These days, it’s a SaaS world and we’re just living in it. From infrastructure and identity to platforms and productivity, Everything-as-a-Service continues to reign supreme. But what does it take to succeed and become one of the SaaS brands that can achieve the annual recurring revenue (ARR) required to drive predictable growth in an ever-crowding market?
According to Gartner, worldwide public cloud services are predicted to grow by 17% this year, from $227.8 billion in 2019 to $266.4 billion in 2020, with revenue forecasts for SaaS brands (cloud application services) expected to reach over $116 billion alone.
And while, as the SaaS market may seem mature after nearly two decades, according to a study by Synergy Research Group, it still only accounts for about 20-25% of total enterprise software spending, meaning there’s plenty of room for growth for both established players and new market entrants. There are challenges, but there are also plenty of opportunities to rise above the fray.
The Market Is Crowded and Continuing to Grow
According to a 2019 survey, data provided by Chiefmartech identified over 7,000 solutions in the marketing segment alone. This market saturation can lead to a lack of differentiation between SaaS brands and ‘buyer fatigue’ from an overwhelming number of choices and plans to consider. This is only likely to increase as investors continue to seek (and see) favorable returns on investments in the SaaS space, spawning multiple versions of even niche solutions.
Ease of Switching Can Lead to Churn
Another impact of the crowded marketplace and sheer volume of offerings is the ease of switching from one SaaS solution to another. SaaS brands, by the nature of the offering, are more scalable and easy to implement vs. traditional on-premise software solutions that require purchasing hardware, installation, and ongoing maintenance and management. Couple this with the fact that many SaaS offerings are nearly indistinguishable from each other and you’ll find the reason the average mid-sized organization is seeing 39% change in their SaaS stack from year to year.
The Target Audience Is…Everyone
Because SaaS has low barriers to adoption relative to traditional IT solutions, it’s increasingly common that the purchaser of a SaaS solution is not from within the IT organization, but is instead in another part of the business with a discretionary budget to spend. As a result, SaaS brands need to remember that their brand needs to be able to communicate beyond a strictly IT audience.
Expectations Are High
The consumerization of IT and what’s known as the ‘Amazon Effect’ continue to raise user expectations as they expect B2B and SaaS solutions to deliver the same level of customization, user experience, and ease of use as they experience from B2C companies and their daily consumer electronic experiences. As a result, SaaS solutions need to over-deliver on overall usability and the customer experience in order to attract and retain active users and preserve AAR.
To overcome these challenges, smart SaaS brands are adopting business and brand strategies and practices from the B2C world and adapting them to the B2B SaaS world.
1) Define the position you want to own in the market.
To stand out in a crowded market, SaaS brands must clearly define what position they want to hold in the market and in the minds of their target audiences. Being clear about how your SaaS offering is specifically differentiated from the rest of the competitive field is the starting point for driving preference.
2) Build a rational and emotional connection.
Like B2C brands, SaaS brands must communicate what the brand does, how it does it, and why the brand matters. At Emotive Brand, we think about this in terms of building a rational and emotional bond with customers—enabling people to know what you stand for, why your brand is different, and feel an emotional connection to your brand. The rational connection may drive initial purchase and adoption, but it’s the emotional connection that builds long-term preference and stickiness.
3) Invest in customer experience.
Create a customer experience that measures up to expectations set by leading B2C brands. This means paying attention to all touchpoints, from the sales process to product functionality and usability, to ensure that each and every interaction reinforces the connection with the product and the brand.
4) Differentiate with design.
Another way for SaaS brands to stand out is by investing in design. A distinctive and ownable visual identity can help differentiate from competitors and build recognition with purchasers and users. Of course, the focus on design needs to extend beyond branding and visual identity to include UX and product design to create an experience that keeps users engaged and utilization and renewal rates up.
As businesses continue to look for ways to streamline and simplify how they use and deploy technology to meet specific business needs, the SaaS market will continue to grow. The crowded market presents opportunities and challenges. Claiming a clear position in the market, building an irresistible brand that champions superior user experience, and differentiating with stellar design can help SaaS brands achieve the growth and recognition they need to succeed.
Emotive Brand is a brand strategy and design agency in Oakland, California.