Bredin Report: Selling SaaS to SMBs, Part 1

The COVID-19 pandemic has accelerated SMB technology adoption. Whether it is to sell more online, reduce costs or boost productivity, the pandemic has forced many SMBs to reassess their operations and deploy technology to improve many aspects of their business.

One of the leading ways SMBs are adopting technology, of course, is software as a service. The business case can be compelling; SaaS offers anywhere, anytime access to secure, high-value capabilities spanning a dizzying range of business functions.

The question is, how can marketers convey the benefits of SaaS solutions in a compelling way that is attuned to the current realities of SMBs? To find out, we surveyed 500 SMB principals via the Bredin SMB Pulse.

The results can provide useful direction for your (or your partners’) SMB SaaS marketing activity.

Cloud terminology

When you describe your SaaS offerings, terminology matters. SMBs are by far the most familiar with the term “the cloud,” followed by “hosted application.” The larger the SMB, the more familiar they are with all cloud-relevant terminology.

Application usage

The most popular applications are email (87% of SMBs use this), an office productivity suite (67%), and accounting/billing (63%). However, of applications used in the cloud, the most popular are file-sharing (68% of users use a cloud-based application), storage/file backup, and website analytics (tied at 57%).

Functionality

Overall, almost six in 10 cloud software users feel they are taking full advantage of their cloud software’s functionality. However, utilization varies significantly by company size: 58% of companies with fewer than 20 employees (very small businesses, or VSBs) feel they are, compared to 73% of companies with 20 to 99 employees (small businesses, or SBs), and 88% of companies with 100 to 500 employees (mid-sized businesses, or MBs).

Why is this important? The more a company feels they are getting from an application, the more likely they are to remain a user.

Cloud adoption

In aggregate, about half of SMBs currently using the cloud expect their usage to remain about the same over the next two years. However, adoption outlook varies quite a bit by company size: 42% of VSBs using the cloud expect to use it more in the next two years, compared to 69% of SBs and 74% of MBs. For marketers, the near-term sales opportunity is in larger SMBs, while VSBs need more education on the definition and benefits of SaaS.

When asked which applications they will adopt in the cloud (as opposed to on-premises), the responses vary: 57% of VSBs will adopt storage / file backup in the cloud, while 68% of SBs will adopt a cloud-based office productivity suite, and 75% of MBs will adopt a cloud-based customer service application.

Adoption drivers

“Anywhere / anytime access” is the top driver of cloud adoption overall, especially among VSBs. VSBs are also motivated by the improved functionality that SaaS solutions can provide. SBs and MBs are most motivated by the security benefits of the cloud, although SBs are also interested in the cost savings and ease of administration of the cloud. In addition to security, MBs like the improved reliability and collaboration that the cloud provides.

The net: the more you know what motivates your target audience, the better you can tailor your message to resonate with them.

Freemium usage

Three out of four SaaS-using SMBs started using at least one application on a freemium basis, with no real difference by company size. Of them, almost half migrated to a paid subscription – 45% overall, and 44% of VSBs, 67% of SBs and a full 81% of MBs. A freemium model can be a great way to generate trial and paid subscriptions, especially among larger SMBs.

Part 2

Next week, we’ll explore the sources of information that SMBs use at each stage of the SaaS sales cycle, and what is important to them from SaaS vendors.

About Bredin

Bredin was founded in 1991 by America's foremost small business expert, author and syndicated columnist Alice Bredin. From its beginning, Bredin was designed to be a breed apart: 50% research consultancy, 50% creative agency, 100% focused on SMB. Based in Somerville, Mass., Bredin helps Fortune 500 companies understand, reach and retain SMB customers through timely, targeted research and award-winning marketing programs.