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Software as a Service or SaaS refers to when software is licensed on a subscription basis to users. Hubspot, Mailchimp and Box are just a few examples of this and, to say the least, it has proven to be a successful business model while revolutionizing the way many run their businesses. 

The key characteristics of SaaS are what make it so alluring. SaaS offers flexible payment options, accessibility, scalability, security, consistent updates and increased collaboration, all key attributes of any successful and growing business.

For these reasons, it makes sense that the SaaS market is booming and is expected to get even bigger in the coming years. Since 2010, the average spend of SaaS applications per company had steadily risen each year and the market overall is expected to reach a whopping $623 billion by 2023.

But what does this mean for 2020? 

Let’s explore SaaS as an industry, how it affects companies of all sizes, and where the opportunities are through these 60 SaaS statistics and trends for 2020. 

The State of the SaaS Industry

illustrations describing saas workload

As we said, the SaaS market is booming and more and more companies are choosing SaaS to be a long-term part of their business.

SaaS Growth Statistics 

There is no question, the SaaS industry is growing globally and across platforms. 

This market growth is due to improved SaaS capabilities, but keep an eye out for outside conditions that could hinder this growth in 2020. 

Key Takeaway: To stay competitive, companies are looking to SaaS organizations. They are increasingly using or planning to use SaaS due to its low barrier to entry, accessibility and scalability. 

Pricing Statistics for SaaS

pie charts with SaaS pricing breakdown

SaaS businesses employ many different pricing strategies to best serve their customers. 

Despite many companies reporting that they offer very few discounts, percent-off discounts and free trial periods seem to be the most popular. 

Key Takeaway: SaaS companies chose pricing strategies relative to their customers. Weigh these three factors to determine your model: number of users, perceived value of your software and how often customers use it. 

Adoption of SaaS

A majority of companies plan to adopt cloud SaaS in 2020 and most use multiple applications when they do.

Cloud SaaS adoption growth includes government agencies. 

More and more are becoming proficient using cloud technology. 

Companies and CIOs are attracted to cloud-based SaaS for its characteristics. 

Companies are making SaaS a part of their yearly budgets for specific reasons. 

Key Takeaway: SaaS malleability makes it an attractive business tool from private enterprise to government organizations. More so than ever before, executives are carving out space in spending budgets for SaaS services in hopes of accommodating for specific, niche needs. 

Churn Statistics in SaaS 

bar charts describing SaaS churn rates

Churn happens in every industry, but varies drastically for SaaS businesses depending on who their primary customer base is. With that said, there is an industry standard. 

Companies that have larger contracts and earn more annually have less churn. 

The best SaaS companies have less churn and more revenue which allows them to grow faster. 

Key Takeaway: SaaS business churn varies incredibly depending on their customer base. SMBs have a high churn rate and low contract cost. Large organizations have much higher retention. These deals involve larger contracts and in turn, more revenue. 

SaaS Sales and Marketing Statistics

SaaS workload illustrations

Sales contract length and time frames vary among companies. 

SaaS companies are using free trials to speed up the consumer decision process and those having the most success are not making their customers commit right away. 

Sales teams making the sales process, tools and software more personal are converting more leads. 

SaaS companies are creating less technical jargon and more creative, thought-provoking content. 

As for content marketing systems to house this content, 54% of the world’s biggest companies in SaaS use WordPress while only 12% use Hubspot. 

Key Takeaway: SaaS companies are looking to modernize marketing to attract customers. Those who educate customers with demos and don’t aggressively try to sell at the first touchpoint are most successful.

SaaS Trends for 2020 

illustrations of capabilities

The SaaS market is booming and, as we can see from the statistics we have discussed, the industry is learning. This knowledge has led the way for advancements in the way the platforms are developed and in the way they are sold. These are the top SaaS trends to watch for in 2020. 

Artificial Intelligence

Artificial intelligence (AI) technology is becoming more widespread and could contribute $15.7 trillion to the global economy by 2030. What does this have to do with SaaS? 

AI is positioned to disrupt and improve the SaaS market in a variety of ways. When combined with SaaS, AI capabilities allow businesses to learn more from their data, better automate and personalize services, improve speed and security and better assist humans. 

This results in a more efficient and responsive software, so be on the lookout for artificial intelligence optimized SaaS solutions in 2020. 

Key takeaway: Tech pioneers are paving the way for SaaS companies. This leads to hyper-optimized services. When applied to SaaS, AI derives a unique platform for the service’s users. AI technology allows SaaS companies to evolve at record pace without extra manpower. 

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Vertical SaaS

Vertical SaaS, a more targeted solution for specific industries and supply chains, will be on the rise in 2020 as companies look for more specialized and cost-effective options

Being industry-specific and not for every sector like horizontal SaaS, allows for the service to have a higher level of customer intelligence built-in, have predefined metrics and KPIs and provide a higher degree of business value and improved data governance. 

Vertical SaaS is held to a high standard but it allows SaaS providers to adapt the features to client demand and industry as well as meet the needs of their customer niche. This allows for more flexibility and lower customer acquisition costs and is one of the reasons why it will be a major trend in 2020.  

Key Takeaway: Vertical SaaS solutions are made to accommodate niche needs. Companies looking to optimize in a specific part of their supply chain will utilize this model.  

Integration Capabilities 

In the past, SaaS companies would direct users to a third-party company or platform to assist in integrating their product with the user’s existing platform. However, more and more SaaS developers and companies are seeing the value of adding integration capabilities directly to their product to properly meet customer expectations. 

This trend will continue in 2020 and SaaS businesses will make integration capabilities a priority when designing and updating their programs. 

Key Takeaway: The most successful and reliable SaaS companies take integration into their own hands. This bolsters client trust and ensures a unique offering for each partner enterprise. 

Pricing Changes

Studies have shown that 98% of SaaS businesses earned positive results from making core changes to their pricing policy. 

Traditionally, SaaS companies have offered flexible pricing structures which their business models are based on. However, with tough competition, industry saturation and the rapid evolution of SaaS platforms, many are starting to reinvent their pricing models according to the needs of their clients or customers. 

Pricing changes and, in particular, specialized changes based on business intelligence and analytics will be a big trend in 2020.  

Key Takeaway: Keep pricing elastic. Responsive pricing methods based on analytical reports are the most successful models in SaaS companies. 

Thought Leadership and Branding

We mentioned earlier that less SaaS companies are focused on producing technical content and more are focused on producing creative, thought-provoking content. This includes videos, blog content, interactive applications or landing pages, eBooks and more. 

Today’s audiences are looking to be inspired and educated and as new SaaS companies or even established ones look to be more competitive in a rapidly growing industry. They will need to try to be that go-to source of inspiration and education for their customers. 

The same goes for branding. To be competitive and differentiate themselves from their competitors, SaaS companies will need to remain true to their mission, establish and communicate a core set of values, create inspiring visuals and know their audience. 

Thought leadership and branding will play a prominent role in the SaaS landscape in 2020. 

Key Takeaway: Be a brand as well as a service. The most successful SaaS companies are providing a holistic experience to their customers. From e-education tutorials to engaging UX, SaaS branding is reflecting the “swipe-for-more” society. 

Concluding Thoughts for 2020

To summarize all that we have explored here, the software as a service or SaaS industry is growing and more and more businesses are adopting SaaS. 

SaaS offers many ways to remain on-budget while competitive in their given fields and this is due to the unique characteristics of SaaS itself. This results in a rapidly growing market for SaaS and numerous opportunities for SaaS companies and developers to capitalize on. 

If you are looking to create the next big thing and need a team of top-notch developers right now, take a look at our process and learn how we can support you to bring your vision to life. 

infographic on 60 SaaS statistics

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Sources: 

https://financesonline.com/saas-statistics/

https://www.datapine.com/blog/saas-trends/

https://www.getbeamer.com/blog/saas-stats-and-trends-for-2020

https://99firms.com/blog/saas-statistics/#gref

https://hostingtribunal.com/blog/cloud-adoption-statistics/#gref

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