SaaS Trends: What’s Coming Up Ahead in 2020

As 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. 

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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 developing 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.

Trend #4: Product-led growth and product-specific KPIs

I wrote about one manifestation of this trend – the rise of product-led growth (PLG) – in another article. And although I stand by the questions I raised about the practice in that piece, it’s clear that growing acceptance of PLG is contributing to an increased focus on product in 2020.

Another way I expect we’ll see this trend take shape is in product-specific KPIs earning a bigger seat at the business table. This is something I’ve seen happening in my own companies, as we’ve been incorporating and prioritizing product KPIs into our monthly recaps and other review sessions for quite a while now.

Trend #5: A focus on customer experience and customer success

We’ve all seen the stats about the impact of creating strong customer experiences and investing in customer success. If you haven’t, it should be enough to know that B2B respondents in Econsultancy and Adobe’s most recent Digital Trends report ranked customer experience as the single most exciting opportunity for 2020:

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Investing in customer experience and customer success improves satisfaction, increases revenue, reduces churn and ensures LTV exceeds average CACs. If it isn’t a priority for your business yet, it should be in 2020.

Trend #6: Artificial intelligence (AI), virtual reality (VR) and machine learning (ML)

In a SaaS Mag article, Ismael Wrixen writes that:

“AI is no longer the ‘new kid on the block.’ Your Amazon Echo, chatbots, and Uber all rely on AI. The technology uses data and algorithms to predict, recommend, and automate processes covering anything from accounting to emails.”

In particular, Wrixen suggests that the impact of AI and related technologies will be seen most in personalization, automation and enhanced security. Integration with blockchain is another trend mentioned frequently in conjunction with these practices.

The bottom line? AI, VR and ML aren’t new. They should already be on your radar – at least in terms of understanding the particular applications they may or may not have for your product. And if they aren’t, make 2020 the year you do a full evaluation.

Trend #7: Increased investment in brand and thought leadership

Investing in thought leadership is something I’ve done for years, so I’m shocked that it hasn’t already taken off in a major way. Yet, according to Datapine’s Sandra Durcevic, Callbox data suggests that, “At present, only 24% of SaaS businesses publish content to educate or enlighten. Others are solely company-focused, and 11% of the primary players don’t even operate a blog.”

If you plan to make this a priority in 2020, check out any of the resources I’ve built on building thought leadership to help get you started:

• How to Secure Guest Posts on Large Publications
• How to Grow Your Blog to 100K Monthly Visitors (From Scratch)
• How to Build Authority Online

Trend #8: Growing demand for API connections 

As API connections become more and more ubiquitous, SaaS companies that don’t offer them risk being left behind by clients who need them. Fortunately, adding one doesn’t have to mean making a major investment. DevSquad contributor Dayana Mayfield recommends that SaaS companies offer at least one or more of the following:

• Direct integrations with popular industry tools
• A SaaS API that allows customers to make better use of the product
• A Zapier integration so that 1500+ integrations are available to customers

If building out your own API connections simply isn’t feasible, creating Zapier integrations or related connections can be a more reasonable approach.

Trend #9: Security issues

I don’t know if 2020 will be the year SaaS companies fully take responsibility for the security issues their products contribute to, but I hope so. As businesses and consumers embrace cloud computing to continually greater degrees, it’s up to SaaS product owners to make sure their trust isn’t misplaced.

In a presentation at Cisco Live 2018, Jonathan Rosenberg, vice president and chief technology officer in Cisco’s collaboration division, emphasized two major security risks endemic to SaaS usage:

1. When companies use SaaS products, they’re effectively allowing “their data to be placed on multitenant servers, where it may commingle with others’ data. That creates a ‘honeypot’ problem, in which sensitive information is at greater risk because it is aggregated in one place. 
2. According to Rosenberg, “data flows like water—all over the place.” Application data has become more diffuse, thanks to the widespread use of APIs and other permeable architectures. “All it takes is one compromised bit of code, copied and embedded in your company’s own app, and malicious actors are off to the races.”

Rosenberg offered several suggestions for SaaS companies who want to minimize their security risks, including the use of end-to-end encryption, PIN security and secure access features that can operate without a VPN. 

Trend #10: New payment models and unbundling of services

Jeff Curran, Director of Business Operations at OpenView Partners, predicts in an article on the company’s site that:

“In 2020, we’ll see companies unbundle their products. This happens when companies break products into smaller, modularized components aimed to solve a specific pain. As software deployment becomes easier and integration between products becomes better, customers are demanding best-in-breed solutions rather than all-in-one suites.”

To me, it’s interesting to see this trend alongside the one listed above about PaaS. Should companies niche down or unbundle products to serve customers who aren’t ready (or who don’t need) a full suite? Or should they double down on becoming all-in-one platforms incorporating multiple tools and supporting several different business needs?

I’m not sure there’s an answer that’s appropriate for every company. But recognizing that both forces are at work should make it easier for founders to figure out how to move forward.

Trend #11: Investment in talent

Finally, it’s worth noting that we’re in a period of record low unemployment rates – and that demand for talent in the tech sector is particularly competitive. 

That may change, but for now, I’m anticipating that SaaS companies will respond in 2020 by focusing on:

• Increasing the size and scope of their recruitment practices to secure top talent with the help of recruitment software.
• Deliberately creating small teams where team members feel their work is more impactful
• Increasing investment in professional development opportunities to retain existing team members
• The future of work is expected to be heavily geared towards remote working. Offering remote work arrangements and other non-traditional benefits can help prevent turnover.

Given the potential for domestic and global volatility we’re already seeing in 2020, it’s anyone’s guess how the year will actually proceed. Any number of circumstances could alter trajectories in the tech sector. But until that happens, paying attention to the trends we’re seeing evidence of now is the smartest course of action for staying competitive.

What other trends are you watching in 2020? Leave a note below sharing your predictions: