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Report: How the ‘Engagement Challenge’ Threatens SaaS Adoption

There is a good news/bad news story emerging around the movement of small-businesses into the cloud to do everything from lead generation to payroll processing to supply chain management. 

The good news is the shift to the cloud is steady, and the applications small businesses are adopting are making a positive difference. There is no question that starting and running a small business has less friction and is available to a more diverse community today because of cloud software, which brings functionality once available only to large businesses to SMBs via monthly subscription. 

Small business tech columnist Gene Marks puts it this way in the report:

“Can you imagine running a business back in 1978? You can’t even compare what you can do now. And it is all because of technology.”

This chart from the new LSA Modern Commerce Monitor™️ shows how steady the march into the cloud has been for U.S. small business operators. 

The flip side of this steady adoption of SaaS tools for business operation is that small businesses continue to struggle with figuring out how to use all the software they are buying to its full capacity. And many express their frustration with the complexity of software and the inadequacy of training and support. Many also feel misled by claims about what the software is capable of doing. The implication of this engagement challenge is that so many more SMBs would jump on the cloud if the process were less daunting. 

This disconnect between adoption and engagement is examined in a new LSA report called “The Engagement Challenge” that was commissioned by Mono Solutions

The report is divided into three sections. The first outlines the positive story of how SaaS and the cloud have caught on with a large segment of SMBs, with tangible, positive results. More than half of SMBs say the cloud software they have purchased performs above expectations. And they cite benefits like higher customer satisfaction and more time on revenue-generating activities resulting from their use of the software. 

Part II of the report looks at the engagement challenge and its causes. Notably, 62% of SMBs say they don’t believe they get the full benefit of the software they use. And Part III features interviews with SaaS developers who share ideas for building better software for small businesses.  

The report cites data from the Modern Commerce Monitor™️ and from an online survey of SMB SaaS developers conducted exclusively for this report. 

The online survey of industry pros drilled into the issues that cause churn (lack of software usage is the leading cause, according to industry insiders). It also asked the respondents to estimate the length of the engagement cycle or the time within which software usage must be established to avoid churn. We were surprised by the range of responses, seen in the chart below. 

 

The report is available now for a free download. The report’s findings will also be discussed in an upcoming episode of the Above the Cloud podcast.

 

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