As a business or startup owner, it is critical to understand the reasons behind your software acquisition strategy; especially when cloud-based applications and upgrades are involved. At present, the market trend shows that consumers have been moving towards cloud-based solutions at a rapid pace, with revenue from such products projected to reach $143.7 billion by 2022.
That’s because the subscription-based service delivery model has introduced better approaches to getting clients, user onboarding, and user satisfaction.
Customer retention is based on engagement, and both are the lifelines of any SaaS business. Even if you look at the difference between the customer acquisition cost (CAC) and the cost of upselling to existing users (for $1 new annual contract value) from the 2016 SaaS benchmarking survey, you can recognize SaaS founders are getting more value against their money.
According to Neil Patel, the co-founder of crazy, value is of great essence when it comes to SaaS upsells. He believes that if the users compare the upsell value with their current subscription or purchase level; they are pretty likely to understand why they need to opt for it.
It’s not just the numbers that make SaaS stood out; dexterity and cost-effectiveness development for companies also make it an insanely reliable solution for numerous businesses and industries. To top it off, simplicity, user accessibility, widespread connectivity, and security have made SaaS popular among companies. As a result, the software distribution model has helped business streamlined their operation smoothly, resulting in maximum efficacy across the board and significant growth in demand for the SaaS. Don’t believe me? Check out the market forecasts:
Though the SaaS growth rate has begun to slow down, looking at the compound annual growth rate (CAGR) projections of over five years; one can say that it is still going strong as the software distribution model is expected to grow by 12%. Other services, such as Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) will also grow at a faster pace; but the SaaS market is achieving higher revenue than both IaaS and PaaS combined.
SaaS success can also be measured in terms of the companies that have made it really big. Here are the ten largest SaaS companies as per a January 2020 report:
A widespread misunderstanding is counting Oracle and Microsoft among SaaS businesses. That’s because a major chunk of their earnings comes from selling on-premise software. So, while these are huge tech companies, calling them, SaaS is mislabeling.
This shows that it’s the perfect time to build a SaaS product for a rocking business as the future seems bright. As per a BetterBuy SaaS report, 64% of SMEs today rely on cloud-based technology to propel growth and boost workflow efficiency. And 78% of businesses suggested that they plan to increase the number of SaaS platforms.
Research analysts envision the industry to achieve a whopping $55 billion in revenue by 2026. At present, the subscription-based model accounts for over 50% of the software implementations compared to on-premise licenses. Thus, it is anticipated that by the end of 2021, 73% of organizations will be using all or mostly SaaS applications.
DFY SaaS can help you avoid costly pitfalls by building in the right way from the start, so you can go the extra mile and increase your chances for success.
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