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 during a global pandemic that has hit local businesses hardest?
Localogy’s Modern Commerce Monitor (MCM) Wave 6.1 answers these and other questions across the SMB SaaS product set, which we preview in this Benchmark Bytes series. After the last installment examined how many vendors SMBs work with, we switch gears this week to see who has consolidated services.
Specifically, 20 percent of SMBs report that they have consolidated service providers to only work with one. 73 percent haven’t done so and 7 percent aren’t sure. Among those who have consolidated, 50 percent have chosen a vendor that specializes in their field while 40 percent work with non-specialized vendors.
What Does it All Mean?
Going a bit deeper, a few things jump out at us:
— As we examined last week, there is a preference among SMBs for vendor consolidation. However, few actually work with just one vendor.
— The fact that aspiration outpaces action signals opportunity for any vendors who can get SMBs to work with them alone.
— The downside of course is that a move to consolidation means that some vendors will be dropped. So consolidation could be a land grab among SMB SaaS vendors.
— The dilemma is that performance in various functional areas can better be optimized by a mix of best-of-breed software. So consolidation is a tradeoff between quality and convenience.
— SMBs are showing the former with their actions but opting for the latter in their words and stated preferences.
— The target (easier said than done) is to build software bundles that have functional excellence across the board.
— As we examined last week, the key word is integration, which is easier to achieve when disparate software is from the same provider.
— As for levels of specialization for vendors, SMBs have a greater propensity for vertical-specific providers when they consolidate services.
— This means that the land grab noted above could be won more easily by SMB SaaS vendors who specialize in a given vertical or series of verticals.
Time to Shine
Stepping back, SMB online services adoption tracked by MCM continues to grow rapidly. SMB SaaS startups and online services providers are correspondingly thriving with exit velocity, funding, and public-market performance. SMB SaaS is becoming a leading subsector of the broader SaaS universe.
Meanwhile, new SMB SaaS users could represent permanent adopters — a concept that’s accelerated in the Covid era as SMBs are forced to boost their digital transformation. This sends them into the arms of SaaS providers to accomplish a range of operational and marketing functions.
We’ll return in the next installment to go deeper on other areas of SMB technology adoption. That will include the types of SMB SaaS software that resonate most. 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.