The market for SaaS apps is becoming increasingly saturated. Some may speculate about whether the market has peaked or not, but that is perhaps too sweeping a statement and there are many indicators that would need to line up to support such a contention.
What we can safely say is, that for any given audience segment that might be in the market for a piece of online software, there are likely to be several choices and for any given problem, there may be dozens of SaaS solutions to choose from.
Clearly, there has been an attitude that SaaS and the cloud in general is some sort of ‘digital oil’. Consequently, there has a been a bit of a ‘fill your boots’ mentality. Many have drawn parallels with the geographical coincidence of today’s SaaS boom and the 1849 California gold rush. Of course, there are other SaaS hubs around the world, but California, San Francisco and Silicon Valley is certainly the actual, virtual and spiritual centre of the SaaS world!
An intrinsic element of any market boom are investors, and there is no shortage of cash, especially where many other investment options offer poor returns over what could once previously be expected. So, for any SaaS venture that can establish MVP, demonstrate market fit and present a competent business plan, it is relatively straightforward to secure a cash injection.
In such circumstances, one inevitable result is commoditisation of the market. When there’s lots of competing products, undercutting on price is used to win deals and the market becomes price sensitive, creating a race to the bottom. Despite the fact that it is easier for subscribers to switch to alternative products, the costs of acquisition and retention become higher, reducing margins.
In some areas there are many competing products with similar if not the same functionality. Early market entrants have been joined by others looking for a slice of the pie, but often they add nothing new and it can seem it’s just a case of ‘me too’.
Many SaaS products are marketed unimaginatively, failing to move beyond a Ronseal (“It does exactly what it says on the tin.”) approach. When it comes to SaaS products establishing their brands, there is something of a vacuum. Remember, a brand is more than just a logo and a feature set! Ultimately, a brand vacuum means a lack of differentiation between products, which creates confusion and makes decision making difficult for buyers.
The challenge for SaaS businesses looking to move beyond their current position in the market is to differentiate and stand out. Here are some key areas where you can stand out and make an impression on the market:
Generally speaking, one opportunity for SaaS vendors and developers now is to innovate technologically, to create something that puts the competition in the shade. Another is to uncover some untapped area, niche or vertical. If someone discovers an untapped horizontal, then let us know! There cannot be many left…
However, for market incumbents looking to sustain early success and continue to grow by beating off the competition, the golden opportunity is to focus on things like establishing a strong well-developed brand, developing a PLG business model and adopting an exemplary approach to onboarding. These are invaluable in helping to win new subscribers from competitors and make them stick.
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