The Software-as-a-Service industry has been a rapidly expanding industry, and this is expected to continue through 2023. From 2015 to 2022, the SaaS industry has grown from $31.5 billion to an estimate of nearly $172 billion, and in 2023, this number is predicted to grow to a whopping $208.1 billion.
While this spells exciting times for SaaS companies mapping their growth, everyone wants in on this thriving industry. With the rise of new SaaS platforms and an increasing number of competitors vying for a space of their own, the SaaS industry has become a playing field only for the ambitious. It is of no surprise that greater power is shifted to the hands of SaaS buyers, as they continue to have the luxury of choice in this saturated market.
Hence, today – more so than ever – it is pertinent for SaaS businesses to understand what buyers are looking for, and market their solutions to target buyer needs.
As we usher in the new year, the SaaS industry will continue to be a mixed blessing for companies. This might sound like a lot to take in, but we have summarized 8 SaaS Marketing Trends to Watch Out for in 2023, that could influence your SaaS marketing strategy for 2023.
SaaS Marketing Trends of 2023
Millennial Buyers Are Here
According to the Harvard Business Review, 73% of employees who participate in buying research and making the final purchasing decision are millennials, with more than half of them as sole B2B Decision-Makers. This is expected to be followed in the SaaS industry, as more millennials become of age in making crucial purchasing decisions.
Marketing to millennials has its unique set of challenges. Millennials today have been born into the digital era, where the information-saturated web (however convoluted it may be) remains their comfort zone. It is thus crucial for your business to figure out how to leave an impression among the many million other apps and sites on the web.
Millennials are twice as likely to discover products through online search compared to older generations. It matters that you equip your potential millennial buyers with sufficient information on the web they need to do their own research. Additionally, SEO might really matter here. Ensure that you have your website optimised for search engines, including your product write-ups, blogs, and videos.
The B2B Millennial Buyer Survey Report states that millennials identified that review websites (49%), web search (43%), demos/trials (38%), and social media (29%) were their main sources of information when making purchasing decisions. Apart from SEO, include reviews and customer testimonials that can help your brand establish greater brand credibility from the web search, enabling your brand to stand out from the competition.
Vertical SaaS in SaaS product marketing
Adoption of vertical SaaS has taken the SaaS industry by storm, and this is expected to continue in 2023.
Vertical SaaS companies have a narrower focus than horizontal SaaS companies, as they target a specific industry, tailoring their services to fill industry-specific gaps. Unlike horizontal SaaS – such as Slack or Asana – that target a wider audience across industries with their business solution, vertical SaaS companies identify an industry – could be retail, healthcare or hospitality – satisfying needs across the identified vertical with their product/ platform features.
What does this spell for vertical SaaS marketing?
Since vertical SaaS companies focus on a specific market segment, it becomes an imperative to customize your marketing content and platform interface to the needs of their customers. There is no longer a reason to sweep across with a broad brushstroke. Instead, industry professionals will be scrutinizing your solution features, backed with their own industry opinions and expertise.
In terms of your digital marketing strategy, keywords are also expected to draw a smaller audience volume and be more difficult to find. With fewer keywords to target, the volume of audience you can draw is expectedly smaller compared to other horizontal SaaS platforms. To mitigate this, target secondary (but still relevant) keywords to widen the focus of your content. This way, you can better expand the visibility of your content on search pages, instead of the niche topic your marketing content may be about.
It is also important to establish brand credibility within your niche market. Given that the business ecosystem in specific industries are often close and well-informed, business will be listening out for what other businesses in their field are doing. This means that case studies and customer referrals might be the way to go for your business. By promoting industry businesses that you have successfully benefited with your solution, similar businesses might be more inclined to use your solution, enabling you to better scale your business within the industry you are targeting.
Content Marketing Becomes More Popular
In 2023, more SaaS businesses are going to turn to content marketing. SaaS content marketing is a strategy that can attract your potential customers by creating value for them with the content you create. While content marketing may not always reap immediate results, its value is in its long-term reach in creating greater brand awareness and strengthening relationships with new and existing customers.
Many marketers today are increasingly seeing the value of content marketing, with 72% of marketers believing that content marketing is efficient alone for lead generation and boosting engagement.
Given that content marketing in SaaS can help to build your business’s brand credibility, it is no wonder that SaaS companies that use content marketing have seen 30% higher growth rates and 5-10% better retention rates. Content marketing is also reported to yield an ROI of up to 647% for SaaS brands.
Many SaaS companies have turned to producing quality content as part of their marketing strategy. One such example is Slack.
Slack has produced many top-notch content including blogs, e-books, guides and videos. These content topics range from “How to” tutorials and case studies, to broader topics about Human Resources and more. Their content is educational and targets the needs of their potential and existing customers, who can find out more about how to maximize their usage of Slack. Such content aids in establishing Slack as a credible industry player in digital communications, boosting their authority and brand recognition.
Given how complex SaaS products can be, with frequently revised features and platform updates, content marketing will be the strategy for you in 2023 to educate your potential customers about what your business solution can do for them.
Use of AI and Machine Learning for Personalization
In this information saturated digital world, personalisation is key. People no longer want to be scouring the web to find information that tackles their wants and needs. Instead, they would love to view content catered to what they are looking for.
In fact, 77% of consumers have chosen, recommended or paid more for a brand that offers a personalized service or experience, and 87% of companies see a lift in key metrics including conversion rates and engagement rates when they employ personalization in their strategy.
Evidently, hyper-personalisation is a trend that we will continue to see in the year ahead. As more SaaS businesses vie for a larger market share, they are going to turn to marketing methods that allow customers to feel more connected with the brand. This could include personalised email marketing, account-based marketing, or targeted ads.
To improve personalisation in marketing, businesses are going to turn to artificial intelligence and machine learning technology in understanding the customer, product recommendations, or advertising strategy.
One thing to note is that businesses are in the midst of bidding cookies goodbye – Google has announced that it will be phasing out third-party cookies on Google Chrome by 2024.
Previously, cookies provided a major opportunity in tracking customer habits by saving browser information. This enabled businesses to personalise the unique customer experience, by targeting what web users are likely to be looking for.
Hence, SaaS businesses will need to look at collecting more first-party or zero-party data to make up for the loss of some valuable customer information from third-party cookies. Some first-party data collection methods could include newsletter signups, surveys or loyalty programs.
Native Advertising Will Be On The Rise
Ad blockers are likely to remain a mainstay in user web habits today. This has contributed to an increasing difficulty in using traditional display advertising methods to increase visibility for brands.
Native advertising refers to ads that are less conspicuous in its web display compared to traditional ad displays. At its best, native advertising could look just like your organic content, making it increasingly difficult for users to reject receiving content from native ads.
According to HubSpot Research, 91% of people believe ads are more intrusive now than they were before, and it is hence of no surprise that display ads could be a huge turn-off for the tech-savvy crowd. With an increasing number of discerning web users today who might not enjoy the idea of being tracked, native advertising can likely combat this ad-averse audience.
Native ads are not all novel, with a proven track record of delivering three times higher returns and retention rates than display banner ads. In 2023, however, we expect native advertising to continue to flourish, as more SaaS companies turn to this sponsored content to attract more users’ attention.
Metrics SaaS businesses Will Be Looking At
SaaS marketing metrics are important benchmarks in helping your business to track your performance and growth. There are many marketing metrics available, with conventional ones such as website traffic, marketing qualified leads and conversions that you are already well-aware of. However, here are two other important metrics that SaaS businesses would likely be looking at in 2023.
Customer Churn Rate
Customer churn rate is one of the most common metrics that SaaS businesses today track. It measures how much business you have lost in a given period of time, and enables your business to better understand your customer retention statistics. In the SaaS market, this would refer to the percentage of your customers who have canceled their subscription to your service within a period. In 2023, the industry benchmark is expected to be about 5.2%.
To calculate churn rate, take the number of existing customers at the beginning of the period minus the existing customers at the end of the period, and divide this value by the existing customers you had at the start of the period.
Churn rates are often conventionally tied to the sales and product teams. It is a result of a combination of factors, but the marketing team should be considered in the equation. If post-review results suggest that the user experience is not a result of the growing churn rates, then we need to consider if our product messaging is creating false expectations for the customers? Are we targeting the wrong customers, resulting in a mismatch of product fit?
Customer Acquisition Costs-Lifetime Value Ratio
A survey by Paddle found that there is likely to be a shift observed in the SaaS industry toward prioritising operational efficiency, with 31% of SaaS companies looking to control costs and achieve outcomes with minimal resources. What this spells for marketing, is that there is going to be a greater reliance on sustainable metrics including CAC-LTV ratios.
Beyond CAC metrics that measure the costs of acquiring a customer, marketers today are more concerned with the CAC-LTV. Given the amount of time and money your business has spent on acquiring a customer, the CAC-LTV ratio is important in tracking that each customer returns value in its cost of acquisition for your business to remain viable with a healthy profit. The CAC-LTV ratio compares the value of a customer over their lifetime to the cost of acquiring them.
The benchmark of an optimal LTV:CAC ratio has conventionally been 3:1. However, in 2023, this benchmark ratio may be expected to increase given that an increasing number of SaaS companies are looking to expand their organic content marketing strategy – including SEO strategy, social media posts, or even email marketing.
Importance of Brand Experience
For a strong brand experience, everything that you put out to your potential customers should align to your brand image and story. This includes your entire content marketing strategy, from graphic designs, text, or even your website interface, as well as a strong brand positioning.
Far more than just a visual aesthetic, the brand experience is crucial in enabling your brand to stand out from the sea of competitors in this SaaS industry. Successful branding is a huge step in building trust and credibility for your business brand, and this comes from establishing a clear brand positioning. By communicating clearly what your business can achieve for your customers, you are creating value for your customers, attracting them to your brand.
With good branding, companies can then establish themselves as a top-of-mind business in their area of expertise. Some of the biggest tech companies we know today have already become synonymous with the services they offer. You now hear people using brand names like “Skype” and “Zoom” as verbs in their daily conversations, and everyone can instantly associate them with what they do – web conferencing.
Rise in Video Marketing
Video marketing has been a crucial marketing tactic for SaaS companies, and this is not expected to shift in 2023. However, what we may see different this year, is that there will be new and innovative uses of video marketing in SaaS marketing strategies in the year ahead.
83% of video marketers said that videos help to generate leads. This is unsurprising, as
video marketing is an incredible platform to educate your customers about your product features and uses without having them see a physical product. Videos are also often more engaging than long form text articles, and are more likely to achieve virality than your blog posts.
Some video ideas that you could explore for your SaaS business in 2023 include product demos, customer testimonials, tutorials or answering frequently asked questions (FAQ). While video marketing might seem to require more effort and time in preparation, video marketing could be key in engaging your audience in 2023 – Explore unconventional but increasingly popular modes of video such as live streams, webinars, behind-the-scenes footage, or even Instagram reels.
What 2023 Will Bring For SaaS Marketing
The continuous rise of the SaaS industry might be a double-edged sword, but it is important that you are two steps ahead of the competition by preparing for these 2023 trends.
Sure, the SaaS industry is constantly shifting with new players and new gaps in the market. However, what remains important is that you identify your brand positioning, and use your prowess to establish your brand as one better than the rest.
As the new year draws in, it isn’t too late to rethink how these trends might affect your marketing strategy. Feel free to contact us for help in conceiving a digital strategy for your business today.