SaaS is a blazing fast industry.
We’re guessing you’ve noticed.
How can we be so sure?
Because we’ve yet to meet a SaaS professional that has enough time to keep up with everything. And no, it doesn’t matter how many coffees you drink or how fast you keep moving.
Just check us out on most days:
So in an act of solidarity, we’ve decided to bite the bullet and pull a few all-nighters to bring you this ultimate collection of SaaS trends and statistics.
It’ll only take you about 15 minutes to get through them but will save you precious time in the long run. After all, it's good to stay informed on all the hottest SaaS statistics. By the time we’re done, your colleagues will know you as the SaaS wizard.
What will we be covering today?
- Four key SaaS stats
- 12 trends broken down into four categories:
- SaaS industry trends
- B2B SaaS trends
- SaaS adoption trends
- SaaS business model trends
Interested? It couldn’t be otherwise, so let’s dash in faster than Sonic the Hedgehog!
Four SaaS Stats You Have To Memorize
70% Of Business Software Is Now SaaS-Based
… and by 2025, it’s predicted to reach a whopping 85%.
For an even bigger wow factor, check out the meteoric rise of SaaS application usage over the last few years:
SaaS applications used by companies
8 apps on average
Why is this happening?
Three simple reasons:
- SaaS increases productivity and gets tasks done faster
- Endless automation possibilities
- Lower IT costs that make the most of tight budgets
Global SaaS Spending Is Valued at $145.5 Billion
Whoa is right.
$145.5 bn in yearly revenue is enough to make Fortune 500 companies jealous, especially if you consider the SaaS industry was only worth c. $30 bn in 2015.
The Average Churn Rate for SaaS Firms is 4.8%
Write this statistic down on a post-it note, stick it up on all your monitors, and use it as a goalpost for your own churn goals.
Whatever you do, don’t forget about churn rates, as they're critical to success in our world.
In super simplistic terms, we can say:
- ≥ 5% is bad
- 4.5 - 5% is average
- ≤ 4.5% is good
- Negative churn is industry-leading (think of Slack and their 143% net dollar retention rates)
By the way, this average churn stat is from Recurly’s ongoing research on over 1,500 subscription businesses.
They also uncovered three other things worth mentioning:
- The upper and lower quartiles of SaaS churn are 8.5% and 2.9%
- The split between voluntary and involuntary churn is 3.7% to 1.1%
- B2C SaaS churn is slightly higher than B2B churn
The USA Dominates the SaaS World With 15,000 Companies
But is 15,000 SaaS firms really that much?
This table puts it into scale:
# of SaaS Firms
# of SaaS Firms
If you do the math (and we know you’re itching for a reason to open your calculator app), you’ll find that the other leading countries only have a combined 8,000 companies.
And the USA's dominance doesn’t stop there — they also have a market value that exceeds $100bn, meaning that, when it comes to SaaS, they’re truly “the greatest country in the world.”
Three Fundamental SaaS Industry Trends
50% Of Companies Will Centralize Their SaaS Applications
By 2026, that is.
So don’t panic; there’s still some time before centralization becomes the norm.
But it’s definitely best to stay ahead of the curve because of its clear-cut advantages:
- Better IT management
- Improved productivity
- Unified reporting and analytics
- Cost savings from eliminating duplicate solutions
- Hardened security thanks to a reduction in shadow IT
This last one is particularly significant because 49% of cyberattacks and 42% of IT budgets are attributable to shadow IT — ouch!
COVID-19 Had A Positive or Neutral Impact on SaaS Spending in 52.9% of Organizations
Well, here’s the research that backs it up:
Look carefully, and you’ll notice that 30.4% of companies said they actually increased spending over this challenging period.
Mention this statistic the next time one of your clients downplays the importance of SaaS in supporting digital transformation and future-proofing businesses.
Germany Is Predicted to Experience the Largest Growth in SaaS Expenditure Out of Major Markets
You can’t stop the Germans — they were already the biggest player in Europe at €6.85 billion in 2020, but that wasn’t enough.
Germany should outpace the other major markets and grow to €16.3 billion by 2025.
With an estimated 300% growth (and the fact that Germany only has 1000 local SaaS companies), honing your marketing skills and practicing your German are starting to sound like great ideas.
Our SaaS marketing playbook can help with the first part, but unfortunately, “Wir sprechen kein Deutsch,” so you’ll need to look elsewhere for language skills.
Three B2B SaaS Trends to Base Business Decisions On
Nothing Matters More Than Customer Experience (CX)
And don’t just take it from us.
Take it from 1,920 business professionals who said that CX has now overtaken pricing and product as their #1 priority.
But why should you join them and ensure all your interactions are top-notch?
N.B. the “all” in italics is fundamental because one bad experience is enough for ⅓ of customers to leave a brand they love. And that shoots up to a shocking 92% if you add a couple more negative interactions.
Talk about a tough crowd.
Now back to why you need to go all-in on CX:
The sales numbers back it up.
The median cost to acquire a single $1 of annual recurring revenue (ARR) is:
- $1.32 for new customers
- $0.71 when upselling to existing customers
- $0.38 when using other expansion tactics on existing customers
Need some examples of SaaS companies that have mastered CX?
Start by exploring Genesys’s online community and how it turns potentially fatal pain points into positive experiences, and then dive deeper with our post on the customer service experience.
SaaS Is the Most Important Technology for Commercial Success
73% of 1,724 tech experts ranging in job titles from developers to CIOs from 69 countries.
And that means it more than deserves a place among our top B2B SaaS industry trends.
It’s also fun to note that SaaS beat out flashy technologies like artificial intelligence, virtual reality, and blockchain — mention that at your next networking event!
Faster Service Delivery Is the Main Reason Companies Switch To Cloud-Based SaaS
The results are in.
These are the main drivers behind businesses switching to cloud SaaS:
- 71% of companies want to boost IT service delivery speeds
- 63% are looking for more flexibility
- 58% are keen on ensuring business continuity
Speed takes the gold home because cloud platforms can deliver a massive 20-40% reduction in IT development timescales.
But why is it so pivotal?
Because customers no longer have any patience, especially when it comes to marketing initiatives.
Let’s show you an example: endless aisles in retailers.
An agile IT department is vital to keep these software solutions up-and-running 24/7 with the latest stock levels and discounts, or else… CX will tank, and shoppers will be lost forever.
The Top Three SaaS Adoption Trends
Nearly 85% Of Small Businesses Use SaaS Solutions
Yes, that’s correct.
Long gone are the days when SaaS systems were limited to large enterprises or companies with their own team of in-house developers.
Come on, small businesses like Roojai.com are even successfully using Salesforce (the gold standard for enterprise-grade SaaS CRMs).
73% Of Companies Use SaaS for All (or Nearly All) Their Software Apps
We’ve already mentioned that 70% of business software is now SaaS-based, remember?
So it’s only logical that 73% of companies are now using SaaS for the vast majority of their software needs.
Need some inspiration on how these two interlinked trends in SaaS can transform a business?
Then take a look at Australian marketing giant Salmat and its five-year journey towards becoming cloud-only.
An Incredible 93% Of CIOs Believe In the Power of SaaS
How do we know?
And it’s not because we’re mind readers.
We just did our homework and found out this is the exact percentage of CIOs that:
- Have adopted, or
- Are adopting, or
- Plan to adopt SaaS solutions.
These impressive numbers are a testament to SaaS’s unparalleled agility and scalability.
Three Essential SaaS Business Model Trends
Inbound marketing initiatives are one of the hottest trends in SaaS.
And for good reason, they’re without a doubt in our minds the future of lead generation.
This will help you:
- Distinguish your organization and product offering from the competitors (remember that SaaS platforms are often similar in the eyes of end-users)
- Become the top paid option for everyone that consumes your awesome free content (it’s only human to want to give back)
Kazoo, a SaaS system for HR professionals, is an excellent example of a company that has leveraged inbound marketing to grow awareness and turbocharge website visitors by 250%.
Keen on doing the same?
Then don’t miss out on our 5-step inbound marketing guide!
Vertical SaaS Is on the Rise
By vertical SaaS, we’re referring to the strategy of targeting a specific customer industry and providing them with a customized software solution that meets all of their particular needs.
And it’s by far one of the biggest SaaS market trends of 2021.
Because vertical SaaS delivers a better service to end-users, who are struggling to keep up with the personalization demands of modern customers.
It delivers the following benefits compared to traditional horizontal (a.k.a. multi-industry) SaaS:
- More cost-effective
- Comes with pre-set KPIs and metrics
- Better data governance
- More flexibility
- Easier to upsell and cross-sell services
One of our favorite case studies (and not only because it’s lunchtime) is Toast, an insanely kitted-out software platform for restaurants.
Micro-SaaS Is The Next Big Thing
Do you think that SaaS is only about fast-growing startups, IPOs, and booming organizational charts?
There’s another side to the coin: micro-SaaS firms.
And these minute companies are one of the most exciting B2B SaaS industry trends.
They have explicitly set themselves the goal of keeping their software solution simple and their teams either one-man shows or tiny enough to fit into your living room.
And micro-SaaS companies are succeeding by focusing on a single niche market problem.
Storemapper is the trailblazer in this category with its ultra-simple store locator app for retailers and OEM manufacturers.
The benefits of this business model include:
- Lower operating costs and freedom from outside funding
- Easy to manage software
- More opportunities to focus on CX
- The ability to operate as an add-on extension
- Remote working possibilities
Key Takeaways: Recapping the Four Stats and 12 Trends
We’ve just covered a ton of numbers.
We know it’s a lot to take in, so here’s the plan of action:
Take a deep breath, pat yourself on the back, and scroll back up through this post, reading only the sixteen headers.
That should be enough to cement the four SaaS statistics and the 12 SaaS trends into your long-term memory.
But what if you’re interested in talking more about SaaS market trends?
Then get in touch, and let’s keep this conversation going!
Chris is one of the managing partners at Roketto. His area of expertise is digital marketing and loves sharing and educating on topics like Google Ads, CPC bidding tactics, Google Analytics, and marketing automation. When Chris isn't in the office, he enjoys playing volleyball, mountain biking, and hiking with his American Eskimo.