SaaS Trends: What’s Coming Up Ahead In 2020

My Post - 2020-01-21T142559.225.pngAs a SaaS company owner and an investor through Ramp Ventures, I’ve always got my ear to the ground when it comes to future trends.

And although there’s no way to predict with 100% accuracy what the upcoming year will bring, the following are a few of the trends I’m keeping an eye on in 2020:

Trend #1: A focus on sustainability

A recent SaaStock article shared the following quote from Hanno Renner, CEO & Co-Founder, Personio:

“I think the biggest trends we’re currently seeing is that while growth remains important (especially at scale) it also gets more and more important to look at your metrics and remain profitable as we grow. Both from a growth margin but also from a customer acquisition perspective.”

I’m thrilled to see this idea gaining traction. I’ve been writing about the need for sustainability in growth since at least 2016, despite huge pressure at that point for companies to focus on scaling at all costs.

That said, given that $100M+ equity financing rounds continue to increase – according to data shared by Sapphire Ventures – it’d be pretty naive to assume that founders and investors are going to suddenly back off on aggressive growth in order to focus on profitability and other sustainability metrics.

But I’d still call it a win if even a small handful of startups take on this trend and decide to run with profitability as a north star in 2020. We’re all better off when growth is built on a strong foundation.

Trend #2: Specialization and differentiation

According to Blissfully’s 2019 Annual SaaS Trends Report, the average company spent $343,000 on SaaS in 2018 – a 78% increase from the previous year.

This kind of dramatic growth has only been possible because so many new products have entered the market in the last few years, and I don’t see that trend slowing down any time soon (barring major changes in the US economy, of course).

The natural response to these increased entries, in my opinion, is going to be specialization and differentiation, in terms of utility, features, audiences or verticals.

When competition gets tougher, only those products that can clearly define a specific value proposition for a single audience and that can differentiate themselves from others are going to thrive.

Trend #3: Platform development (PaaS)

An alternative to serving a tightly-defined audience with a differentiated USP is to become a company’s “go to” platform for multiple needs.

Perhaps that’s why Linchpin SEO predicts growth in platform-as-a-service (PaaS) in 2020, writing that:

“PaaS focuses on allowing clients to create or purchase add-ons to the product that they initially bought. Doing so allows SaaS/PaaS providers to offer clients a much more personalized approach to their client’s needs, which should encourage their growth rate and customer retention.”

The challenge here is that building a platform is harder than building a single solution tool – and it isn’t appropriate for many SaaS startups. If you haven’t hit product-market fit, for example, you’ve got more fundamental underlying issues to resolve before you start worrying about developing platform capabilities. – Read more