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Software as a Service (SaaS) is on a major growth curve, and the industry is evolving to keep pace
Cloud application services are big business. SaaS tools are a part of daily life for enterprises, with organizations over 10,000 people using on average one SaaS tool for every two employees, according to Alpin.
With that growth comes added competition. If you're planning to develop a SaaS tool, you'll need to pay attention to 10 trends that are shaping the market in 2019.
1. SaaS goes vertical
SaaS has often focused on being an industry-agnostic solution to enterprise needs. A single SaaS tool is designed to work for any type of business, and at any scale. But many SaaS developers are now looking to go deep instead of wide.
Vertical growth for SaaS means picking a niche and providing broad solutions for that niche. In practice, it could mean SaaS developers work on applications to address more and more specific use cases rather than making applications for general use. Smart SaaS companies and developers can use this strategy to own a business vertical. It's a targeted approach, and could end up winning out over the spray-and-pray marketing of a single application for every industry.
Users increasingly want a customized experience. For SaaS companies, this means their businesses may want to pick and choose the features they utilize. API integration allows this to happen.
Expect to see more SaaS platforms offering their API as a way to integrate features into an enterprise's existing stack. This allows users to work in a white labelled UX while still taking advantage of the features they want from a SaaS platform and eliminating the features they won't use.
3. Pricing becomes sophisticated
SaaS companies are going to become more bespoke in their pricing models in 2019. This could mean devoting more resources to building subscription pricing models. It could also mean offering a pay-per-use model in addition to subscriptions.
4. The customer becomes key
Turnover for SaaS products far exceeds customer turnover. A 2019 report from SaaS company Blissfully found SaaS products saw a 43% turnover rate. Subscription models make SaaS products easy to adopt, but just as easy to abandon out of frustration.
Customer retention will be crucial in 2019. SaaS companies will have to put more emphasis on the end user experience. This means better educating customers on how to use SaaS platforms and how to streamline their normal processes. It also means creating excellent, intuitive products that don't confound the end user.
5. Product-led growth performs best
If you're unfamiliar with product-led growth (PLG), it's a concept that describes how companies scale. It means staking your growth on the value your product adds to the end user. And PLG companies will outperform in 2019.
This concept ties in well with the previous trend of increased focus on the end user. The more a SaaS product becomes an indispensable part of an enterprise's operations, the quicker it scales. One way to leverage PLG is by offering freemium models. As users integrate more and more of their daily tasks or data with your SaaS platform, they become more entrenched and bring on more adopters. PLG creates rapid scale, and keeps customers sticky.
6. AI makes SaaS smart
Artificial intelligence is becoming table stakes for good SaaS platforms. The goal of a useful SaaS tool is to help companies work more efficiently at scale, and AI provides a powerful tool to provide this functionality.
Chatbots are one of the main ways to integrate AI into SaaS platforms. It has tremendous potential not only for messaging, but for client management, sales management and task automation. Expect to see more AI integrated into SaaS in 2019.
7. Branding reigns supreme
Competition is fierce in the SaaS market. The average SaaS platform has 9.7 competitors. Great products are a bare minimum expectation for SaaS companies. Great branding is what will make you stand apart.
Slack built its branding through referral marketing by inviting key contacts to try their product and share it with others. They expanded on this to address business' pain points in intra-office communication. Building their brand has made Slack synonymous with enterprise messaging.
8. Content takes center stage
As the SaaS industry matures, we'll see platforms position themselves more as thought leaders and educators. And as competition heats up, SaaS marketers will need to grab the attention of lower intent consumers. This means ramping up their content marketing efforts.
A few SaaS companies already do this exceptionally well. SEO tools like Ahrefs and Moz have created content that's made them the reigning sages of inbound marketing, while Atlassian owns the conversation on workplace productivity with its content.
Expect to see more SaaS companies move into this arena, offering content to draw in top of funnel clients.
9. Smart SaaS does less
Following on both the trends of going deep into verticals and leveraging APIs, SaaS developers are looking to play to their strengths and develop "best in breed" solutions for specific problems rather than offer a massive, wide-ranging suite.
CIOs will increasingly move to an a la carte style of SaaS selection, putting the right tools in the right places rather than seeking all-encompassing solutions. This means smart SaaS developers should focus on nailing one major use case. Being the world's best solution for one issue will beat providing a middling solution for many issues.