Yesterday Charles Laughlin, Neal Polachek and I presented a webinar about the evolution of the SMB market and cloud services. Check it out here. LSA has also created a dedicated program (Tech Adoption Index) examining changes in the SMB market and the expanding scope of competition.
Boundaries are dissolving and market sectors that were very separate before are increasingly porous. Companies that offer online HR/payroll or accounting/invoicing software, for example, might offer CRM or other digital marketing. Square, originally a POS service, is now doing CRM and social media marketing for example.
Companies that were well outside of SMB marketing services are now encroaching on the realm of the traditional providers of those services to SMBs: newspapers, YP, online agencies and others. By the same token some companies that were purely about leads are now offering back office functionality.
Indeed, some of the local marketing companies that primarily provided local search leads on behalf of SMBs are now diversifying or rebranding. For example, ReachLocal is promoting “marketing automation” as a big part of the company’s messaging.
DexYP is another one that now describes itself very differently than in the past (hear more on this podcast with DexYP CMO Gordon Henry). Take a look below at DexYP’s Google search result. The headline and text don’t emphasize local search, advertising or lead-generation (although DexYP does all those things), rather “local and small business automation software.”
These are just two examples, as evidence of the shift taking place in the broader market.
Another example: eRelevance sells retention marketing services to healthcare professionals through medical equipment salespeople. The pitch is that the service will help drive more business that helps pay for the machines. Novel and unexpected: the medical equipment provider selling marketing services. This is an example of how new competitors are entering the market; it’s also an example of how niche players and vertical specialists will put pressure on the “horizontal” marketing service providers.
From the SMB perspective, CRM solutions appear to be one of the gateways to the cloud; another entry point is productivity (e.g., Office 365 has expanded into invoicing). The following data is from LSA’s most recent survey of 1,000 SMBs:
CRM and “marketing automation” started in the enterprise and have moved down market into the SMB arena. These capabilities are now being supported or supplemented by “machine learning” and “AI.” Some of this is clearly bluster but some of it is very real.
Technology advancement is partly what’s driving the product evolution I’m describing. But there’s a lot more going on such as demographic shifts in the SMB world, rising consumer demands and new competitive pressures faced by both SMBs and their marketing services providers.
All of this is complicated and for the companies involved success is far from assured. What’s the right mix of products, what’s the right go-to-market strategy; is the brand “elastic” enough to sell “software”? I spoke to one directory company executive who expressed skepticism about whether companies like his or others similarly situated — used to providing leads, clicks and calls to SMBs — could successfully transition into SaaS companies.
There are about 10 different questions and issues raised above. Many of them will be explored in provocative discussions at LSA’s upcoming SMB Cloud Adoption Summit, which is not so much about software as it is about where the SMB market is heading and who stands to benefit. Join us on December 7 in San Francisco.