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In our ever-evolving tech landscape, staying ahead of the curve isn’t just a competitive advantage—it’s a necessity. As we usher in 2024, the SaaS industry continues to be a driving force, shaping how businesses operate, collaborate, and innovate.
It also continues to grow at an explosive rate, going from $237.48 billion in 2022 to $273.55 in 2023, and is projected to reach a whopping $908.21 billion by 2030.
- 71% of companies currently rely on SaaS applications to complete most of their business activities.
- By 2025, almost half of the world’s data will be stored in the cloud.
- Two years from now, around 85% of all business products will be SaaS apps.
- By 2025, 65.7% of spending on software applications will be directed to cloud services.
In this post, we’ll use our experience as a B2B HR tech company (that serves SaaS applications covering a wide range of industries), the expertise of our team (as well as industry thought leaders), and extensive market research to share the 2024 trends that will help shape the tech industry and allow you to make decisions that will help your organization be future-ready.
The Most Important SaaS Trends of 2024
- An Emphasis on Customer Preferences
- The Growing Need for Strong API Connections
- App Consolidation
- The Continued Growth of Vertical and Micro SaaS
An Emphasis on Customer Preferences
Customers have more options than ever regarding SaaS applications, and those who aren’t happy with their experience have no problem churning—the average yearly churn rate for SaaS companies targeting SMBs is 58%. Lowering customer churn is a priority of savvy SaaS companies since an increase in user retention by just 5% can boost profits by 25-95%.
The most successful SaaS providers are designing and releasing new product updates and additions developed entirely around their users, taking note from B2C tech companies like Google and Netflix that are almost wholly customer-driven. Prioritizing the customer experience is crucial since:
- 84% of customers say a company's experience is as necessary as its products and services.
- 50% of customers in the United States said that they don’t notice improvements in customer service year over year.
- 77% of customers will share positive customer service stories with others.
“Understanding what value means to your customers and capitalizing on that through product updates and iterating is key in 2024,” says HiringThing’s Director of Product, Colette Luke. “What customers expect from SaaS providers has evolved. They expect us to be one step ahead of their ever-changing needs, which I view as a net positive. If they expect that from us, it shows that we’ve been doing our jobs, and trying to keep ahead of them means we don’t get complacent.”
“Understanding what value means to your customers and capitalizing on that through great partnerships and customer experience is equally as important in 2024,” says HiringThing’s Director of Partner Success Noël Hancock. “So much churn happens because end users don’t know how to fully utilize their SaaS applications or get frustrated trying to use them. Value is a two-pronged approach. You need solutions that customers require and the support to ensure they can utilize them.”
The Growing Need for Strong API Connections
Application Program Interfaces (API) have emerged as the linchpin of our uber-connected digital era. As businesses and services increasingly rely on seamless data exchanges, the demand for robust API connections has increased.
“APIs act as the bridges that connect disparate systems, allowing them to communicate and share information in real time. From cloud services to mobile applications, APIs facilitate data flow, allowing SaaS customers to streamline processes and adapt in real-time to the rapidly changing technological landscape,” says HiringThing CTO Alex Luke. “As consumers demand more integrated and personalized experiences, businesses leverage APIs to enhance user interfaces and provide a seamless journey across multiple platforms. APIs play a pivotal role in delivering a cohesive and user-friendly experience, not to mention the innovation they foster by allowing development teams to tap into the functionalities of existing systems.”
This is especially crucial in the B2B world, where many customers have development teams who can now build upon established platforms' capabilities without starting from scratch.
“Open APIs encourage collaboration and the creation of new applications that could further benefit the symbiotic B2B SaaS relationship,” says HiringThing CEO Joshua Siler,” leading to a dynamic ecosystem of interconnected service.”
The HR Research Institute found that only 16% of recruiters said their recruiting software integrates seamlessly with other HR tech applications. Aptitude Research found that poor integration is the most significant frustration of talent acquisition professionals with HR tech.
Migration to PaaS
With the aforementioned focus on retention, in 2024, we expect to see more and more SaaS migrate further towards platform as service (PaaS). While Gartner predicted a 16.8% growth for SaaS in 2023, they predicted a 23.3% growth for PaaS. The PaaS market is expected to grow to $300 billion by 2030 and is the future of cloud computing.
PaaS empowers businesses to build custom apps that act as add-ons to their original services, making it easier for businesses to scale successfully.
“The increasing demand for rapid application development and deployment has led organizations to seek PaaS solutions that provide pre-built components and templates for faster development cycles,” says HiringThing CTO Alex Luke.
“HiringThing is a PaaS,” says HiringThing COO Jess Tejani, “allowing us to add our new onboarding solution to the HiringThing platform efficiently. Our ATS and onboarding work together, which empowers our current customers, but they could be used separately, which can potentially help us launch into new markets.”
App Consolidation
The average company has 254 SaaS apps, but less than half the licensed employees use the SaaS programs available.
“Today’s B2B customers are looking to cut costs by ditching apps that aren’t getting use and searching for applications that cover many functionalities they need,” says HiringThing Director of Partner Development Tevis Paxton. “We’re consistently fielding inquiries from potential customers who want to consolidate their tech stacks. Why have 300 apps that no one uses when you could have 50 that make the workday more productive, engaging, and innovative?”
The average company replaces 39% of its SaaS applications with ones with more functionality. Today’s B2B consumers want their SaaS apps to solve as many workplace challenges as possible, not simply offer one solution.
Today’s SaaS customers are getting tired of the so-called “toggle tax”—wasting up to 32 days a year going between different applications —and seeking SaaS (or PaaS) applications that cover a wide breadth of the functionalities they seek.
Going multiproduct—which we created an article series around—is one way SaaS companies can make themselves more competitive and set themselves up for success. Companies are going multiproduct by acquiring smaller companies, partnering with other SaaS vendors, and prioritizing the addition of new products and features through in-house development or white labeling their SaaS solutions.
SaaS companies selling more than one solution increase retention by nearly 20%—SaaS platforms with at least four solutions have an 80% better retention rate than single-product platforms.
White Labeling SaaS Solutions Can Help SaaS Expand Their Functionality
White labeling SaaS solutions is a way SaaS organizations can quickly and efficiently help their users consolidate apps by adding new features, functionalities, and products to their tech stacks. With white labeling, one vendor creates a solution and then sells it to another vendor who brands it and presents it as a proprietary solution.
We white label recruiting software here at HiringThing and have personally seen the need for it explode in recent years.
The Continued Growth of Vertical and Micro SaaS
In 2023, 89% of executives and IT leaders agreed that Vertical SaaS is the way of the future, and we only see that number rising in 2024. Specialized software that doesn’t try to be everything to everyone has grown by 28% since the beginning of 2020 and will only continue to rise, especially since Vertical SaaS platforms are starting to consolidate and go multiproduct.
Vertical SaaS giants like Toast, Blend, and ProCore are, as the Fractal Software State of Vertical SaaS 2021 Report says, “proof of the massive upside for companies building industry-specific software.” All three of these owe much of their success to becoming multiproduct software whose niche-but-varied functionalities help dominate the industries they serve (restaurants, banking, and construction, respectively).
“One of the key advantages of Vertical SaaS platforms is offering tailored features and functionalities that address the specific needs and compliance pain points of targeted industries. By profoundly understanding these industries, Vertical SaaS platforms can craft solutions to the nuances their clients need. It’s the ultimate version of tailoring to customer needs and preferences,” says Joanna Campa, HiringThing’s Director of Marketing.
“We work with many vertical SaaS vendors,” says HiringThing Director of Partner Development, Tevis Paxton, “because they can private label our recruiting solutions, customizing them to meet the niche needs of their clientele. While hiring and onboarding are universal, there are nuanced differences between. For example, hospitality hiring, legal hiring, construction hiring, and hiring for barber shops or salons. By customizing these HR functionalities, vertical SaaS vendors can go above and beyond for their customers.”
“And unlike more horizontal solutions, the nature of Vertical SaaS means they are staying one step ahead of the specific challenges and needs of the customers in their industries,” says HiringThing Director of Product Colette Luke. “We expect more and more Vertical SaaS platforms to pop up or horizontal SaaS to start growing Vertical SaaS verticals. They’re user-friendly, tailored solutions that have a deep understanding of specific topics.”
Thanks for Your Interest in Our SaaS Insights!
We’re passionate about how the Saas industry is growing, and we appreciate you taking the time to read our team’s insights. We’d love to engage more.
About HiringThing
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable HR technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.
