SaaS companies are growing, and the annual FinTech has been growing 15 times every year. Every day a new SaaS company is entering the market with unique solutions to everyday problems. Big names such as Amazon and Tesla are growing exponentially and earning huge profits.
A big part of the growth for these companies may be the changing customer needs. In fact, SaaS companies have been entering industries that seemed impossible before. The reliability of subscription based selling is changing the industry tides.
In this article, we will cover what is a SaaS company. Principles of Growth used by SaaS companies, and top SaaS companies.
What Is a SaaS Company?
A SaaS company is a company that hosts an application and shares it with customers. Customers all over the globe can take advantage of the app/software over the web.
SaaS means Software As a Service. This suggests that companies are offering a software as a service. To access this service on a regular basis, users have to give a specific amount every month.
A SaaS company has to maintain servers, and databases, and update its software regularly. This allows them to share their software to customers.
SaaS companies can handle almost every kind of work. Here are some examples of work that SaaS companies have been doing for a couple of years:
- Customer resource management (CRM)
- Enterprise resource planning (ERP)
- Project management software
- Web hosting and eCommerce
- Human resources
- Data management
Growth Principles of a SaaS Company
The SaaS model is a clear success. Companies that were non-existent a few years ago have made a name for themselves now. This is all because of the SaaS industry. Here are the principles of growth of a SaaS company.
- Build a Conversion Model
The sales technique of today is vastly different from how it worked in the past. Today, the sales team and the marketing teams have to work together to build a sales model.
They have to develop the right kind of content. AI is helping reshape how companies can target the customer with the written word. Once a user visits the website, sales and marketing teams can target them with ads/content catered to their preference.
Technologically sound marketers know how to generate buzz and interest.
In eCommerce marketing, A/B testing is a common process. Marketers have to do A/B testing for everything (photos, content, pricing, promotion techniques).
This testing helps the brand finds its identity and its voice. SaaS companies rely heavily on A/B testing to see what works well for customers. Based on the responses, they move forward.
- Price Fluidity
More and more businesses are moving towards automation. This also includes setting the price points. Today, the pricing of a commodity or a service changes according to consumer demand.
As the use of AI will become mainstream, the pricing will become more fluid. The prices of software will depend on consumer demand.
- Switch to Subscription Models
The reason subscription models are being adopted widespread is they earn greater profits. Customers in general are lazy. They rarely utilize the services to their extent. And, even if they are not using the service, they’re too lazy to unsubscribe.
If a company is able to provide even a little bit of value to the customer’s life each month, then they’ll keep on subscribing. Even if they aren’t using the service properly. The profitability ratio is very high when it comes to subscription-based services. That is why SaaS Companies are growing enormously.
- Invest in Marketing
For a SaaS company to generate any respectable amount of profit, they have to overinvest in marketing early on. The cost of acquisition goes down as the lifetime value goes up.
While spending too much on marketing may not seem like a good idea at first, it is sure to generate great amounts of revenue.
Top SaaS Companies of Today
Microsoft is definitely one of the top SaaS company in the market today. They adopted the SaaS model pretty early. Now, they’ve moved their desktop productivity suite completely online.
Office now comes with cloud connectivity named Office 365. The Office 365 version outsells the packaged client version and it includes:
- Dynamics CRM
- SharePoint collaborations
- SQL Server Database (on-demand)
- Adobe Creative Cloud
Adobe, the video, and photo editing software selling giant adopted the SaaS model way back in 2012. Since adopting the subscription model, the company’s revenue has skyrocketed.
All the video, audio, and photo editing tools are now available on a cloud-based subscription model.
- Google Workspace
Google Workspace which was also known as G Suite is a one-stop hub for all the services that are individually offered by Google. Now Google already offers Gmail, Cloud Storage, and Calender, but with Google Workspace, you can expect better services. These services include custom email and 24/7 support.
This workspace solution comes at a subscription price excluding the price of basic services offered by Google.