Why is SMB SaaS Engagement Such a Vexing Problem?

Writing about small business software is one of the primary tasks in my multi-faceted work life. I am also a small business software user. I use QuickBooks to handle the money. I use to manage projects. I use Zoom to conduct interviews for blog posts, white papers, and podcasts. I use Slack for real-time communication with colleagues. These are just a few examples.

As part of our coverage of small business software, we’ve identified a set of issues the industry faces as it tries to sell more SaaS to SMBs.  Engagement, which is the degree to which SMBs actually use the software they purchase, is near the top of the list of pressing issues facing the industry.

Without engagement, churn is much more likely. Without engagement, upselling users to the next price tier is far less likely. We’ve devoted a white paper to this topic, and we have an upcoming webinar on the same issue. And much of our recent Modern Commerce Monitor research focuses on SMBs’ use of and satisfaction with the software in their toolboxes.

The level and depth of my usage of the SaaS tools in my personal toolbox is a microcosm of the engagement problem. Some tools, like Zoom, I use to at or near their full capability. Others, like QuickBooks and, let’s just say not so much.

The latter experience leaves me with a nagging feeling that I am overpaying. It’s like having a combat-ready four-wheel-drive truck and never driving it on terrain more rugged than a freshly paved grocery store parking lot. If you don’t drive that bad boy up the side of a mountain every once in a while, you will eventually realize that you’re wasting your money.

The truth is it takes an investment of time to use most software at all, let alone to its fullest. Some software requires more of our time than others, but there is no getting around this barrier. Every time I begin to make this investment, a bell rings (literally or in my head) telling me I have more urgent things to do. And so it goes. When I have this experience I picture it occurring millions of times over among small business operators, freelancers, and side hustlers all over the world.

As noted, our recent Modern Commerce Monitor small business survey has documented the engagement challenge and surfaced insights that could help SMB SaaS product managers address the problem. The MCM was conducted in April-May this year among 1,000 U.S. small business decision-makers.

As the chart below from MCM shows, 62% of SMBs say they do not fully utilize the software they have purchased. This doesn’t mean they are not getting any value from their suboptimal usage. And in some cases, the user may only want a software product for its original core function and is content with this underutilization. Still, nearly two-thirds of SMBs saying they are using less than what they paid for isn’t exactly a win. It’s a troubling signal.

The reasons why SMBs don’t utilize the software are instructive. Byt the way, the 31% who say they plan to use the features but just haven’t done so is totally me. And I suspect it is most of us.

Other responses suggest the software they use may be too complex or even over-designed. Needing more training or needing to upgrade technology or change processes in order to use the software are signs that greater simplicity may be in order. It’s important to note that businesses with employees and older decision-makers flagged the need for additional training at a much higher rate than the full sample.

We drilled down further on this issue in the MCM and asked for recommendations on what would lead small businesses to increase their engagement with the software they’ve purchased.  The number one answer? “A simpler product. Too many features make it difficult to use,” garnered a 76% response.

This response raises an uncomfortable question. Are those designing software for SMBs spending enough time learning the challenges small businesses face every day in finding enough time to do all of the things they need to do to keep the lights on and the doors open?

If you want to dig deeper into this issue, I recommend that you download “The Engagement Challenge” a white paper we produced along with Mono Solutions. And you should register for our August 27 webinar, “Breaking the Engagement Barrier”, in which I, ThriveHive’s David Mihm, and Mono’s Jillian Als will debate what it takes to optimize engagement with small business software. Please plan on joining us. 

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