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What is the Future of B2B SaaS?

What you'll learn:

The multi-billion dollar B2B SaaS industry promises an exciting future, with steady growth that shows no sign of stopping. What's fuelling this growth, and how can you take advantage of it as a marketer? Let's find out.

The global SaaS market continued to grow at a rate of 28 percent year-on-year to a value of $333.03 billion in 2023.

But let’s not beat around the bush. It was a tough year for B2B SaaS.

VC funding fell through the floor, down 50 percent compared to 2022 across most regions (including the US, Europe, Africa, and Asia). An uncertain global economic and political climate — driven by factors ranging from inflation and the cost of living crisis to frosty China-US relations — gave investors the jitters and impacted the startup ecosystem. 

B2B SaaS sales cycles became, on average, 3.8 weeks longer, putting a squeeze on SaaS providers and forcing 82 percent of them to offer discounts to incentivize customers.

It was also the year that AI burst into every corner of our work and lives, with SaaS companies scrambling to integrate AI into their products and workflows. Although, if you’re not working with AI yet, don’t worry — most business leaders are still talking about it more than actually implementing it.

As 2024 gets underway, AI is bound to continue making headlines, and while we probably won’t get a definitive answer about whether it’s going to take our jobs, early indications suggest that won’t happen anytime soon.

Meanwhile, SaaS leaders are cautiously optimistic that VC funding will bounce back in the coming year, and the global SaaS market is expected to grow to $232 billion by the end of 2024.

While many businesses will be looking to streamline their tech stacks to save money, they will also embrace products that improve efficiency, so 2024 will present both challenges and opportunities for B2B SaaS providers. 

Radical differentiation will be a crucial strategy for B2B SaaS startups to make their mark on the world, but competition will be fierce. If you want to take a slice of the coveted SaaS pie, you’ll need to stay on top of the latest B2B SaaS trends. 

This article will cover a brief history of B2B SaaS, SaaS trends to look out for in 2024 and beyond, and marketing tips for B2B SaaS companies. 

What is B2B SaaS?

SaaS stands for ‘software as a service’ and refers to any cloud-based software product you can use in exchange for a monthly subscription fee — no need to purchase or install software on your computer.

B2B (business to business) and B2C (business to customer) are the two main types of SaaS. While B2C SaaS consists of subscription-based products meant for individual consumers — think Spotify Premium or Netflix — B2B SaaS is designed to improve, automate, and streamline business processes. 

To understand this difference, let’s take the example of two SaaS apps: EveryDollar and FloQast. Both platforms provide budgeting and accounting features, but EveryDollar is aimed at individuals, while FloQast is the equivalent for businesses.

EveryDollar makes it clear through its messaging, interface, and features that it is meant to help individuals stay on top of their personal finances. Similarly, FloQast highlights its accounting automation, remote collaboration, and document organization features to appeal to businesses.

To understand the future of B2B SaaS, it’s essential to familiarize yourself with its history. As the great Maya Angelou said, “If you don’t know where you’ve come from, you don’t know where you’re going,” so let’s take a trip down memory lane and review the history of B2B SaaS.

A brief history of B2B SaaS

The 1980s-90s: businesses need new software solutions

In the 1980s and 90s, the price of personal computers gradually became more accessible, and businesses started to shift away from computer sharing — instead, buying a computer for each employee.

More computer equipment and software meant buying, managing, and maintaining servers on-site. It also gave rise to Local Area Networks (LANs) that allowed businesses to host critical data on the central servers and other information on the local computers.

However, this placed a heavy burden of operation, data management and backup, and hardware maintenance onto companies — a burden many small businesses simply couldn’t afford.

In addition, advances in software and technology were evolving more quickly than the hardware. As a solution, providers began working to make their software more independent of the consumer’s hardware, leading to the rise of Application Service Providers (ASPs) in the 1990s and 2000s.

The 2000s: age of the ASP

With the expansion of the internet and its wider availability, businesses no longer had to rely solely on in-house servers or LANs to store and manage their data.

People began to realize it was easier and more cost-effective to store their data off-site and access it through the internet. The companies providing these internet-based services were Application Service Providers, the precursors of SaaS.

ASPs offered services such as managed business apps and hosting services. The most common apps hosted by ASPs were customer relationship management (CRM) platforms.

The 2010s: from ASP to SaaS

ASPs made a good start but failed to deliver on their ambitious promises, which included easy deployment, low costs, seamless updates, and fully-featured remote applications. One of the major sticking points was that with ASPs, the vendor had to manually create each login and environment for its customers, making it difficult to scale.

With their self-service model and out-of-the-box features, SaaS solutions were different. They fulfilled the promises of ASPs and began providing unique, additional value to businesses. At first, many people believed SaaS was only suited to startups and small businesses, but the software became scalable for larger companies and enterprises. Plus, there was no need for a network manager, as the SaaS applications managed themselves.

SaaS began providing a number of key features and improved functionality that cemented its place as the dominant tech solution in both B2B and B2C markets, including automation of business processes and integrations with other apps and software platforms.

The Future of B2B SaaS: 2024 Predictions

2023 may have been a bumpy ride in the world of B2B SaaS, but there is hope for recovery in 2024. As VCs cautiously begin re-opening their wallets, they will be focusing on a somewhat nebulous metric: sustainable growth

This marks a shift away from the “growth at all costs” model that has characterized the SaaS industry in recent years and burned more than a few VCs. 

They will now be looking at the devils in the details, examining metrics such as ARR per employee. This is where AI and automation will help B2B SaaS companies make productivity gains — like Ramp, which reached over $100 million ARR with just 50 employees.

If you want to replicate that kind of success, you’ll need to be aware of the trends that will shape the B2B SaaS industry in 2024 and beyond. 

Here are our predictions.

The robots take over

You’re probably already sick of hearing about AI, which has generated not just dodgy art and poor logic, but also something of an arms race among B2B SaaS companies.

By swiftly adding AI capabilities to their products, SaaS companies have differentiated their offerings from those of their competitors and established themselves as industry leaders. 

For example, Playbook, a storage platform for artists and designers, saw an opportunity to one-up on its competitor Google Drive by adding AI-powered features that allow users to generate, share, and store their AI art and automatically save prompts all on one platform.

Other areas benefiting from AI integration include HR SaaS, where AI is improving and automating talent search and hiring processes, and CRM, where AI can forecast sales trends, prioritize leads, and provide chatbot support, among other things.

SaaS companies will also benefit from integrating AI into their tech stacks — for instance, by using it to analyze data, they can save themselves time and focus on more important strategic work.

Accounting moves to the cloud

SaaS accounting software automates many of the repetitive processes accountants once performed manually, leaving them free to focus on strategy and value-adding activities. But accounting professionals are demanding more from their software.

The new generation of B2B accounting SaaS platforms offers features such as compliance, leave entitlements, and wage subsidies and — you guessed it — harnesses AI for data analysis.

Enterprise resource planning will dominate

Enterprise Resource Planning (ERP) software solutions are an integrated type of software used to manage day-to-day business activities such as accounting, project management, risk management, compliance, and supply chain operations.

ERP SaaS is gaining popularity as implementation becomes faster and prices more cost-effective.

B2B SaaS will improve customer experience

CRMs are a time-tested player in the B2B SaaS world — in fact, CRM Salesforce, which launched in 1999, is considered the world’s first SaaS platform. CRMs are an essential tool for increasing customer retention and reducing churn.

One of the ways they do this is by improving the customer experience through customer experience management (CXM) solutions. These platforms use CRM data to improve customer experience across all touchpoints through automation and personalization.

B2B omnichannel is the next normal

Just a month after the pandemic began, more than 90% of B2B companies had switched to a virtual sales model, according to McKinsey. This sudden shift changed the way B2B SaaS sales take place, and as a result, more than 70% of businesses now prefer doing business online. By contrast, only 25% of B2B customers wish to continue in-person interactions with salespeople. 

Therefore, we can expect to see B2B SaaS vendors offering omnichannel experiences for their target companies based on speed, transparency, and technical support.

The rise of vertical SaaS

The term ‘vertical SaaS’ refers to SaaS products whose features cater to a super-specific target audience. 

For example, Pepper is an e-commerce provider for the food distribution industry. Their customers are businesses that need to order large quantities of food and a convenient way to track and manage their orders and stock. Pepper streamlines all these processes into one user-friendly, Shopify-style platform.

These ultra-niche B2B SaaS platforms are also called micro-SaaS, and they’re growing in popularity as users turn away from one-size-fits-all in search of something that fits their particular needs.

Content marketing will continue to reign

As organic reach tanks across social media platforms such as Facebook and Instagram, B2B SaaS companies will pivot their marketing efforts to focus more on SEO content marketing.

Organic reach on Google searches is still relatively high compared to social media. According to Sparktoro, around 45% of Google searches result in a click on an organic search result — which is lower than it used to be but still higher than on many social media platforms.

Fears that AI would render content writers obsolete have so far been unfounded (this article was typed by human hands!), but smart marketers are learning to leverage AI tools to produce high-quality content more quickly. 

For instance, AI can help a writer carry out research by reading and summarizing long texts or analyzing data they can use to inform their content. 

Top tips for B2B SaaS Marketing

Marketing a B2B SaaS business requires a dedicated strategy that’s different from marketing a B2C product. The buyer journey for B2B SaaS is usually longer than B2C, with leads requiring more nurturing and touchpoints. Your customers want to be sure they’re choosing the best solution for their needs so they can onboard the whole team for the long term. 

On the other hand, churn rates are generally lower for B2B SaaS, so an important aspect of your marketing will be nurturing existing customer relationships to keep those churn rates as low as possible. Here are our top four tips for B2B SaaS marketing.

Refine your product page

Your product page is the first place many potential customers will learn about your SaaS product, so it’s essential to get it right. 

Tailor your product page to your target audience, providing a detailed and easy-to-follow description of the problem your product solves and how. 

It should include mobile mockups, helpful screenshots, and specific guides that walk potential customers through how to use the product while helping them imagine their life after buying it.

Invest in content marketing

Companies don’t just want to buy a good product — they want to buy from a reliable business, and creating stand-out content is what will position your brand as a market leader. 

Creating timely, high-quality content for your website that ranks on Google will drive traffic and sales and — perhaps more importantly — establish you as a competent voice in the market for your chosen niche. 

It’s no wonder 90% of marketers using content marketing will continue investing the same amount into it the following year.

Experiment with your content marketing strategy to include long-form SEO blogs, infographics, how-to guides, product videos, social media creatives, and other creative channels to create an ecosystem of powerful content around your SaaS product. 

Offer a free or discounted trial version

If your product is new in the market, this move is a must, as most companies are unlikely to onboard a new SaaS product without taking it for a test drive first. 

Offering discounts, trial versions, and demos to give potential customers a glimpse of what it will be like to incorporate your SaaS product into their daily work lives. Then, ask them for honest feedback to help you refine it further. 

Don’t forget your re-engagement strategy

Don’t just abandon your customers once you’ve closed the sale. Nurture them with email marketing campaigns, mixing general communications — such as a monthly newsletter and product updates — with more personalized touch points. 

Remember to treat your customers like human beings who bring value to your community, and not just a number that boosts your bottom line. Adopting Human-to-Human (H2H) marketing strategies is one way to stand out in a sea of stuffy product demos and pushy salespeople.

The future of B2B SaaS is here