What’s shaping SaaS marketing in 2020?
10th December 2019
The SaaS market continues to see explosive growth and has evolved at an astonishing pace. The figures that reflect the size of the cloud market are impressive.
- Annual SaaS market revenues predicted to exceed $100 billion Q2/2019 – Q1/2020, with the market growing at 30% per year. (Source: Synergy Research Group)
- The average company with 200 to 500 employees has a SaaS app stack of about 123 Software-as-a-Service (SaaS) applications these days. (Source: Blissfully)
- The average employee uses at least 8 apps and 36 cloud-based services in their daily routine. (Source: Blissfully/Skyhigh)
And it’s not just the revenues being generated and the degree to which SaaS apps dominate the use of software, but the benefits to cloud services customers.
- 80% of companies report operational improvements within the first few months of adopting the tech. (Source: Multisoft)
- Small and medium businesses find it 40% more cost-effective to employ third-party cloud platforms than maintaining an in-house system. (Source: Multisoft)
- 94% of businesses report significant improvements in online security after moving their data to the cloud. (Source: Salesforce)
- 91% also state cloud tech proves of immense help when they deal with government compliance requirements. (Source: Salesforce)
However, while this may all seem to suggest a very healthy period for the industry, indications are sufficiently advanced to suggest that the market is maturing.
Last year we noted that the marketplace was crowded and becoming increasingly commoditised and this trend has continued to develop.
Further evidence of a maturing market can also be seen in the development of The BVP Nasdaq Emerging Cloud Index, listed as EMCLOUD. This is the next generation of The BVP Cloud Index, designed to track the performance of emerging public companies in the sector.
From the vendor/service provider side there is more competition, with many vertical products of similar capability, performance and value vying for subscribers from the same pool within a specific industry.
From the subscriber side there are many similar products from which to select, making it hard to differentiate vendors and products.
And from the perspective of investors, where traditional business models in non-tech sectors of the economy are being severely disrupted, often by compliance designed to promote deep and lasting change, tech continues to be something of a golden egg-layer.
Consequently, market maturity notwithstanding, it seems that the opportunity to secure investment is now stronger than ever. It appears that there is no shortage of cash to pump into the sector for Seed, A, B, C and D Series funding, because there is a widespread expectation that investments in tech are likely to have better yields.
Looking beyond the confines of SaaS and the cloud in general, there is an air of uncertainty in the operating environment (but what else is new!?). A survey of economists by the US National Association for Business Economics puts the spectre of a looming economic recession at 60%; an American sneeze could give the entire global economy a cold, tipping the scales from a slowdown into a downturn.
What does it all mean?
With over 10 years of SaaS Marketing experience and the first marketing agency specialising solely on the SaaS industry, Xander Marketing is wired to the market. Add in our interactions with SaaS company owners and principals, and this has shaped our views.
For 2020 we see a strengthening of the three key trends we identified for 2019:
- We have seen an increase in market saturation This is driving a race to the bottom that may lead to more failures of SaaS ventures, increasing the potential for consolidation and M&A activity. More than ever, a strong brand and great marketing is needed to succeed in 2020.
- 2019 has seen the SaaS leaders consolidate their positions. For major players that are cornerstones of the cloud ecosystem like Microsoft, AWS, CA Technologies and Salesforce the challenge is to avoid complacency and maintain their position. For everyone else there is a need to sustain and grow. Key drivers of this are brand building, innovation and diversification. Only the strong are likely to survive and those running out of ideas and cash are set to fail.
- Many are leveraging Product Led Growth (PLG) to snare prospects and then convert them into paying customers once they establish the business value of the app. PLG lets free sign-ups see the value of paying.
To help owners and key stakeholders in SaaS ventures to market their businesses more effectively, we have come up with some suggestions. Download 7 Smart Ideas to Market your SaaS Business in 2020 here.
The SaaS Marketing Agency
Xander Marketing is the outsourced marketing partner of choice for B2B SaaS businesses globally that need more customers, leads, website traffic and to build their brands.
If you lack the time, resource or know how to undertake marketing then get in touch.
As a full service agency we’ve been partnering with SaaS businesses since 2009 and our highly experienced team have seen most things when it comes to marketing SaaS products. We’d love to bring this experience to marketing your SaaS business, whether you are a startup or have a growing business.