At Cloud Summit, a Focus on the Transition to SaaS Services

At last week’s SMB Cloud Adoption Summit held by The Local Search Association in San Francisco, roughly 100 attendees gathered to discuss the transition of their  services for SMBs from advertising-oriented sales to the new breed of SaaS based solutions (or “Cloud Applications.”).

Key topics for the gathered group include the size of the SaaS market for SMBs, segmentation, sales approaches and tech offerings. The Summit represented something of a 1-2 punch with October’s B2SMB Summit in Chicago, a brand-centric event that I co-chaired with Hiveworks.

For companies that currently focus on media channels, several speakers suggested that a transition to SaaS solutions is inevitable.  For one thing, the “stickiness” of SaaS services is much higher.

ReachLocal CPO Kris Barton noted that SaaS churn is typically between 6 percent and 22 percent. Media churn is between 39 percent and 86 percent. The key is to provide an integrated marketing system, said Barton: “Sixty-four percent are more likely to use a marketing system when it is integrated with core business systems.”

Barton also stressed how important it is for companies like ReachLocal — owned by Gannett — to become a “coach” rather than a “concierge.”  “A coach provides accountability, instruction and insights,” he said. A concierge provides clients with “whatever they want to hear” and tend to be “overly optimistic about results.”

Other speakers noted how important it is to be mobile-centric. While fewer than half of SMBs are currently using mobile apps, there is a wide recognition that mobile will be at the center of the universe within five years.

A mobile-centric approach would seem to give an edge to tech firms. As conference chair Charles Laughlin noted, “Tech rises above traditional media as the preferred partner.” LSA research found this is especially the case with millennial-owned SMBs, who may never have purchased marketing programs like search from media companies.  

But tech giants that haven’t focused on industry trends will get hit, too. As Broadly CEO Josh Melick noted, Salesforce has been an early leader in SaaS services. But the company’s mobile app is “a POS.” The company clearly hasn’t envisioned “running your business from your mobile” devices, he said.

Melick points to companies like Square as positioning themselves for true SaaS success with SMBs. If it can focus more,  Square would be “dangerous” to existing SMB sales leaders because it provides a strong set of services at great values,” said Melick.

What remains most important for winning SMB business, however, is establishing clear value. It is currently a mess, says Melick. SaaS service tiers are basically the same offering, whether they cost their clients monthly fees of $5 to $50, $200 to $400, or $2,000 to $5,000. “They are being driven more on business value than on value delivered,” said Melick. “Make sure their value is linked up.”

Peter Krasilovsky is the lead consultant and  analyst at LocalOnliner, which focuses on SMB marketing and commerce solutions.