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 in a pandemic? This is all a moving target.
Localogy’s Modern Commerce Monitor (MCM) answers these website dynamics questions across SMB SaaS, which we preview in this Benchmark Bytes series. After examining SMBs’ sentiments towards one-stop-shop SaaS, we switch gears to look at the preferred number of software vendors they use.
In other words, when piecing together best-of-breed software into a customized mix, what’s the optimal number of vendors? Though branching out to various vendors lets SMBs get best-of-breed software in any given function, it’s inconvenient to work with too many providers. So what’s the sweet spot?
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Data Dive
Going deeper, a few insights jump out from these figures.
– The vast majority of SMBs surveyed (78 percent) prefer to work with just one software vendor for all their SaaS needs.
– 21 percent prefers to work with several vendors to have the freedom and flexibility to cherry-pick the best software across functional areas.
– These results stand to reason, as SMBs are famously time-starved and tech challenged. Working with just one vendor alleviates some of these common challenges.
– However, as is sometimes the case with survey sentiments, these stated preferences are highly aspirational.
– We say that simply because their desire for one-stop-shop SaaS vendors doesn’t align with their behavior.
– For example, as examined in the previous Benchmark Bytes installment, the biggest segment of SMBs (35 percent) works with five or more software vendors.
– After that, the second most popular group (31 percent) works with 3-4 software vendors. This is followed by 1-2 software vendors (25 percent) and zero software vendors (9 percent).
– Synthesizing all of the above, SMBs say they want one vendor but their behavior paints a different picture.
– In fact, the trend among SMBs tracked over the past three waves is that they appear to be working with more vendors, not less.
– As examined in the previous Benchmark Bytes Installment, SMBs working with fewer vendors have declined over three survey waves, while vendor quantities at the higher end have grown.
–The bottom line: SMB aspirations are important as a window into their potential future behavior… but actions speak louder than words.
Time to Shine
Stepping back, SMB online marketing – website-based or otherwise – continues to grow rapidly. SMB SaaS startups and online services providers are correspondingly thriving as it continues to grow as a leading subsector of the broader SaaS universe. There’s a long-tail opportunity at play.
Meanwhile, new SMB SaaS users could represent permanent adopters. This is 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 marketing and operational functions.
We’ll return in the next installment to go deeper into Localogy original survey research. That will include SMB goals and success factors. Let us know what additional insights jump out at you from the above data. Stay tuned for more breakdowns in our Benchmark Bytes series.
