Deep Dive: How Flexible SaaS Plans Are Helping Businesses And Consumers During The Pandemic
The pandemic has affected nations around the globe and touched almost every industry, bringing the U.S. economy to a screeching halt in Q2 2020. At least one industry appears to be weathering the storm and even making gains: subscriptions. The growing popularity of streaming and digital media subscriptions has been particularly notable during the health crisis, but SaaS providers have also seen huge boosts.
SaaS firms have experienced a wave of investment as more companies use their services to help employees work remotely and digitally, and they have extended their staying power as businesses choose subscription payment models over larger, upfront amounts for big-ticket software or products.
The pandemic is not the only factor behind SaaS companies’ successes. The space was on the rise even before the spring as businesses turned to SaaS solutions to more quickly roll out software in a convenient, flexible and secure manner. This growth has come with its share of challenges, however, especially as providers aim to keep their services functioning smoothly while demand increases — sometimes exponentially. The following Deep Dive examines the evolution of the fast-growing SaaS sector during the pandemic as well as how these providers are coping with increased demand.
SaaS Sector On The Rise
The robust growth SaaS companies have undergone during the pandemic shows no signs of slowing. One recent report predicted that the market could reach $157 billion in 2020, and another projected its expanse to a staggering $623 billion by 2023 at a compound annual growth rate (CAGR) of 18 percent.
One reason behind SaaS firms’ stable growth could be their focus on developing and sustaining long-term relationships through special offers and services, namely free trial periods. PYMNTS’ recent Subscription Commerce Conversion Index found that the share of SaaS firms that offered free trials increased 6 percentage points between Q4 2019 and Q4 2020. Many school districts across the U.S. pivoted to home learning during the pandemic, prompting communications technology services provider Zoom to offer its services for free to classrooms, for example. The company said the move allowed it to boost its number of daily users 20-fold in just a few months. California-based guitar maker Fender Musical Instruments also relied on a such an offer, upping its two-week free trial subscription to three months as potential customers began to spend more time at home and look for new hobbies. The offering was so well-received that Fender increased its original limit of 100,000 new registrations to 1 million. Adobe, Salesforce and Dropbox have also extended their free trial periods and offered more discounts.
The risk of viral transmission during medical office visits has also been a key consideration during the pandemic, and telehealth services have been growing more popular as a result. Experts expect this trend to continue even after the health crisis ends, as SaaS medical apps make it easier for consumers to engage in remote healthcare. The number of medical telehealth visits in the U.S. is expected to exceed 200 million in 2020 — up from the original estimate of 36 million.
Challenges Still To Solve
This SaaS surge has nevertheless featured its share of hurdles. Critics raised questions about privacy as Zoom logged 200 million users in March. There were also reports of hackers who entered chat rooms and wreaked havoc, leading the company to require passwords or authorization for users to enter.
One of the keys to helping SaaS companies stay profitable in the future is to adjust their customer strategies. Eighty percent of the SaaS sector’s revenue stemmed from existing clients during the 2008 recession, meaning these providers should focus on satisfying existing customers in addition to chasing new ones.
The pandemic continues to make SaaS solutions popular with businesses and consumers alike, and their newfound enthusiasm for these services is unlikely to wane even after the health crisis ends. It is up to SaaS firms to ensure that their offerings can cater to clients’ digital needs while avoiding the growing pains that are emerging as the space expands by leaps and bounds.