10 Interesting SaaS Trends for 2022: What You Need to Know
Through MicroConf, we produce an annual State of Independent SaaS (SOIS) report. We’ve surveyed hundreds of bootstrapped founders and gained some interesting insights, and we’re here to today to share what we see are the SaaS trends for 2022.
The SaaS industry continues to grow at a rapid pace. A Gartner poll reveals that SaaS spending is expected to grow by 40% in 2022. Enterprises are also “spending an additional $20 billion on SaaS each year.” The SaaS engine is revving up for lightning-fast growth.
SaaS continues to grow in popularity because of its flexibility and affordability. Brandon Medford, senior principal analyst at Gartner, had this to say about SaaS solutions:
Organizations are advancing their timelines on digital business initiatives and moving rapidly to the cloud in an effort to modernize environments, improve system reliability, support hybrid work models and address other new realities compelled by the pandemic.
Being aware of 2022 SaaS trends will help you stay ahead of the game. Here’s a breakdown of what we believe you can expect from the SaaS industry this year.
Our 2022 SaaS Predictions:
#1: Virtual event software will continue to be huge
Virtual events aren’t a dying trend. They’ve actually “increased in popularity by 35% from 2020.” But in-person events aren’t completely out of the picture. Camille Trent, Head of Content at Dooly, shared her perspective:
We might see a dip [in virtual events] once in-person becomes a more viable option. People are craving in-person, but it won't go 100% back to normal. Virtual is too convenient.
Think about the last time you attended an in-person event. The electric energy in the room. The laughter. The anticipation. Conversations with new people giving you a new sense of purpose.
Be honest — have you ever felt like this at a virtual event? Heck, virtual events probably look more like you chasing your kids or pets out of the room while you try to catch bits of what the speakers are saying. Plus, you don’t really get to meet new people, even if there are breakout rooms. Hybrid events offer a middle ground.
Some businesses are hoping to get the best of both the in-person and virtual event experiences by hosting more hybrid events. That’s a smart move since “86% of B2B organizations see a positive ROI of their hybrid events seven months after the event date”.
However, Camille Trend (Head of Content at Dooly) explains that long-term ROI isn’t the only benefit of hybrid events:
“The power of virtual events is the ability to amplify content afterward. And, with hybrid event software, you get the magic in the short term paired with the long-term dividends of repurposing.
While one B2B sale from in-person can pay for an event, the real ROI is in the digital distribution.”
You’re more likely to achieve such a high ROI from your hybrid events if you use the best hybrid event platforms. And you’re in good company since 21% of marketers are looking for a hybrid event platform. They’re expecting these hybrid event platforms to help them:
Better engage with virtual attendees.
Manage both virtual and in-person events.
Connect event sponsors and attendees both virtually and in-person.
As Camille states, “Companies like Topia and GatherTown are changing the game with this Sims-like in-between space. Unlike Zoom, you can walk around and explore and experience virtual events within the events.” Exvo by AllSeated is another great platform for creating a metaverse-ready virtual event.
The virtual side of hybrid events has proven to be very valuable for several businesses. Research conducted by Bizzabo reveals that 80% of virtual event organizers believe their ability to reach a wider audience is the greatest benefit of virtual events, and roughly 40% of the survey respondents believe that virtual events make it easier to get great speakers. So, combining in-person and virtual events to create hybrid experiences helps improve an event’s impact.
That’s why we’ll see a rise in virtual event software. G2 even created a new category for virtual event platforms on its website to accommodate the growth of software platforms in that niche. By the end of Q2 of 2021, there were roughly 67 virtual software tools listed on G2; now, there are over 193 tools. New players will continue to emerge as hybrid events increase popularity.
#2: Freemium plans are becoming less common
Freemium plans can cause more harm than good. On average, the conversion rate for users who move from a free to a paid plan generally falls within the 2% to 5% range. Dropbox, for instance, has 700 million users but 15.48 million paying users. That’s a 2.21% conversion rate!
Dropbox can handle a 2.21% conversion rate because the company raised $1.7 billion in funding. But a small SaaS startup trying to pave its way in the crowded marketplace is less likely to benefit from such a low conversion rate. As John Solomon states:
“It is only in rare cases that freemium has been found to lead to a substantial increase in conversion rate for the number of paying customers. In most cases, it leads to negative product positioning, increased costs, and stifling of the business.”
Freemium plans can be great for increasing the user base, but they’re also money-suckers. It takes a lot of money to support non-paying customers in the long term. Also, freemium models sometimes make revenue attribution a challenge. Without accurate revenue attribution, SaaS companies run the risk of not being compliant with accounting standards.
There are also various discussions about how to truly measure the success of freemium plans. Does success really only boil down to increased revenue?
What’s the best alternative? A free trial. Research conducted by the University of Technology Sydney revealed that free trial models are more effective than freemium models. But accurate data tracking is important.
Results from MicroConf’s SOIS reports reveal that over 10% of bootstrapped SaaS founders don’t know how many of their free-trial users become paying customers. That’s concerning since it’s important to track this metric.
Don’t make the same mistake since accurate tracking helps you better understand how the free trial impacts your bottom line.
If you’re debating whether to choose a free trial or freemium model, especially in the early days, a free trial model is often the better bet.
#3: Marketing attribution will continue its difficult journey
It’s no secret that marketers have access to lots of marketing attribution tools. In fact, there are 83 marketing attribution tools listed on G2. But do these tools really provide a complete picture of how each marketing activity impacts a buyer’s decision? Is multi-touch attribution truly effective?
Here’s the ugly truth. Apple released the App Tracking Transparency feature that allows iPhone users to control which apps can track them and how. Apple’s Mail Privacy Protection feature reduces how marketers can track email subscriber behavior. Then there’s GDPR. Almost every website you visit nowadays has a popup asking you to grant permission for them to use third-party cookies. GDPR regulations stipulate that a website can’t store third-party cookies without user consent, and cookies must be blocked if users don’t give consent.
Data privacy continues to be a major issue. As more tech companies and lawmakers clamp down to help customers regain control of their data, it’s going to become increasingly difficult to accurately use multi-touch attribution.
That’s why the focus of multi-touch attribution has to change. David Blinov, Managing Partner of The F Company, suggests that speaking directly with customers provides a better solution.
“You can have better conversations with customers to facilitate better marketing attribution by scheduling 15-minute calls with a group of your actual customers. Ask them how they heard about you and what information helped them make a purchase decision.
You will realize that many of the interactions happened long before they entered your CRM, and not in the channels you think. This will also shed light on what content actually helps your audience move through the customer journey.
Having conversations with your customers will help you enrich the attribution data and make better marketing decisions.”
David is hinting at the age-old concept of the dark funnel. A post from Ravi Kumar on LinkedIn (screenshot at right) best explains it:
We tend to overly rely on marketing data. More often than not, we use a data-driven approach to make marketing decisions.
(…)It’s easy to get lost in data. Let’s not forget the person on the other side of the screen.”
But that doesn’t mean marketing attribution should be abandoned altogether. Jeremy Sacramento, Content Manager at Dreamdata.io, shares his take:
Attribution carries the stigma of being complicated, both in what it does and how it’s used.
Setting up an attribution solution, therefore, needs both a tech shift, i.e., how you collect, process and model data. And a culture shift in how you understand the performance of your marketing efforts.
On the tech side of things, an off-the-shelf tool like Dreamdata is the most sensible option. Not only do they save businesses time and resources in setting this up in-house, but they also guarantee constant innovation.
On the culture shift, it’s really a question of learning by doing, and of course, being prepared for a new way of approaching performance and marketing in general. Off-the-shelf tools, again like Dreamdata, also bring the support function which really assists on this front too.
Despite the challenges posed by Apple’s privacy updates and GDPR, Dreamdata.io still does a pretty good job of tracking customer data. Each tracking journey begins with assigning an anonymous ID to users who interact with a website. Identifying trackers are used when users complete a specific action such as signing up for a newsletter, purchasing a product, or logging into a service.
The point? Marketing attribution tools won’t capture all aspects of a customer’s buying journey. But they can be used in tandem with customer interviews to provide a better overall picture of what a buyer’s journey looks like.
That’s as close to a perfect picture as you can get.
#4: Large, horizontal applications are being verticalized
Source: Bessemer Venture Partners
Salesforce has been one of the biggest players in the CRM space for years. That dominance is partly the result of the platform appealing to a wide audience. But the tides are changing. More businesses are popping up in various SaaS industries to meet the needs of very specific audiences. In fact, the market cap of publicly traded vertical software companies increased from $71 billion in 2010 to $653 billion in 2020.
Amish Shah, Global Strategy and Solution Manager for SAP Customer Experience, says:
“SaaS software products that are vertically oriented have grown massively over the past decade, and will continue to grow. Vertical SaaS across industries shows huge potential, especially as companies transform digitally into intelligent enterprises and move from on-prem, in-house IT organizations to cloud-based organizations.”
Some examples of these new verticalized applications include:
Builder Prime, a CRM tool specifically for home improvement contractors.
Client Hub, project-management software for accountants.
Activity Messenger, an all-in-one platform for sports and leisure businesses.
As software verticalization increases, there’s greater demand for more bundled services. For instance, wellness business owners who aren’t tech-savvy don’t want to be stressed out by having multiple tools in their tech stacks. They want one tool that can help them manage all their business needs. Gym Desk is a platform that offers website building, gym member management, billing and payment solutions, email marketing, and analytics in one platform.
Verticalized applications will continue to rise because they:
Address the needs of underserved markets.
Put several customized systems together.
More B2B commerce is moving online.
But it’s important for vertical application teams to develop a layer cake for scalable growth. As Brian Feinstein and Connor Watumull state:
“Vertical software CEOs need to start thinking about their “next act” years before their core product starts to slow. It can take two to three years to launch a new product and grow it to meaningful scale.”
Creating a verticalized application could be a great move for your business. But you should also carefully consider building a layered cake for scalable growth.
#5: More SaaS MVPs will be built using no-code and low code
It’s much easier than ever before to create customized software solutions. Tools such as Zapier make it possible for brands to easily combine software solutions into one customized platform to suit their specific needs.
Take this example from MicroConf. Our producer built a no-code podcast production system in Airtable in a week or two. He’s not a developer, but he created a fully functioning app that will track our production process, and could be turned into a fully-coded SaaS product.
No-code also has several applications outside of hardcore SaaS products. Rob says it well:
Jay Clouse used no-code to build a thriving community. He’s the founder of the Tweet100 challenge, a challenge that helps more people actively use Twitter by creating at least one post per day for 100 days.
After registering to be part of the challenge via the Tweet100 website, participants only have to use #tweet100 in their tweets and each tweet would be recorded in the leaderboard. Jay used Airtable to create the registration process and leaderboard. No code required.
Of course, no-code has its limitations. The UI isn’t great and it probably won’t scale amazingly well.
“[No-code] platforms are great for startups during the initial phase. However, as startups grow, they can’t remain dependent on these no-code platforms because of increasing business size and customized requirements. After a point, companies have to shift from a no-code platform to engineers who develop their products.”
Interested in learning more about how no-code can be applied to your business? Check out these no-code presentations from MicroConf Remote 3.0.
#6: No-code is allowing SaaS founders to do more with less effort
No-code can be used for a wide range of business functions from sales and marketing to internal operations. No-code and low-code make it easier to build internal systems without relying on engineering support. Your team can get a lot more done in less time.
Jessica Malnik helped the MicroConf team build our MicroConf Connect widget using no-code tools. We brought her on because we were facing three challenges within our MicroConf Connect community:
Community members couldn’t find content in Slack easily.
Content disappeared after a few months.
Increased activity in Slack resulted in content rapidly disappearing.
Jessica used Airtable, Zapier, and Softr to create our customized widget. Zapier connected the work she did in Zapier and Softr.
Now, our community members can easily find what they’re looking for and have a much better experience.
#7: Artificial Intelligence (AI) is rising for written content
There are more than 30 AI content writing tools, with new players joining each year.
More marketing teams are turning to AI for content writing support. The State of Content Ops and Outsourcing Report published by SEM Rush reveals that roughly 12% of marketing teams use AI writing tools.
Source: Semrush
Jasper is one of the most popular AI content writing tools. The marketing team has done a great job of giving Jasper a fun persona people love. Here’s an example of one of their fun tweets.
Lost for love words this Valentine’s day?
— Jasper (Formerly Jarvis) (@heyjasperai) February 14, 2022
So is @kanyewest...
He’s been trying to win back @KimKardashian's love but obviously, he needs help.
So Jasper wrote a romantic love letter on his behalf to win back her heart. ❤️
Read it here👇https://t.co/THy0RX5f2x pic.twitter.com/MibBILRJ7y
Jasper has several features, such as a sentence expander, that allow you to reconstruct a sentence in any tone of voice (even Darth Vader from Star Wars).
May the force be with you, young copywriter. pic.twitter.com/7tenINz17J
— Jasper (Formerly Jarvis) (@heyjasperai) May 6, 2021
Overall, people like using Jasper because it makes content writing easier. Jason Cuellton lists six benefits of using Jasper in the tweet below.
Highly recommended @heyjasperai
— Jason Culleton (@Jason_Culleton) February 5, 2022
Create original content that ranks for SEO
Finish your first draft 2-5X faster
Boost ad conversions with better copy
End writer’s block with ideas from a robot
Breakthrough the language barrier
Scale up your content marketing fast#socialmedia pic.twitter.com/h3jJ1Btwl1
Although AI writing tools like Jasper provide great content writing support, the content they produce still needs a human touch. As Gareth Davies states, “AI content bots can’t write you a good blog post (yet).”
AI content bots can't write you a good blog post (yet).
— Gareth (@garethaledavies) January 28, 2022
But I think they're brilliant for helping brainstorm microcontent, like:
- Titles
- Meta descs
- Social bios
- Landing page headings
- Ad copy
- Tweets 😅
Or for relieving writer's block.
Try: @copy_ai or @heyjasperai pic.twitter.com/5Nl9FGavlK
Any app that adds a “content to do” to their customer’s list will start to consider whether they should use one of the now public APIs to start suggesting content for them to edit instead of leaving them with “blank page syndrome” where they have to craft everything from scratch.
AI writing tools aren’t perfect. But the growing dependence on technology, coupled with the need to produce content quickly to remain competitive, means the use of AI writing tools will increase in 2022 and beyond.
Some other AI writing tools you may want to consider include Ink Editor, Wordtune, and AI Writer.
#8: There are more founder-friendly funding options
Founders have traditionally had a few funding options — invest their own funds (bootstrapping), take out a loan, or find an external investor. But things have changed.
In the upcoming MicroConf 2022 SOIS report, 30% of respondents indicated they’re looking for some sort of funding, or will be looking for it in the next 12 months. There’s now a wider range of funding options for SaaS founders to choose from. The beauty of it is that these options are increasingly becoming perfect matches for growing startups.
Here are some examples:
TinySeed (that’s us!) offers bootstrapper-friendly funds.
LighterCapital provides revenue-based financing where investors receive a percentage of the company’s ongoing gross revenue in exchange for the money invested.
Pipe.com allows SaaS companies to get the capital they need when they need it without disrupting the customer’s experience.
These three companies are part of a growing niche that makes access to capital easier for SaaS founders.
Gone are the days when you’d struggle to secure funding for your growing SaaS business. You can achieve so much more with the wider range of funding options at your disposal.
#9: Brand is becoming more important in crowded spaces
Source: Statista
There were only 150 martech (marketing technology) companies in 2011. That number increased to 9,500 in 2021 — a whopping 6233% increase — and there are no signs of this growth slowing down.
Competition will continue to increase not only in martech, but also across the SaaS industry. As a result, business branding is going to evolve. Branding isn’t about your company’s logos and colors. Instead, it’s about what people say about your company when you’re not around. Your brand’s impact is felt through your customer experience, the content you publish across platforms, how you engage your audience, and how you use internal marketing to engage your employees.
Discussions around internal marketing are becoming more common in the B2B industry. Internal marketing is what helps you engage employees in brand development and awareness. When done well, internal marketing will encourage employees to drive more brand awareness through their personal brands.
John Michail had this to say during his Internal Marketing Podcast interview:
Building the personal brands for your people matters because it helps build trust for your organization. When the employees become the voice for the organization, the organization becomes trustworthy. Authentic communication takes over.
Internal marketing helped Dreamdata.io encourage employees to be part of a social selling initiative. Six members of Dreamdata.io’s team participated. The task was simple: post frequently on LinkedIn. The result? Collectively, they got over 520,000 post views and their MQLs tripled. Their posts created the authentic communication Dreamdata.io needed to build trust with their target audience.
So, shake off your obsession with brand colors, logos, and fonts. If you want your brand to stand out in a sea of competitors, expand your branding to include internal marketing, customer experience and engagement, and content creation.
#10: SaaS exits will continue at a breakneck pace
The 2022 MicroConf SOIS report revealed that 48% of the bootstrapped SaaS business owners have “selling their businesses” as one of their ultimate goals. This isn’t surprising since we’ve seen companies with ARRs in the low millions being valued at 4x to 10x their ARR. The allure of life-changing money and long-term capital gains is tempting.
“Two things have happened to SaaS multiples in the last decade — public market multiples have expanded from 4-5x up to as high as 16x in 2021 (although multiples have pulled back a bit since the peak in mid-2021). Private company multiples have expanded along a similar path.
The other big driver in the lower middle market for SaaS (so say < $10M ARR) is that a lot of dry powder is sitting in various software focused Private Equity (P.E.) funds, and they’ve been moving down market in terms of the size of SaaS company they’re willing to acquire. Ten years ago, most P.E. wouldn’t touch anything sub $10M ARR (certainly sub $5M ARR), whereas now those players are flush with cash and actively buying firms as small as $1M ARR (typically as tuck-ins to larger portfolio companies).
Couple that with various new sources of debt financing for acquiring SaaS companies and you’ll continue to see a very active market.”
Why does this matter? There are now more opportunities for you to sell your SaaS business if you so choose. There are more people interested in SaaS acquisitions now than there were a few years ago. Brokers like QuietLight have made it easier for buyers to find the SaaS companies they need.
Final Thoughts
The SaaS industry will continue to grow in 2022 and beyond. There are more opportunities now than ever before for new and growing SaaS companies to make their marks in this ever-evolving marketplace. That’s why it’s important to apply the lessons you’ve learned from these SaaS trends to keep your brand top of mind.
Hybrid events are the way of the future and you’ll need the right technology to support these events.
Freemium models are challenging in the B2B space.
Verticalized software creates more opportunities for greater impact.
No-code is making it easier to build customizable software.
AI may not be able to completely replace human creativity in writing but it sure is making the writing process much easier and more efficient.
There are more ways to fund SaaS businesses of all sizes.
If you’re considering selling your business, there are more buyers now than at any time in the past.
TinySeed’s cofounder, Rob Walling says it best:
“There has never been a better time in history to be an entrepreneur. The volume and variety of guidance, community, funding options, and tools for building startups is simply breathtaking.”
We hope you found this article helpful. You may also like our article on the 17 Must-Have Tools to Grow Your Startup in 2022.
