3 Emerging Trends We Are Observing In SaaS

3 Emerging Trends We Are Observing In SaaS

March 26, 2018
Michael Brown Headshot
Michael Brown Managing Partner

According to Statista, the global SaaS market is projected for 2018 to reach $71.2 billion. It is becoming increasingly difficult for entrepreneurs to invent novel and useful tools as competition increases and the market expands wider. For example, the marketing technology ecosystem now consists of 5,000 companies compared to just 150 in 2011 according to ChiefMarTech. However, the saturation in some SaaS sectors does not preclude new opportunities. Here are three emerging trends in SaaS that will fundamentally change the landscape in our view.

1. Coaching Networks. At every level, business operators continuously make erroneous decisions. The root of the problem is that marketers, recruiters, engineers, executives and so on don’t utilize data to influence their decisions but rely on instinct instead. As a result, businesses miss many opportunities. As this enterprise challenge becomes more evident, more startups are building tools that provide suggestions for best-practices across various departments based on massive data sets. This concept is known as “Coaching Networks” as defined by Gordon Ritter at Emergence Capital. Coaching Networks analyze patterns, compare them to your actions and suggest optimal action items based on data. For example, Textio, a startup that provides a tool for writing analysis, can analyze a marketing email and offer suggestions that will help marketers communicate more effectively to their target audience. Another example is Picasso Labs, a visual marketing analytics SaaS startup, which helps enterprise content teams optimize their visual assets by detecting which creative attributes drive engagement based on the visual patterns in hundreds of thousands of images across multiple industries and companies. Coaching Networks are one of the hottest emerging trends in SaaS.

2. API Integrations. As SaaS solutions are becoming increasingly prevalent, business struggle to utilize the multitude of solutions in a systematic and efficient fashion. Enterprises also fail to protect against shadow IT, a situation where IT solutions are used without explicit organizational approval. These issues arise primarily due to management oversight and fragmented solution offerings with minimal integrations. In this context, a wide array of API integrations are being built to enable integration between solutions. Additionally, it is becoming more popular for SaaS companies to build API integrations with other popular platforms. This integration trend is making it easier for IT managers to track usage. The integrations also increase efficiency for operators who use the solutions. Companies will continue to prioritize API integration for years to come and this continues to be one of the most relevant emerging trends in SaaS as we see it.

3. Hyper Personalization. As the SaaS market continues to explode, customer retention and upselling is proving to be a big challenge for many SaaS companies. Signing a POC is no longer enough to celebrate. SaaS companies need to stand out if they want to upsell and have low churn rates. One way to do this is through AI-based hyper personalization. Understanding customer preferences and modulating the product based on these findings can significantly increase upsells. As the SaaS market becomes more competitive, we will see more personalized solutions.

If you liked “Three Emerging Trends We Are Observing In SaaS” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.

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