This is the inaugural post in LSA’s new Video Vault series. Running semi-weekly, it examines selected conference talks including embedded video and key takeaways. Speakers’ opinions are their own. Check out the entire series here.
The SMB SaaS universe continues to expand. Comprising SMB operational tools, it stretches well beyond the traditional advertising & marketing focus of the sector known as “local.” It’s not just about acquiring customers but keeping them. It’s payment processing, scheduling and myriad back-office functions.
This was the topic of a previous Street Fight Summit panel discussion* (video below) as well as an upcoming LSA white paper on SMB SaaS. Panelists span the gamut of SMB operational functions: inventory & order fulfillment (Slice) payment processing (UpServe) and networking/ telephony (Cisco).
Slice takes a vertical-specific approach with Pizza. Sort of a “pizza shop as a service,” it covers marketing tools, menu creation, and order/delivery logistics. It even uses its size for supply chain leverage for its customers. This brings franchise-like support to independent shops while preserving their authenticity.
This is a sizable market opportunity if you consider that 75 percent of pizza shop locations are independent. Combine those numbers with such a fragmented set of available technologies, and you get an opportunity to bring independents the standardization and economies of scale enjoyed by the big guys.
“In terms of locations, its 25 percent big chains and 75 percent [independents],” Slice CEO Ilir Sela told me on stage. “In terms of revenue, two-thirds is local so a third is the big chains. [They] are processing more transactions on a per-store basis and that has been driven by technology adoption.”
The same principle applies to full-service restaurants that are UpServe’s bread & butter. Independent restaurants are famously frenetic, says CEO Angus Davis, which puts them behind the technology curve. This is a double-edged sword in that it’s a massive market, but a tough customer. Simplicity is key.
“Restaurants are about 10-years behind other verticals are in terms of their adoption of digital technologies,” said Davis. “They’re left behind the digital transformation that’s occurred in other parts of our economy, so there’s a strong need to get access to technologies and a huge addressable market.”
But the product works if its retention rates are any indication. UpServe has 100+% net retention, which Davis partly attributes to the critical business functions it addresses. Compared to, say, ad campaigns that can be turned on and off, payment processing is mission-critical. It’s a harder sell but with greater retention.
“That’s a critically important metric, and one that’s pretty unusual within the SMB sector,” said Davis. “If you can supply the operating system on which a business runs, it’s typically a single vendor, not a multi-vendor decision. It’s a big decision… it’s not every three months you’re gonna try a new operating system.”
Cisco lives by a similar mission-critical principle said strategic account manager Nadine Paz. Telephony is a horizontal tech that has many points of entry, which can then be expanded for greater ARPU and customer lifetime value. Everyone needs routers and secure internet, which can be the tip of a very long spear.
See the full panel discussion below and stay tuned for more video and analysis from top SMB SaaS-related talks in LSA’s video vault series.
*Disclosure: the author of this post holds an editorial content management position at Street Fight, and moderated the conference session featured in this post