Benchmark Bytes: Why Don’t SMBs Utilize Saas to its Extent?

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 SMB Saas frees up time for revenue-generating activities, we switch gears to examine underutilized services.

Specifically, 61 percent of SMBs are not using the full capabilities of SMB Saas products. Among those, the biggest stated reason for underutilizing these tools is that some features don’t apply to their business (24 percent). That’s followed by the need for more training to use additional features (23 percent).

Further down the list is the need for new processes to utilize SMB Saas features (20 percent). That’s followed by SMBs that plan to use additional features but haven’t started yet (17 percent). These data were gathered in January and February so they have some Covid-influence in terms of adoption drivers.

Localogy members can access full charts and SMB survey reports.

What Does it All Mean?

Going a bit deeper, a few things jump out at us:

— At a high level, it’s telling that a majority (61 percent) aren’t using the full feature set that they’re paying for in SMB Saas tools.

— This should be concerning to SMB Saas providers in that businesses aren’t getting the intended value out of the software, which could impact their churn rates.

— The leading reason for underutilizing these tools — the fact that additional features don’t apply to a given business — has product design implications for bundling in features that are more relevant for SMBs.

— Similarly, 23 percent of respondents say they’ll need additional training in order to utilize more features, suggesting that SMB Saas providers should provide more tutorials and onboarding resources.

— It’s encouraging that 17 percent of respondents plan to activate additional features but just haven’t done so yet. This is likewise a call to action for SMB Saas providers to accelerate the process

— In this case, they should incentivize the use of additional features or gamify SMB onboarding (think: status bars or completion points for activating the full feature set).

— The more features that SMBs use, the more likely they are to associate SMB Saas tools with positive ROI. That, again, can impact key success factors like retention and recurring revenue.

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.

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