As part of the ritual of examining local commerce and SMB Saas strategies, we decided to go 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 during a global pandemic that has hit local businesses hardest?
Localogy’s latest Small Business Trends report answers these and other questions across the SMB SaaS product set, which we examine one-by-one in this Benchmark Bytes series. After the last installment examined how SMBs have changed their websites in 2020, we shift attention this week to CRM buying patterns.
Specifically, the data tell us that 40 percent of SMBs use CRM software to help market their business. But more notably, 12 percent of have purchased new CRM software in 2020. Salesforce and Freshworks tie for the lead with 19 percent, followed by a three-way tie for second place (9 percent) with Zoho, Pipedrive and Insightly.
Hubspot, Apptivo, Microsoft Dynamics, Zendesk and others follow, each with a single-digit share of SMBs’ new CRM spend. These figures reference the time period between March 2020 and when the survey was fielded in October 2020, indicating that a considerable portion of new sales were Covid-driven.
What Does it All Mean?
Going a bit deeper, a few things jump out at us:
— CRM’s growth in new SMB adoption is logical, given that this is a time when SMBs need to optimize every customer relationship to mitigate losses.
— SMBs may have more time to apply to longstanding admin projects and “cleaning house,” during lockdowns, where CRM projects make sense.
— SMBs are also more driven to pursue any means necessary to boost business.
— Because CRM can tap into existing/past customers, it’s “low hanging fruit” in terms of marketing rigor… at least relative to new customer acquisition.
— Salesforce’s lead isn’t surprising due to the company’s continued blitz on the enterprise software market, and its down-market expansion to SMBs.
— Salesforce’s ongoing functional expansion (e.g. Marketing Cloud) allows it to continue growing and diversifying its revenue.
— But another advantage is deepening enterprise and SMB relationships through larger bundles and “one-stop-shop” appeal.
— This will only continue as Salesforce’s M&A momentum isn’t slowing down, the most recent example being Slack. This could position it well for CRM expansion among current SMB Slack users.
— Freshworks’ leading position on this list (tied with Salesforce) is somewhat surprising, given that it’s not as integrated nor brand-prolific
— The company has been pushing hard to change this over the past few years and challenge Salesforce’s dominance.
— These data represent one sign that it’s succeeding.
— Part of its strategy to gain market share and challenge Salesforce is to compete on price, which aligns with SMBs’ cash-flow challenges (endemic and Covid-inflicted).
— Hubspot, and Microsoft Dynamics’ lower position (each holding 6 percent of SMBs’ new CRM spend) is somewhat surprising given existing SMB software integrations and brand equity.
As these data indicate, CRM is on a clear uptick in the Covid era. The question is if that growth will sustain as SMBs reopen. A certain degree of SMB CRM sales will evaporate as they themselves do… which isn’t good for CRM providers nor any vendors that serve this segment. But there could also be new Covid-driven converts.
These new users could represent permanent adopters — a concept that has gone into hyperdrive in the Covid era as SMBs are forced to accelerate their digital transformation as a survival imperative. This often sends them into the arms of SaaS providers to accomplish a range of operational and marketing functions.
We’ll return in the next installments to go deeper on CRM, including segmenting what types of SMBs are adopting, and what goals they have for the technology. 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.