SaaS Supergraphic Made by Chiefmartec in 2019
Where is SaaS, where is it going, and what can we do to stay relevant in the space, and capitalize on its growth?
First, click on the above infographic created by Chiefmartec to see the immensity of the SaaS landscape.
According to the blissfully SaaS trends annual study, software as a service has continued its dramatic growth. “In 2018, SaaS spend and adoption continued to grow quickly across all company sizes. In 2018, the average company spent $343,000 on SaaS, a 78% increase from the previous year.”
Companies are spending more on SaaS than hardware for their employees. Specifically, in 2018, the average company spent $2,884 on SaaS subscriptions, while the cost of a new Macbook was $1,299 (https://www.blissfully.com/saas-trends/2019-annual/).
The data doesn’t indicate much slowing in the market, but those affiliated with SaaS have their concerns. In spite of this rapid and sustained growth, influencers and thought leaders have expressed concerns about the future of SaaS. What should new and established companies do in the face of the Martech graphic above?
Areas of Concern
We’ve spoken to the experts and honed in on three areas of concern. First, the splintering of the SaaS market due to the number of apps, and the lack of integration between these apps and internal software. Second, customer retention is more important now than ever before due to the immense and furious competition between SaaS products in almost every niche. Lastly, users want access to SaaS products and the data that they store in these products even when SaaS companies fail.
Toolkit Nausea
Splintering of SaaS due to the number of apps, and lack of integration causes toolkit nausea for administrators, employees, and SaaS specialists alike. Dana Severson (@danerobert), Director of Growth at RightMessage.com and co-founder of Startups Anonymous says larger organizations, on average “use somewhere north of 30 different SaaS tools to run their business, compared to what used to be just one or two all-in-one solutions.“
In 2017, Better Cloud released a State of SaaS article saying organizations used an average of 16, but SaaS powered workplaces such as HubSpot, Workday, Evernote, Google, Slack, and others used an average of 34 apps. In 2019, that number has grown dramatically not only in SaaS powered workplaces but in almost every company. Blissfully’s State of SaaS 2019 article found that the number of apps used by companies grows dramatically with the number of employees they have. For instance, companies with 0-50 employees use 40 apps, whereas companies with 250-500 employees use 123 apps overall (https://www.blissfully.com/saas-trends/2019-annual/). The writing is on the wall: SaaS is here to stay.
This growth, despite being great for SaaS startups, isn’t without its downsides. The lack of integration with internal and external software, along with the sheer number of apps companies use all impede adoption. In 2019, Chiefmartech surveyed the SaaS industry to find that there were 7040+ SaaS companies in the marketing space alone. Research has shown that having too much choice can be detrimental due to choice overload, leading to less adoption and less opportunity for new SaaS companies to pique interest, capture, and retain users.
Tip 1 – How to standout in the battle for SaaS supremacy?
Focus on integration with other SaaS apps, and customizability of app functionality to empower companies to tailor apps to their preexisting systems and internal tools.
Our customers are right after we finish our product, right?
Wrong, customer focus is first and foremost. In 2019, customer retention is harder than ever with countless free or cheap trials for thousands of competitors in every niche of the SaaS marketplace. Customer churn is higher than ever and companies need tactics to retain users for the long term.
Dana Severson says that “SaaS customers today are more informed and sophisticated than ever before. At a minimum, [businesses] need to exceed customer’s expectations to earn and maintain their business. If you want their loyalty, you need to go even further.” Severson continues “nearly every SaaS company claims to be customer-focused, but very few understand the degree to which this is necessary and tend to fall short.“
Relentless customer focus is what distinguishes an average SaaS company from trendsetters in the market. Giants like Netflix, Amazon, Microsoft, and Google don’t all coincidently prioritize users over anything else. This is the lifeblood of their organizations, as it should be for any SaaS company.
Tip 2 – Customer user retention
Think of customers as people, as users who are essential to the success of SaaS products. Users are people and should be treated that way. They may be just numbers in sales forecasts, but, in the modern-day SaaS market, users are so much more. Users are a company’s compass to aid with navigation from prototype to final product. Users are the crew on the ship that battens down the hatches and sails the ship for you into the bay. Users are the lifeblood of startups and cash cows alike. Don’t underestimate the value of users and involve the community as soon as possible to give them a stake in your product. If a product falls in the SaaS wilderness and nobody uses it, does it really exist?
Where’s my data?
Abby Fichner, the “Guardian Angel” of the startup world, has rightly criticized the SaaS market for its high company turnover, and lack of user control or ownership of data. In spite of the benefits provided by cloud management solutions in SaaS, Fichner has had first-hand experience with the challenges of proprietary data silos. In one case, she laments “I paid for accounting software from a business long after it was shut down, just so that I could keep access to my data – which was incredibly frustrating, because I was paying out of my pocket for a business that no longer was, but I couldn’t afford to take a chance that I might still need the data. Sure, you can typically export the data – but it’s rarely in a format that’s easy to consume and you generally can’t export everything.”
For companies and individuals that intend to withstand the ebb and flow of SaaS, this fear rings especially true. It acts as the major impedance in the adoption of new SaaS solutions. Fichner argues that the ability to use software shouldn’t be reliant on the success of a business and instead should be guaranteed for the long-term with the purchase of a SaaS product. Of course, this would require a retrofit to the purchasing model that is typical in SaaS, but Fichner believes it’s worth it for user empowerment. She argues for an optional upgrade model that empowers users to choose if they would like to upgrade their SaaS products. She says that “we, the users, should have the option to stay with our current version so we are always able to pull up our old data and use the features we’ve purchased.”
In short, the challenge lies in that data is so “intricately tied to software.” How will companies that play a short game empower users to access, save, manage, and host their data in the long-term?
Tip 3 – Give me my data!
Even if upgrades to SaaS products enhance the experience, power, efficiency, and safety, companies should let users decide how they use products. At the least, empower users to download, export, or own their data. The lifespan of a company shouldn’t limit the use of software that users love or limit access to data users need.
Publist solves all of these problems!
A cloud desktop solution to connect all your cloud apps.
See it here!