The remarkable growth of the B2B SaaS market.
Marketing has never been so high on the agenda in tech companies. Now, content marketing is the new black as the world takes notice of the insane growth of the B2B SaaS. Looking through the prism of global news, analysts’ reports and social media, it’s hard not to be seduced by the halo of SaaS Unicorns that magnify the sector’s market potential. While there is clearly a B2B marketing machine at work, 22 new SaaS unicorns announced in February 2021, in the middle of COVID-19 pandemic, leave little doubt that the B2B SaaS market is one of the hottest B2B markets.
Yet, the mesmerising growth that makes SaaS market so attractive is also the major reason of why so many market players are experiencing frustrating growth issues. So, unless your B2B SaaS brand has a growth strategy in place, these challenges will only get worse.
So, let’s look at the SaaS market’s potential, pitfalls and growth solutions your business can adopt to get a slice of this delicious pie.
SaaS Market Growth: Opportunity and Threat
There is absolutely no doubt that the SaaS market will continue to grow. Its meteoric rise in the past five years has received an exponential boost from 18 months of COVID-19 distancing and the urgency to move work and life to the cloud. The prevalence of cloud, perhaps not better understood, but increasingly accepted as essential in the age of IoT connectivity and fuelled by the ferocious hunger for real-time data in every area of business and across more industries. So, yes, the cloud has created a supremely expandable growth platform for the SaaS vendors.
As a result, the SaaS market’s global revenue, according to Forbes, is predicted to reach $233 billion in 2022 and $369.4 billion by 2024. In June 2020, there were 15,529 SaaS companies world-wide (Crunchbase 2020), including just over 700 unicorns. With 22 new SaaS unicorns announced in February 2021, amid a pandemic, SaaS is the hottest market sector in the world.
Why Then Is Your Business Struggling with Growth?
Few B2B companies face the same level of opportunities and barriers to growth as those in the B2B SaaS sector. The alluring market potential of SaaS is a two-edged sword. While it delivers healthy Unicorns, it also quickly churns through or stuns the growth of many SaaS companies. Why?
From rookie marketing mistakes to the eye-watering lack of a marketing backbone to support the growth funnel, a staggering 63% of business to business (B2B) SaaS companies are struggling to generate sales leads. It is well-documented that many sales teams across all B2B sectors struggle with traditional sales activities: 37% with prospecting, 28% with closing, 18% with identifying leads and 17% with qualifying prospects. (HubSpot, State of Inbound 2018)
Where do you stand?
- What if your B2B SaaS company doesn’t even have a Sales Team yet?
- Are you, the Founder, still doing everything in business by yourself, from ordering toilet paper to approaching multinationals for partnerships?
- Do you have effective essential marketing assets?
- Do you have a growth strategy to attract and engage your target market?
- Are you clear about what your Brand stands, i.e. STANDS OUT for? What makes you different?
If not, this could explain your crippling growth pains.
SaaS companies are the epitome of innovation. The leaders among them inevitably start with a market-centric insight that solves an important problem for many people, in a new way, made possible by new technology. It’s exciting, newsworthy!
And that’s a great story for the product launch.
The Hard Currency of Customer Feedback.
Software development, just like marketing communication, doesn’t stop after product launch. Glitches in the software are to be expected and nobody wants a great product to fall through poor initial customer experience. Therefore, you need to continue testing and improving. But, importantly, you need to seek customer feedback.
Customer feedback is your hard currency (even if it’s bitcoin) for market leadership and growth. On one hand, it provides invaluable data for innovation and further scope for features and value. Plus, builds brand engagement and community as the best defence against competitors who will soon be out there with their own versions of your product.
In a nutshell, SaaS product is an ongoing work in progress in collaboration with customers and users. If you neglect the development of your software, eventually you will lose all customers.
Why Not Think About SaaS Product and Marketing in the Same Way?
The biggest challenge for SaaS companies is failing to recognise that ongoing market communication is an integral part of their SaaS products development and growth.
Think: Freemium. While Freemium model is the best marketing asset for any SaaS company, it requires a sound B2B Marketing Strategy and Content Marketing to deliver results.
Here is the thing. For every update, version and extra feature; and every move of SaaS market, or your customer segment, your brand needs to be out there with a message, a reminder and an opinion to remain at the top of the list of your prospects.
Marketing and SaaS products cannot succeed without each other. It is a permanent circle of innovation, improvement, and communication. In the not-so-distant future, we will build AI into relevant software, with an ability to perform the role of Inbound Marketing. We are not there yet.
Until then, this absence of growth strategy and marketing innovation to match the company’s product innovation presents the biggest obstacle to growth and, potentially, a life threat to a SaaS business. It is also the reason why there is a billion-dollar chasm between highly successful and struggling SaaS companies.
Yet, even ignoring the ‘unfair’ market share distribution in the sector, the potential of SaaS market is undeniable.
So, how can a B2B SaaS brand build a greater core strength to speed up growth and success?
First: let’s take a leaf out of the unicorn book.
The 5 Secrets of SaaS Unicorns.
They are called Unicorns for a reason. They are as elusive as they are exciting. SaaS unicorns sell dreams before they sell software.
It is an expectation of unbridled potential that makes SaaS unicorns so attractive and not just to investors but also to the user community and the media. We all get fascinated by the novel idea, the elegant solution and an even more exciting Brand story surrounding them that most SaaS companies don’t even know they are missing.
What is a SaaS unicorn?
A “unicorn” is a privately held company that’s received a market valuation of more than $1 billion. Note that because all unicorns are startups, their value is based primarily on their growth potential and expected development from the investment community.
Clearly, chasing the Unicorn dream is not for everyone. But if you can find at least one of these secrets within you as a B2B SaaS business leader, you have a chance for exceptional growth, anyway.
But, as alluring as they are, there are five hard facts about Unicorns to keep in mind when considering your B2B SaaS growth strategy.
1. They are extremely well-funded!
The magic of Unicorns is that they are supremely powerful. In business terms, this power stems from financial strength that enables the company to do extraordinary things. Marketing budget? No problem. Quality growth team hires? Of course! Someone has to keep cranking up the magic machine.
Recent Example: Melio (Israel) is a B2B payments startup that provides small businesses with the digital management of their supplier payments. Founded in 2018, landed $110 million in funding in January 2021 to become a unicorn with $1.335 billion in valuation in February 2021. Cool, hah?
2. They invest heavily in Brand and marketing early.
They spend 80-120% of their total revenue on marketing in the first 5 years (BlueTree, 2019), often not making any profit or even generating revenue for that number of years. They focus on creating users and brand experience. Most high growth SaaS companies spend up to 50% of the revenue in the first five years, with the median number being around 10%.
3. They adopt Product-led Growth Strategies
Using the Freemium business model, they leverage their exciting SaaS Product and urgently build dedicated user communities of Brand evangelists. Facilitating development of easy-to-follow DIY training, self-help and user-driven content are the best strategies and the best allocation of resources.
4. Their Founders are Savvy Self-Promoters
They understand the importance of not doing it all alone but with support in key areas: finance, business, sales and marketing. And, they have access and ability to raise growth capital. This is the critical differentiator for many SaaS and other tech companies who fall short at this point. Just imagine where Apple would be without the marketing savvy of Steve Jobs.
Importantly, successful SaaS Founders don’t undertake doing marketing themselves. They don’t scour freelancing sites searching for a bargain. Instead, they surround themselves with the right people with the right skills, values and inspire them to deliver.
And this brings us to the most important factor of Unicorn success: vision.
5. Their Leaders Wield a Bold Vision and a Clear Marketing Roadmap
Think about it. Good, bad or ugly. Anything important humanity has created throughout history, from the great pyramids to artistic masterpieces, man-on-the-moon, or great revolutions, it has always been about an inspiring vision and a roadmap.
SaaS Unicorn leaders anchor their success in a bold business vison. This vision inevitably shows an inspiring shared prize, supported by a data-driven growth strategy roadmap, complete with marketing and Brand plan for how they will lead the company to realise this potential.
Clearly, business vision is not just to attract customers. It is even more important in attracting investors, partners, best talent and influential media. Because who doesn’t want to buy into “the next big thing”? And getting early adopters is the shortest path to early success in technology, especially in SaaS market!
If you still have questions here, talk to me. Click image below.
About the Author:
Margaret Manson is an experienced, inbound certified content marketing strategist. As Founder and Chief Inspirator of Melbourne based InnoFuture Marketing Innovation, she provides strategic, tactical and marketing project management support to innovative B2B organisations. She works with selected companies as a high calibre, part-time CMO helping them grow and scale up their marketing efforts.
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