While 2022 may not have been the boom year the SaaS world (or the world in general) was expecting, it did bring a lot of clarity. By the time the year came to a close, leaders in the industry were largely focused on the consolidation of tools, marketing budget cuts, and, in some unfortunate cases, layoffs or restructuring.
It was a period of reassessment and re-establishment. Now, as we enter 2023, SaaS marketers and industry leaders are looking to reset and refresh with smarter, more efficient ways of working and growing. Those who succeed will be primed to take a bigger piece of the SaaS end-user spending pie.
We spoke to industry leaders to find out what they see as the biggest trends in SaaS for 2023. A few common themes quickly emerged, including tech stacks being put under the microscope, marketing — from content strategies to growth tactics — right-sizing quantity in the name of quality, and AI becoming a part of every department’s day-to-day life.
Every year there seems to be one trend that every SaaS expert agrees will be prominent in the year. In 2023, that trend is the auditing and consolidation of tech stacks.
This focus will filter through to multiple departments, from finance and operations to marketing, sales to product development.
CEO and Co-founder of Dock, Alex Kracov pointed out the impact this will have on marketers and sales teams, stating, “SaaS is moving into a new era of consolidation. To help sales teams, marketers need to create down-funnel content that explains how their solution will consolidate software stacks. Marketers should also create more content targeted at CFOs that explain the product's business impact and associated cost savings."
With consolidation and auditing top of mind, cloud management platforms — in other words, a SaaS solution to manage your SaaS solutions — are ripe for growth. Research Principal at G2, Rachana Hasyagar, is already seeing strong signs this space is about to explode.
“Cloud has become an integral part of business today. As cloud adoption accelerates, focus on micro-SaaS will grow. Micro-SaaS applications are specialized solutions or add-ons to larger solutions that cater to very specific functional needs,” Hasyagar shared.
“Large SaaS providers usually have general solutions with very broad scopes that might not outright meet niche business requirements. So companies are increasingly gravitating towards highly specialized SaaS solutions that exactly match their business processes.”
The more SaaS tools a company has in play, the greater the need to monitor, manage, and consolidate.
“With companies employing a large number of SaaS solutions for different functionalities,” Hasyagar continues, “management, cost control and integration of these applications has become crucial. As a result of this, the demand for SaaS spend management and SaaS management tools is set to increase in 2023. Traffic to the cloud management platforms category on G2 has grown by 438% and SaaS operations management by 265% in the last two years, reflecting this growing demand.”
Expect to see a greater emphasis on SaaS consolidation and management, and an increase in the number of SaaS management tools being adopted, especially in large companies where implementation across various teams can quickly get out of hand.
Relatedly, with more options in front of them, an increased focus on SaaS platforms being used within organizations, and a greater need to ensure platforms integrate with one another, decision-makers are doing more due diligence before making a purchase.
This ever-evolving SaaS buyer journey is, according to Joe Kevans, Director of Demand Generation at PartnerStack and the Founder of B2B SaaS Reviews, one of the things that makes SaaS sales so difficult and a large part of the reason buyers will, “increasingly turn to third-party sources, such as app marketplaces when making purchasing decisions.”
Kevans continues, “G2 has reported that B2B buyers who prefer to buy from a third-place marketplace have risen from 22% in 2021 to 28% in 2022. With the number of SaaS apps increasing — already more than 100,000 — more vendors are building app marketplaces and listing their apps on other marketplaces to make their software easier to buy, implement, and use.”
This presents a huge opportunity for marketers. Marketplaces can be a, “cost-effective growth lever to pull with increased buyer demand amidst worsening market conditions that will make selling through traditional sales and marketing channels more challenging.”
As artificial intelligence advances and becomes more accessible, new use cases are coming to light.
CEO and Co-Founder at Instrumentl, Gauri Manglik, predicts that product development could be the next AI-powered space to transform the SaaS space.
“There are a few reasons for this,” Manglik explains, “For one thing, technology has gotten so advanced that it's now possible for companies to build products that can learn from their customers and adapt to their needs—and use those learnings to make new products.”
“This could mean that you have a SaaS product that knows exactly what you need it to do and how you want it done, so it ‘just works.’”
"It also means that new features can be added as quickly as they're needed because of the feedback loop between the customer and the product designer. This will be particularly important for companies that are looking to cut their product development cycle time.” Manglik shares.
It could also help SaaS companies triage product development, sending smaller updates or features to the AI, to give the development team time and space to work on big-picture pieces.
More accessible still is the ability to incorporate AI based on the GPT3 model into software. CEO and Co-Founder at Polymer Search, Ashish Gupta, shares, “There are already solutions being developed out there that allow businesses to train a chatGPT-like assistant based on their own data. Major companies are all thinking of ways to incorporate this into their systems.”
Given ChatGPT’s rise to prominence, Gupta sees conversational systems as the most obvious first point of implementation, saying “Basically all conversational systems (customer support, chatbots, virtual assistants, emails, etc.) will be handled by AI. Some will be replaced entirely, whilst others will still have a human to overlook everything.”
The ‘data stack’ is not a new concept and the collection, organization, and operationalization of data has been top of mind for years. But this year, more than ever before, organizations can no longer afford to let data exist in silos.
Because of this, the Data-as-a-Service (DaaS) market is set to explode with the year-on-year growth rate of 2023 expected to be 28.64%.
Director and Co-founder of Altosight, Alex Chaidaroglou, shared, “For the past years, data has been important for companies. Strategic decisions are based entirely on customer analytics or competitors’ data monitoring. Companies would have to invest in a more specialized staff if they want to do this themselves, and considering the vitality of this aspect, it can be quite hard to find qualified talents for the position. This is where DaaS comes in, providing more flexible options for companies and allowing them to employ their functions based on necessity.”
“By doing this, businesses can save the time needed to make crucial strategic and operational decisions while also improving the accuracy and dependability of their data. Additionally, because setting up cloud-based software is far simpler than setting up on-premise software, it dramatically reduces the time and cost of setting up data tools and processes across the organization.”
One of the many reasons marketers can no longer operate with their data in silos is the need to have all customer data in one place in order to meet their customer’s high expectations around personalization.
Head of Marketing at Siteline, Charlotte Bohnett, shares, “It's always been important for marketing teams to run efficiently, but that imperative has become crystal clear in light of all of the tech layoffs. Teams need to make an impact in as lean of a fashion as possible. Email personalization at scale provides an efficient way to improve conversion rates throughout the buyer's journey. Improved conversion rates directly impact revenue.”
“The benefits are clear, and I think the pitfalls are, too: Data hygiene is paramount, otherwise your personalization could be a nightmare. Also, it's easy to feel the lure of ‘set it and forget it’—especially with automation and AI—but success in email marketing is like gardening. You must constantly tend to and nurture your campaigns. Test, iterate, optimize.”
Bohnett and her team use Ortto to “pull data about our customers and prospects from across our marketing stack and then use dynamic fields to plug that data into automated email campaigns. The messages are personalized, but the approach is one-to-many.”
She adds, “And with Ortto's AI-powered subject line generator, we are actively perfecting our subject lines based on all of the data points within our CDP.”
Growth hacking your way to a flood of leads may be a thing of the past as businesses focus on more profitable and long-term metrics, like conversions and retention.
Co-CEO and Co-Founder of Chili Piper, Nicolas Vandenberghe, shares, “The economy in 2023 is expected to continue to cool, especially in the tech sector. With that change, companies will focus more on optimizing conversion rates over brand awareness plays."
“With fewer hot inbound leads coming in, you need to roll out the red carpet experience for the people who are expressing interest — all the way to Closed Won. It’s always been important to patch up the leaks in your funnel, but this year it’s critical.”
Ortto’s Director of Growth Marketing, Charlie Windschill, sees an overdue shift from acquisition to retention in our midst.
“After years of plush budgets and growth-at-all-costs acquisition strategies, marketers are now suddenly being asked to do more with less,” Windchill shares. “As a result, many growth marketers will be shifting their focus to retention strategies and tactics for minimizing churn risk.”
This will mean unifying data, getting a single view of the customer journey, and building sophisticated customer segments will become an essential part of the growth marketer’s job. This data will help identify key cohorts like highest value users or users showing signs of churn risk. Armed with these insights, marketer’s can focus their efforts for maximum impact and quickly identify what's working and not.
Windschill sees this exercise as essential to long-term sustainable growth, even after acquisition spend ramps back up again.
“One of the advantages of taking a retention-first approach is that you will develop data and insights that have a positive impact across the entire funnel.. Knowing your highest value segments enables you to refine your ICP and fine tune targeting to acquire higher-value customers.”
Over the last few years, there has been a noticeable shift in the type of content companies create. Short, sharp, and keyword-laden is already a thing of the past. But this year, quality, originality, and authority will become the sole focus for content marketers who want to stand out.
Content Director & Founder at Chosen Data, Branko Kral, shares, “SEO content and lead nurturing content, has been an effective way for SaaS companies to grow, to a point where many SaaS companies ramp up content programs when they're getting ready to go public. But SERPs and inboxes have been getting saturated.”
“In 2023, with better templates and AI, the saturation is getting worse. To stand out, the content will need to be original — based on experience or opinion and owned data, with insight that hasn't been shared before. It will still need to be high quality in terms of writing, design, and visual resources, too. And it will still need to be worth repurposing on at least a few platforms.”
This is no easy feat, especially for smaller teams. To scale, content programs will need a healthier balance in quantity and marketers will need to get closer to their product and development teams who will take a larger role in helping to produce content with an original point of view.
No matter what this year throws at us, one thing is certain: SaaS is set for another big year. While there will be challenges faced along the way, the companies and individuals that are tenacious in their pursuit of growth will find opportunities to grow — and will learn a lot of incredibly valuable lessons along the way.
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