After examining SMB website dynamics in our Website Windup series, and in roundtable discussions with thought-leading investors, we decided to go right to the source: SMBs themselves. How do they feel about websites? What features do they want? And do they upsell to adjacent services?
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 that examined SMB’s top areas of improvement, we’ll now dive into SMBs that enlist agencies versus DIY.
First, for context, we’ll reiterate the last installment’s data. The biggest thing SMBs feel is missing from websites provider is the ability to ask general questions (36 percent). That’s followed by performance reporting (28 percent), assistance with learning functions (13 percent) and on-demand troubleshooting (10 percent).
Notably, these sentiments come mostly from SMBs that take a DIY approach to website management. Given that they have direct contact with website builders’ products, they’ve developed the above attitudes. But there are a segment of SMBs who instead pay for someone else to deal with it.
Specifically, 54 percent of SMBs with 50 or more employees enlist the services of agencies to manage their website presence. 29 percent of businesses with 26-50 employees do so, and it tapers off from there as headcount shrinks. The figures flip for the DIY route, where smaller businesses index high.
What Does it All Mean?
Going a bit deeper on the above data points, a few things jump out at us:
— There’s a clear correlation between SMB size and propensity to farm out website services.
— The larger an SMB, the greater its chance of utilizing agency services. These variables grow together in step, as can be seen in the above bars.
— The biggest reason for this is budget, as larger businesses tend to correlate to greater revenue levels or a stage of maturity where the business has “graduated” to agency services.
— The correlation between size and agency outsourcing can also be seen as counter-intuitive as more employees (including sometimes a marketing department) means more hands to manage website presence.
— Here, it appears that between the above variables — time and money — the latter is a stronger signal for propensity to use agency services for website work.
— The lesson for SMB-focused agencies is to target businesses with 50 or more employees, where there’s clearly greater receptiveness.
— This finding joins the existing reasons that agencies would want to target larger SMBs over smaller ones, including larger spend levels and lifetime value.
As further background, websites continue to be the “tip of the spear,” for SMB marketing. They’re often the first step into digital marketing, followed by other formats. This is generally due to the cost/benefit ratio, given the falling cost of web hosting and escalating standards of website builders.
Websites can also be the base ingredient to get in the game for SEO, social amplification, and other areas (not always the case). This is the reason many website providers are expanding their bundles to deepen SMB relationships with higher-margin products like CRM and eCommerce.
This of course has gone into hyperdrive in the Covid era as SMBs have been forced to accelerate their digital transformation as a survival imperative. This often sends them into the arms of website builders as an onramp to the many other things they need to accomplish… eCommerce being most prominent.
We’ll return in future installments to go deeper on this bundling opportunity, as well as other factors like SMB digital adoption in areas beyond websites. Let us know what additional insights jump out at you from the above data, and stay tuned for more data breakdowns in our Benchmark Bytes series.