9 Important SaaS Trends For 2020 & Beyond

Here are the 9 most significant trends for the Software as a Service (SaaS) industry this year.

We'll also cover the key companies and software products leading the way.

In short, this list of SaaS trends will help you get a feel for what’s coming around the corner.

Let's jump right into the list.

1. More “Vertical SaaS” Products

Vertical SaaS is software created for a very specific niche.

vertical saas chart.png

Search volume for "vertical SaaS" over time.

For example, Brightwheel is an app designed specifically for people that work at day care centers.

brightwheel.png

Brightwheel is an example of a software product designed for a very specific vertical.

Not middle schools. Not high schools. Just day care.

Which means they can tailor their product to meet the specific needs of day care center staff.

And don’t confuse “niche market” with “too small to be worth your while”. According to Crunchbase, Brightwheel has raised $33.8M in funding to date.

Why is vertical SaaS on the rise?

Well, the great thing about SaaS is it’s dirt cheap compared to something you’d get custom-built.

Let’s say you want accounting software for your tennis court business. Back in the day you’d have to pay Oracle $250k to make a tool just for you. Today, you can pay $50/month to access a SaaS product that does basically the same thing.

But that compromise comes with a cost.

You know that feature that helps you quickly note whether a customer is playing singles or doubles? Well, that’s not available in any SaaS product because literally .0001% of their users would need it. Even though that one feature would save you two hours every week.

Which is leading many people to ditch one-size-fits-all solutions. Instead, they’re turning to SaaS products that meet their very specific needs.

And entrepreneurs that create software products specifically for niche markets have the potential to grow super quickly.

2. Increased Demand for Collab Software

Owl Labs reports that 56% of US companies have employees on staff that work remotely.

And many of these companies are finding that email isn’t enough to keep everyone on the same page.

Enter: a rising number of collaboration software options.

Slack, with over 12.5M users, is obviously the king of the mountain when it comes to collaboration tools.

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Search volume for Slack, the uber popular chat-based collaboration software.

And there’s still plenty of room for tools that help remote teams get things done. Especially those that don’t compete directly with Slack.

For example, notion.so has quickly gained market share in the lucrative project management software market.

notion.png

Searches for notion looked like they peaked. But they're already starting to spike again.

3. Rise of “Accessible Martech”

Martech is known for old-school practices, like:

  • Product demos
  • Pushy salespeople
  • Sky-high enterprise pricing
  • Lengthy contracts

But there’s an increasing number of martech companies bucking this trend.

Instead of product demos, they have clear, transparent pricing.

And instead of complicated enterprise software with a million features, they do one thing well.

Canva is one of the best examples of the growing “accessible martech” trend.

canva.png

Interest in Canva continues to grow.

Canva makes it easy for non-graphic designers to make images for blog posts, email newsletters and social media.

Unlike martech from back in the day, you don’t need a product demo to see the tool in action. In fact, there’s a free trial.

And instead of “contact us for pricing”, Canva has a list of their different plans that anyone can see.

canva pricing.png

Canva's clear pricing separates it from martech companies of old.

The SEO software suite Ahrefs is another great example of the accessible martech trend.

ahrefs.png

SEO software company Ahrefs has grown largely due to its product designed for individuals and small teams over enterprise.

Their branding, UX, pricing, and trial accounts are all designed to appeal to individuals and small businesses.

4. AI Integrates Into More Software

AI is getting integrated into software of all types.

Even a few that you wouldn’t expect.

For example, Remove.bg uses AI to automagically remove background from images.

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RemoveBG is one of many SaaS companies using AI to enhance their software.

That’s not to say that your software needs a machine learning algorithm to get traction.

But more and more people are expecting AI as a feature. Especially in B2B.

Even if your AI is something invisible that runs behind the scenes to make the software work better..

For example, Spotify uses machine learning to help its personalized song suggestions.

spotify ML.png

Spotify's homepage is populated with songs that a machine learning algorithm picks out.

They don’t boast “we use machine learning!” on their homepage. But their AI integration is an important part of why their software has done so well.

That said, there are no shortage of startups that use machine learning as part of their positioning.

One example of this is Alphasense.

They put their AI-focused software front and center:

alphasense.png

Alphasense makes AI part of their branding and positioning.

5. Low-code becomes the norm

Coding software from scratch is quickly becoming a thing of the past.

Instead, a growing number of software developers are building apps and websites with low-code platforms.

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Searches for "low-code" continue to grow.

In fact, Forrester research reports that the low-code industry is set to be worth over $15B.

Low-code is just like it sounds: it’s developing an application with minimal coding.

Why is low-code such an important SaaS trend?

First of all, building an all with a low-code platform like Ninox can save lots of development time.

ninox.png

Ninox is one of many growing platforms that help people create software with no-code or low-code tools.

Instead of manually coding something line-by-line, a low-code platform can help you build applications with “visual programming”. In other words: a drag and drop style interface. But for coding.

Low-code (and its cousin, no-code) opens up app development to the millions of people that want to get into SaaS. But don’t have the skills to build an app from the ground up. For example, maybe you know a little bit of Ruby on Rails or Javascript. But not enough to create an entire application.

Well, you can use a low-code platform to build a lot of the key features that you want in your software product. And you can manually code the rest.

For example, Lattice built and now runs their entire website on a no-code environment (Webflow).

lattice homepage.png

Lattice, like many established companies and startups, are turning their web development over to low-code platforms.

6. AWS evolves into an end-to-end dev platform

Amazon’s AWS has been an absolute game changer for the entire SaaS industry.

Before AWS, startups had to build their own server infrastructure. And had to figure out how to scale up as they grew.

Today, most SaaS products host everything on Amazon’s cloud platform. Which allows startups to focus on what they do best: making awesome software.

For example, meal delivery app Deliveroo used AWS's EC2 to help them scale as they achieved rapid and unexpected growth.

deliveroo.png

Like many growing apps, Deliveroo runs a lot of its infrastructure on AWS.

Over the last few years, AWS has expanded well beyond cloud computing. Today, AWS has dozens of different products, including:

  • Amazon CloudSearch (search engines)
  • Amazon Lightsail (servers)
  • Amazon Sagemaker (machine learning)
  • Amazon Gamelift (video game hosting)
  • AWS IoT core (internet of things app)

In short, AWS is pulling an Amazon: slowly expanding until it becomes “one stop shopping” for software developers.

7. SaaS Founders Double Down on Content and SEO

Thanks to low-code tech and cloud platforms like AWS, creating a SaaS product is relatively easy.

The hard part is getting people to even know that your software exists.

Social media and Facebook ads have their place. But they come with some serious issues.

Social media is hit or miss. Plus, organic reach on social networks like Facebook and Instagram is way down.

Facebook ads are great to get early traction. But it’s tough for pre-revenue SaaS companies to scale.

Which is why an increasing number of SaaS companies are using content marketing and SEO to get traffic and users.

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Searches or "SaaS SEO" since 2016.

For example, HubSpot has built a $600+M B2B SaaS business on the back of SEO.

Why the push into SEO and content?

Unlike Facebook ads, content marketing and SEO are relatively cheap (even free if you use a CMS like WordPress).

Plus, organic “reach” on Google is still quite high. Sparktoro reports that about half of all Google searches result in a click on the organic results.

Paid-Organic-Zero-Click-June-2019.webp

Google's organic CTR is lower than it used to be. But it’s still much higher than most social media networks.

Google's organic CTR is lower than it used to be. But it’s sky-high compared to most social media networks.

8. New tools to fight churn

A high churn rate can mean death for a SaaS startup.

And there’s no shortage of tactics that software companies use to keep customers paying their monthly bill:

  • User onboarding email sequences
  • “Concierge” support
  • Explainer videos and tutorials
  • Annual billing
  • New feature notifications

Do these tactics work? Yes.

But for many SaaS businesses, they’re not enough.

Which is why there’s a growing number of solutions out there specifically designed to combat churn.

For example, Bonjoro helps companies create onboarding videos that are personalized to each customer.

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Searches for "Bonjoro" have grown steadily since early 2017.

9. Employer branding becomes a distinct advantage

37% of SaaS founders worry about “hiring the best talent”.

Which is why many SaaS businesses are taking a close look at their “employer branding”. And optimizing for it.

What is employer branding?

Employer branding is branding… for an employer.

In other words, it’s the approach that companies take to make themselves look like a great place to work.

And many Silicon Valley SaaS companies are using employee branding to attract the best developers and managers.

Employer branding includes things like:

  • A company’s core mission
  • Interesting benefits (like a weekly massage stipend)
  • Major media mentions
  • Revenue and user growth metrics
  • A famous founder
  • Team activities

Squarespace does a great job of employer branding on their careers page.

squarespace careers page.png

Squarespace, like many SaaS companies, position themselves as a great place to work. 

If you’re an amazing JS coder, you can work pretty much anywhere. So your decision comes down to the type of environment that you want to work in. And your perception of that environment comes largely from a company’s employer branding.

Conclusion

That’s our list of the 7 biggest trends in the SaaS industry right now.

From recruiting, to churn, to development, the software world is always in flux.

And if you want your software company to do well, the fundamentals are super important. But to really thrive, it’s important to keep tabs on the biggest trends.

Published Date: 
May 20, 2020
Josh Howarth
Co-founder of Exploding Topics.

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