SaaS Market in 2022: Maturity and New Challenges

The SaaS market is relatively new compared to others, but the number of companies in it, and the number of employees working to develop it every day made it mature quickly, completely changing what this market meant 10 years ago to the year 2022. New challenges arise and user demands increase at the same speed as revenues reach record highs. In this article, I'm going to talk a little bit about everything that's happening right now.

Maturation

Like any new lucrative area, the SaaS market is going through a period of maturity from its current state. Now, the millions of experiments that have been done have already made clear what are the ways to get many customers, get the attention of users and make your SaaS business scalable.

The result is a market that projects revenues of US$716 billion in 2028, consolidating itself as one of the most promising and profitable economic areas that ever existed. With over 4 billion people as potential consumers for any digital product.

Homeoffice

The modality of working from the comfort of your home or a trip to a beach or town in the countryside was established. Although some companies still insist on wanting all their employees in offices, it seems that professionals in the field are not ready to go back.

The pandemic and covid-19 in 2020 accelerated this process that had already been happening for some time. This item is also part of the maturation of this market, as it consolidates itself as a fundamental feature of its operation and almost as a culture for professionals.

Integrating Technologies

Everything that involves the SaaS business model is basically the application of new technologies to expand the possibilities and also solve existing real-world problems. The new technologies integrated into SaaS products develop and improve every positive outcome for all users, whether for the purpose of entertaining or producing.

Artificial intelligence has perfected the way professionals get results, and has improved and is used to make everyone's work easier every day. By integrating the Internet of Things with Artificial Intelligence, it is possible to obtain and accumulate even more information that is transformed into useful data and, finally, into the necessary knowledge for the creation and execution of an effective strategy.

Another technology is customization, a demand that is increasingly demanded by users, especially by digital natives or generation Z. Everyone wants products to be made based on their needs and not pay for something standardized, and customization improves the digital environment.

Challenges

Just like any market that matures and consolidates itself as a lucrative area, new challenges arise and make it increasingly difficult to stand out in the digital world.

Qualifying Leads

The created applications are not only meant to generate revenue, they are also meant to deceive data tracking. Many apps or browser extensions basically circumvent any and all data tracking systems done by SaaS platform algorithms.

A new barrier arises for marketing and relationship teams, as it makes it difficult to know what are the characteristics of the users who visit, frequent, and see value in your product. The new marketing strategies focused on highly qualified leads, that is, on capturing users who are more likely to pay for your product, will have to adapt to overcome these new privacy barriers.

Even the big techs are getting ready for this, as in the case of the company META, which after a change in Apple's policies, had to stop tracking and capturing data from its users, reducing its revenues.

Increase in competitors

Maturity doesn't just come with good news, it adds an enormous amount of competitors increasing the pressure on your company. 5 years ago there were only 3 social networks that dominated, currently, this competition is already in the dozens of social platforms that are extremely used to competing with each other.

If you have a SaaS product launched on the web, and you search for a similar competitor on Google, in less than an hour you will find at least 50 options for products that are extremely similar to yours, and many of them will have several differentiators.

Align Revenue and Profit

Recently we are constantly exposed to the news about big techs making cost cuts and laying off hundreds of thousands of employees across the planet, META, Google, and Twitter are just a few examples. All the huge financial injection in new products was withdrawn so that companies can remain profitable in the midst of new waves in the market.

In 2020, we had a boom in this market, such as viralization on a social network, but just like views, the extra money also decreases after the hype. The entire digital market, including SaaS, needs to adapt and reorganize to align acquired revenue with solid and steady profit.

Cloud Protection

Users all over the planet are clamoring every day for more security in the digital environment, with so much news of user data “leaked” every day, pressure is expected in the security aspect. Privacy is also another very important factor in this topic, every user wants to keep their private information private from any other interested user who wants to read it.

With data in the cloud, providing protection and privacy becomes hard work, as the attack focuses on just a few centralized points such as amazon or Microsoft. Always try to have A/B/C plans for the worst situations.

Increase Lifetime Value

Few are SaaS products that really manage to have a long useful life, most of the products that are developed and launched have a useful life for users of a maximum of two years, after this period, they tend to be forgotten and less used each passing year. And that's a rule, successful platforms are rare and specific cases, we only know that they exist because they have passed the test of time.

Think about how to increase the Lifetime Value of your product so that it doesn't become another one in Google's huge drawer of discontinued products.

Increase Average Ticket

Finally, the biggest challenge of all markets that mature and consolidate: increasing the value of the average sell ticker.

When smartphones were invented, the most expensive ones cost an average of US$500, today they are around US$1200, how did the companies that manufacture them manage to raise the value of their product by more than 100% and still manage to increase their sales? If you thought the answer was “improving your products”, you were wrong.

What has enabled the rise in prices of smartphones is the huge and growing dependence of people on needing to be connected all the time showing their life. To show that their life is good, they needed better cameras, to be able to have more fun, more powerful processors, to be able to stay away from the sockets all day long, and batteries with greater autonomy and all of this was delivered.

But today, it seems that the average ticket for smartphones has reached its limit, with prices ceasing to increase and companies betting on SaaS products to supplement their income.

In fact, there is still no information said to be true about how much it is possible to increase the price of SaaS products and their monthly fees. And the biggest challenge is to scale up and convince users that the scale-up is worth it, as they can easily switch to some other competitor.

All this maturation and the challenges that arise indicate that whoever bets on solving these problems and stands out in the eyes of users, in a financially responsible manner, will consolidate itself as a successful SaaS company.