Small Business SaaS Priorities Shifting from Efficiency to Mobility

As small-business owners emerge from COVID-related lockdowns, they continue to invest in SaaS tools to help them through the crisis. This has led to a dramatic shift in the reasons SMBs site for their technology purchases. And it has led to a shift in where they are directing their investments.

Currently, about 88% of small businesses are open. This is a dramatic rise from April when about a third of businesses were closed. However, being open is not the same as being back to normal. For example, 39% of businesses are still operating at reduced capacity and 40% have laid workers off. Another 60% are managing at least some remote workers. 

So it’s no surprise that small business priorities have changed under these circumstances. 

According to Wave V-III of Localogy’s Modern Commerce Monitor™ state of SMB  study, the percentage of SMBs cited “time savings” or “efficiency” as a top reason to shift a business function to SaaS fell from 72% in January to 33% in June. 

Over the same time frame, the number citing smartphone access as the key reason for the shift jumped from 23% to 45%. 

Clearly events have conspired to pull a 180 on what matters to small business operators. Pre-pandemic, busy business owners were so bogged down in the red tape of running a business that they struggled to find enough time to devote to value-added activities like sales, marketing, and customer engagement. 

During the pandemic and as we emerge into a hybrid post-lockdown phase, businesses need tools to help them do businesses in ways they haven’t done before. 

For example, as noted earlier, many small businesses are managing remote teams for the first time. (More on this later.)  They are also having to sell online or manage contactless payments and delivery. Again many are managing these processes for the first time. Under these circumstances, saving time plummets on the list of priorities. Instead, the ability to run a business remotely and service customers effectively at a distance climb up the list. 

Measuring Across the SMB Operations Stack

MCM (Modern Commerce Monitor™ )is an ongoing online survey of small businesses (500 or fewer employees) asking a battery of questions about their technology use across the full business operation, from sales and marketing through accounting. We also ask about their business outlook.

The new Wave V-III report was issued last week for Localogy members. This latest “mini-wave”, conducted between June 3 and June 17, included 1,014 respondents. The responding business decision-makers span five verticals (retail, home services, personal services, automotive and professional series).

The survey addresses software applications for all elements of a small business’s day-to-day operation. 

These include online website hosting platforms (e.g., Wix), marketing automation tools (e.g., Hubspot), online payments, and e-commerce solutions (e.g., Shopify), cloud accounting (e.g., Quickbooks), HR (e.g. Gusto), and so on. We want to help our members understand what parts of the business SMBs are automating and why. This data provides context, validation, and ideas for deeper inquiry to sales, marketing, and product teams at SMB SaaS companies.

SMBs Getting Comfortable with Change

Wave V-III found that 66% of small businesses still have some employees working remotely. This is down from 77% in April. But it still represents a huge cohort having to deal with the mechanics of managing a virtual workforce. 

The latest data shows that as time passes, business owners’ anxieties over remote work have eased. 

In the latest wave, the number of operators saying they were “moderately” or “extremely” concerned about remote worker productivity dropped from 60% to 38%. 

 

 

This easing of concerns coincides with more investment in tools that drive productivity in a contactless workplace. For example, since April the number who report investing in messaging and chat software grew from 20% to 29% and virtual office software adoption grew from 13% to 22%. 

And across the five pillars of the small business operating system that MCM has tracked since the first wave in 2017, there has been a spike in adoption in areas that align with a movement to contactless payments and eCommerce. 

More Insights on the State of SMBs Today

MCM Wave V-III covers a much wider range of topics than covered in this post. For example, we track how SMBs are purchasing SaaS tools (e.g., BIY vs direct sales). And we measure which pricing models seem to drive purchase behavior (e.g., freemiums, free trials). 

MCM also tracks small business sentiment, future tech purchase intentions, satisfaction with SaaS tools, and more. 

The Wave V-III report and past reports are available to Localogy members. Future reports will take a deep dive into specific verticals from Wave V-III, including Home Services, Retail, and Restaurants. In addition, Localogy will release Wave V-IV in September.

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