Video Vault: SaaS — The Next Small Business Revolution
November 20, 2019 | Contributed by: Charles Laughlin
This is the latest in LSA’s 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.
At the recent Asiacomm 19 conference in Vietnam, presented by ALSMA, I shared the LSA’s point of view on why small businesses are transitioning their business operations from pen and paper to the cloud, what impact this transition is having on SMBs, and how the shift to an apps based ecosystem is driving changes in how SMBs are buying digital products. The presentation’s findings were based on the LSA’s Modern Commerce Monitor ™️ small business survey.
The event’s audience was a mix of old-line directory publishers from Asian and Pacific markets, as well as publishers deep enough into their transformations to being offer SaaS or SaaS-adjacent products in their markets. Companies offering software solutions for SMBs rounded out the audience. The shift to SaaS is at different stages across this audience spectrum, but the topic is relevant across the board as SMBs are increasingly using apps, in Asia notably WhatsApp to WeChat, to run their businesses.
Before marching through the three major themes, I established some truisms about the SMB SaaS landscape that we’ve established from measuring and analyzing small business tech adoption over the past two years. These include:
- SMBs increasingly use apps to run their businesses – in particular younger business owners.
- The cloud and SaaS have given SMBs access to enterprise-level software in a cash flow friendly manner via monthly subscription.
- SaaS platforms have been expanding their offerings beyond their core – and into new competitive lanes.
- The real battleground is the SMB share of wallet – and the competitive field is now much bigger because of SaaS.
Part I: The Steady March Into the Cloud
My first point was that the MCM data clearly demonstrates that small businesses are moving rapidly into the cloud. LSA estimates that 75% of SMBs will be operating at least one key aspect of their business in the cloud by 2021. Further, about half of those not using apps today plan to do so in the future, and 65% of those who do currently use apps plan to expand their use of them in the future.
Companies in growth mode and run by younger decision-makers index higher for cloud adoption. This is a clear signal of accelerating adoption in the near future.
Part II: Benefitting from the Shift
Small businesses are not only moving into the cloud, but they are seeing positive benefits from doing so. I explained how the last wave of MCM research added some questions designed to learn whether SMB software is living up to its billing. While there are ongoing issues with getting more SMBs to actually use the software they purchase, those who do report significant benefits.
For example, as this slide shows, more than half of SMBs using cloud software say it performs better or much better than expected, across all of the business functions we measure in the survey.
And significantly, SMBs that run all or part of their business ops in the cloud report spending more time on revenue-related actions — selling, serving customers, and so on, than those that do not use any apps to run their operations. This is a very solid proof point that the cloud delivers for SMBs, at least for those that invest the time needed to fully utilize the software.
Part III: SaaS Signals a New Sales Model
Finally, I shared how SaaS has already disrupted conventional sales methods. This upheaval will accelerate as younger business decision-makers take the reins at small businesses.
For example, 30% of small businesses that have purchased cloud software to run their businesses did so directly from the provider’s website, which was the plurality choice. In addition, 60% purchased software after either using a freemium version or taking advantage of a free trial, and half of these said they would not have purchased the software without a free trial. Our view is that SaaS, as well as small businesses’ experiences as consumers, are training SMBs to form different habits and expectations around sales.
This gradual behavioral change sets the stage for another trend we anticipate, which is the development of buy it yourself platforms that SMBs can use to make well-informed purchases in a fully automated environment. And software businesses will shift more investment into customer success resources to ensure the post-sale experience is good enough to drive engagement and retention.
We will have much more to say on the topic of sales automation in the coming weeks.
You can view the entire presentation here:
The full talk is shared below, and stay tuned for more LSA video coverage in the periodic Video Vault series.
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