The 2010s saw some of the biggest advances in software to date. From Dev expanding into ops and QA, to the massive global impact of the smartphone and beyond – the 2010s changed the world forever. And for the better! In 2020, your data has never been safer or easier to use, emerging trends have never been more exciting, and we’ve never been more connected to the people around us.
It could be argued that the biggest technological advance the 2010s brought was the rise of cloud computing and cloud-based subscription services. As a result of this shift, software services as we know them were born. While it’s true that software services have existed since the 1960s, the rise of cloud computing brought the SaaS platform into its own. The last decade was a great time for software and SaaS alike, but we believe the best years are ahead. For those is us in the SaaS world, this only the beginning!
So what does the future of SaaS look like? Here are the 8 biggest SaaS trends of 2020.
1. Product-led growth
While 2019 saw the biggest surge in product-led growth in recent history, we can expect to see this trend engulf the industry in 2020. We’ve talked in the past of aligning marketing and sales efforts to maximize external acquisition channels and drive demand, but these days it’s increasingly more common for companies to simply let their product be the driver of growth.
Product-led growth (PLG) is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself. It creates company-wide alignment across teams—from engineering to sales and marketing—around the product as the largest source of sustainable, scalable business growth.
– Product-led
Tracking and measuring product usage is essential for PLG, as well as using the data across your whole business to drive growth. Customer Success and engineering teams can use this data to understand the health of their customers and identify potential problems before they arise. This is an extremely powerful approach, and more companies are switching to PLG strategies every day. Learn more about PLG here.
2. A mobile-first mindset
Many of 2020’s trends thus far have been heavily influenced by developments in related industries. In 2017, worldwide mobile traffic overtook desktop traffic for the first time, and since then, mobile’s lead on desktop has only grown larger.
As the workforce becomes more mobile, companies and employees will seek out mobile-first SaaS apps that are custom-built to help streamline operations and boost efficiencies. 90% of mobile data traffic will be generated by cloud solutions/SaaS by 2019.
– Vista Equity Partners Management
The rise in mobile traffic really needs no explanation, as the growing need for accessibility continues to yield unfathomable technological advances in mobile devices. But what does this mean for SaaS? Simply put: if your mobile apps are not quick, responsive, and user-friendly – they may not survive!
3. Customer-centricity
Customer-centricity has always been an important part of running a successful SaaS company, but in 2020 – your company may not survive without it. A report from customer experience firm Walker shows that customer experience has overtaken price and product as a key brand differentiator.
Customers desire more reciprocal relationships from brands. They want to be valued personally for their purchases and for their loyalty. They demand brands understand their motivations and are in tune with their entire experience.
– Camille Nicita
Looking forward into 2020, smart businesses are adjusting their internal strategies to meet the needs and expectations of the modern customer. This is the year to create meaningful and authentic connections with your customers. Customer-centricity starts with honesty, concern, and communication.
4. The rise of usage-based pricing.
This year the stage is set for a massive shift in SaaS pricing policy and arrangement. Though it has long been a common practice for customers to pay subscriptions monthly or annually, the usage model is quickly becoming the most popular pricing route.
Usage based pricing model is also touted as the “pay as you go” model. In this pricing model, the customer is charged based on their usage of the product. If they use more, they’re charged more and if they use less they’re charged less
– Chargebee
With usage-based pricing, customers are given the freedom to choose the features they want, paying only for what they use. This “pay-per-use model” gives customers unprecedented flexibility and the ability to trim expenses. You can’t go wrong there!
5. Product positioning
If you travel in SaaS circles, The Martech 5000 supergraphic has been hard to miss. It seems like no SaaS conference would be complete without it! And if you’ve seen it, you’ve no doubt felt a twinge of concern about your current differentiation strategy.
Just because a market looks crowded, does not mean you cannot build a viable business upon it or even disrupt it with a new vision and broader ambitions.
– Thibaud Clement
In fact, it’s safe to say that differentiation is near the top of every SaaS company’s 2020 to-do list. And for good reason! Maybe 2020 is your year to focus on specific verticals, geographies or sub-industries. Whatever it is, 2020 is the year to do it! It’s clear that building a SaaS company that appeals to everyone is a thing of the past, and going niche is the future. Differentiation season is here!
6. The growing need for API connections
Third-party APIs have become more and more common over the last few years. These days – you’ll be hard-pressed to find SaaS products and apps that run without them. API stands for Application Programming Interface, and though many don’t realize, apps like Uber, Airbnb, and PayPal rely on them every day.
While SaaS may have pioneered the idea that the best way to do business isn’t to actually build everything in-house, today we’re seeing APIs amplify this theme.
– Daniel Levine
Along with the massive explosion of SaaS solutions came the need to properly integrate them into an existing business system. SaaS companies are split down the middle with some wanting to migrate all their data to a cloud platform and others looking to harmonize data with their existing infrastructure. This has created a problem, and as a result – the need for APIs has increased.
To learn more about SaaS APIs, click here.
7. Vertical SaaS
One of the biggest and most important objectives SaaS companies have for 2020 is creating a better, tailor-made system to meet the specific needs of customers. This goal has lead to a dramatic surge in vertical SaaS. The very niche-focused and nuanced approach to SaaS success may not be new, but it’s popularity certainly is. As a matter of fact, the vertical SaaS market has more than tripled in the last ten years!
The vertical SaaS model doesn’t aim to be all things to all people or cover a broad product category; instead, they focus much more narrowly on industry verticals. Their solutions are purpose-built for clear industry niches and in doing so, they narrow the size of their potential market.
– Robert Kazmi
It shouldn’t be a surprise that a SaaS solution made specifically for a certain industry yields countless improvements for those who decide to use it. Better governance, highly increased business value and improved analytical accuracy are just some of the benefits of vertical SaaS. To learn more about vertical SaaS, click here.
8. Artificial intelligence
It’s no secret that the abilities and benefits of artificial intelligence (AI) are virtually unlimited. For SaaS, the untapped potential is staggering with machine learning being used to revolutionize countless aspects of the software industry.
We’ve never seen a technology move as fast as AI has to impact society and technology. This is by far the fastest moving technology that we’ve ever tracked in terms of its impact and we’re just getting started.”
– Paul Daugherty
Of particular interest is AI’s effect on cloud security. The algorithms generated by AI have been highly successful in recognizing and arresting threats before they cause any damage. With data analysis, internal process, and automation benefits all among a long list of powerful AI features, it’s clear that our new artificial friend is here to stay. 2020 is the year to find out what AI can do for you!
Here’s to 2020!
2020 is shaping up to be the best year for SaaS yet, and we couldn’t be more excited. Are there any emerging SaaS trends that we forgot to mention? Let us know!
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