Study: 22% of SMBs Use Cloud-Based Solutions for Marketing

Study: 22% of SMBs Use Cloud-Based Solutions for Marketing

Nearly half of small businesses have adopted cloud-based tools and many more will in the next 12 to 18 months. This shift to the cloud may be the most disruptive trend yet facing local marketing and media sellers.

As it stands today, a new study found that 22% of SMBs are already making use of cloud-based technology (SaaS) for marketing and advertising. This was second behind payroll and HR (25%) and ahead of customer relationship management (20%), finance and operations (14%) and supply chain services (10%).

Of the services analyzed, 37% of SMBs said they aren’t using any of the ones listed. For those planning to shift to cloud-based tech, 27% will be investing in CRM tools. And of those who expect to invest in new tech, 82% expect to do so within the next year. Understanding this shift will help SMB providers make strategic decisions related to product development, competitive differentiation and growth strategies.

The data comes from LSA’s first wave of the Tech Adoption Index which surveyed over 1000 SMBs. To access the graphic above, click here.

Tech Adoption Index: Tracking SMB Usage of Cloud-Based Services

Tech Adoption Index: Tracking SMB Usage of Cloud-Based Services

Nearly half of small and medium-sized businesses (SMBs) have adopted cloud-based tools in at least one area of their businesses and many more will over the next 12 to 18 months. As SaaS businesses establish trust with their SMB customers they will expand into adjacent services, including local marketing.

This shift to the cloud may be the most disruptive trend yet facing local media sellers. For that reason, LSA developed a new quantitative tracking study called the Tech Adoption Index (TAI), sponsored by Dex Media and Google. The TAI is designed to measure the SMB market’s shift to cloud-based services through a bi-annual survey of 1,000 SMBs in each wave.

In a recent webinar, LSA’s Charles Laughlin and Advisor Neal Polachek shared top-line results from the first TAI wave. Here are some of the takeaways from the webinar:

  • Enterprise technology is increasingly being scaled down to serve small businesses.
  • The estimated worldwide SMB SaaS revenue is $10 billion.
  • 32% of small biz have adopted tech for customer relationship management (CRM), 25% for payroll and other human resource solutions.
  • Small biz only spend 36% of their time actually providing services to customers.
  • 57% of SMBs are “comfortable” with existing tech & tools.
  • 60% would prefer to work with a single provider of software and technology services vs. many different providers.

The goal of the research is to help SMB providers use the data to make strategic businesses decisions as it relates to product development, competitive differentiation and growth strategies. For the entire discussion, view the video below.

Study: Tech Adoption Linked to Revenue Growth for Small Business

Study: Tech Adoption Linked to Revenue Growth for Small Business

From not having a website to using digital tools that analyze purchase behaviors, small and medium-sized businesses (SMBs) span the entire spectrum of digital adoption. However, in today’s market, effective usage of digital technologies is directly related to revenue growth. SMBs not engaging with tech are at risk of losing to those that are.

A new Deloitte study (commissioned by Google) found that the more digitally sophisticated an SMB is, the greater their revenue growth rate is. Bucketed into four levels of sophistication (basic, intermediate, high, advanced), the study found that revenue growth rate for the last 12 months for “advanced” SMBs was nearly four times that of “basic” SMBs.

Aggregated figures for revenue growth in the past 12 months were: 12% basic, 21% intermediate, 31% high and 45% advanced. The greater the SMB’s digital sophistication level, the study found, the higher the revenue growth rate.

Here were some additional findings for digitally advanced small businesses:

  • Are able to reach a more diversified customer base, including a wider range of export markets, which means they can grow faster than small businesses with a more limited pool of potential customers.
  • Have greater capabilities for product innovation, which enables these small businesses to generate new streams of revenue by offering new products and services to the market.
  • Experience more customer activity throughout the sales funnel, from initial interest, to purchase inquiries, to actual customers.

The distribution of SMBs across the various sophistication levels was fairly even, with 20% falling under basic, 30% intermediate, 30% high and 20% advanced. The following are some key characteristics of each of the levels:

DeloitteStudy1

Traditionally SMB providers have segmented the SMB market by years in business, headcount, revenues or industry. However the study’s view of the space offers providers, particularly digital marketers, a new way to carve up the space and target SMBs.

Running parallel to this digital adoption issue is a widening marketing spending gap among SMBs. According to a recent survey, roughly a third (33%) of SMBs expect to spend $1,000 or less on marketing this year while 30% will spend $25,000 or more.

The study does suggest something of a chicken and egg scenario. Is digital investment a function of a more sophisticated and growth-oriented approach or does digital deliver growth independent of the underlying attitudes of the business? According to the study, “the primary causal direction of the relationship is that small businesses are indeed reaping significant growth dividends as a result of increased use of digital tools.”

It isn’t a major surprise that digital adoption is helping drive revenue growth for SMBs given the rise of the digital consumer. But the study does help quantify and segment the market based on digital sophistication among SMBs, offering a new way for providers to think about and approach SMBs.