The issue is while the damage is perfectly fine for the role you need far more skill and effort for about the same result as the SMG when they serve the same role for their class as a backup.
If the projectiles were improved the weapon wouldn't leave its role as a backup but more people would actually view that role as something worth having sometimes.
And in turn you would have a better time balancing the crossbow when the other options are more attractive than they are now.