overall sample that reported having consolidated to one provider, per the above).
– Meanwhile, 37 percent work with a provider that serves several verticals and functions.
– The remaining 7 percent of respondents chose “other.”
– Stepping back, when looking at the SMB choice between specialized and broad, there are pros and cons of each.
– For example, broadly-defined players tend to be larger and more proven, including reliable support and other functions (example: Salesforce)
– On the other hand, specialized players can be more purpose-built, which is especially relevant in specialized verticals such as fintech or healthcare.
– Those same verticals also sometimes need specialized players for other reasons, such as regulatory compliance.
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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.
And stay tuned for the latest Wave of MCM, which will be out shortly, with highlights that will be presented for the first time at Localogy’s upcoming L24 conference. We hope to see you there…
