We talk a lot about B2B SaaS on this blog, so it’s only fair to define it. SaaS companies are the present and the future of the web. As a report by Bluetree shares:
“SaaS usage is expected to grow in leaps and bounds. Just 38% of companies relied on SaaS for at least 80% of their software needs in 2016. That number increased to 43% in 2017 and to 51% in 2018. However, 86% of the surveyed organizations said they expected at least 80% of their software needs to be met by SaaS after 2022.”
In other words, businesses are migrating from traditional on-premise and offline tools to using tools in the cloud. But why is that?
Let’s start with the definition of B2B SaaS.
What is B2B SaaS?
B2B SaaS stands for “Business-to-Business Software as a Service.” It’s a category of cloud-based applications specifically built to cater to the needs of businesses, organizations, and enterprises.
A SaaS is run and used over the cloud — meaning you don’t have to install a software program or a server. It’s right there, ready for use for you.
B2B SaaS products are usually delivered on a subscription basis, where customers pay a recurring fee to access and use the tool. This pricing model is one of the other key differences from traditional on-premise software.
Examples of B2B SaaS applications include:
- Customer relationship management (CRM) software (HubSpot)
- Project management tools (ClickUp)
- Accounting and financial software (Xero)
- HR management systems
- Email marketing and marketing automation tools (Encharge)
- and many other specialized business applications.
The B2B SaaS model has gained popularity because it offers several advantages to businesses, such as cost-effectiveness, scalability, regular updates and improvements, and the ability to access software from anywhere with an internet connection without downloading any apps.
B2B SaaS vs. B2C SaaS?
B2B SaaS are aimed at business, while B2C (Business to Consumer) SaaS tools are built for consumers, pro-summers, and single users. Let’s review the difference.
Project management platform ClickUp is created for businesses and teams. The messaging and feature set aim to attract business — “Get everyone working in a single platform”. While single users can use the platform, people would get the most value out of ClickUp when collaborating with others.
Todoist, on the other hand, is a to-do list tool built for individuals. Its goal is to help you organize your personal life and tasks, as demonstrated on the tool homepage.
Let’s explore the general main differences between B2B and B2C SaaS platforms:
|Teams, organizations, and enterprises
|Single individuals and prosumers
|Generally more expensive. Pricing can vary from $30/mo to thousands of dollars.
The pricing model could be value-based: based on the number of seats (team members) using the tool or other metered metric OR feature-based with more expensive tiers unlocking more features.
|Generally cheaper. Pricing can vary between $5/mo and $100/mo.
The pricing model is usually simpler and most often based on features.
|Usually longer, it could take anywhere from a couple of weeks to months and in some enterprise companies, even years. The decision-making process is longer, usually involving multiple stakeholders.
|The buying cycle is usually shorter. Decisions are made much faster, and often spontaneous, involving emotion and less planning.
|Tends to be lower. 1-10% per month.
|Tends to be on the higher end.
|Could offer a free trial or no trial at all. Rarely has a freemium plan included.
|Very often includes a freemium plan which is used as a marketing lever.
|Product-led vs. sales-led
|Could employ both product-led and/or sales-led growth and onboarding strategies.
|Due to the unit economics of B2C, they are usually use product-led marketing and onboarding.
|Higher due to the required high-touch input.
|Usually lower due to the self-serve approach.
Of course, there are tools that target both B2C and B2B. In the example above, we can see that Todoist offers “Todoist for Teams” which incorporates features for teams.
Benefits of B2B SaaS
Cost-effective for both customers and providers
B2B SaaS typically operates on a subscription model, allowing users to avoid significant upfront costs for software licenses and hardware. This can result in cost savings, especially for smaller companies. Moreover, businesses don’t have to manage the underlying infrastructure or worry about maintenance, reducing the IT workload and allowing teams to focus on more strategic tasks to improve the bottom line. (Related to the build vs. buy dilemma).
On the side of the SaaS vendors, the model could also end up being more cost effective as it doesn’t require the implementation of servers, hardware and other utilities.
Higher margins for vendors
SaaS businesses tend to operate with higher margins compared to other business models like eCommerce which usually have higher costs of goods and fixed expenses. It’s not uncommon for SaaS tools to have 70% and above profit margins.
B2B SaaS solutions can easily adapt to the business’s changing needs. You can upgrade or downgrade your subscription as your business grows or contracts, ensuring you pay for what you actually use. This is also known as value-based pricing. For instance, at Encharge we charge our customers based on the number of people (contacts) they have in their account.
Cloud-based B2B SaaS can be accessed from anywhere with an internet connection, promoting remote work and collaboration among team members regardless of their physical location. Often, SaaS tools also support mobile devices through responsive design or native mobile apps, which makes using them remotely even easier.
SaaS providers frequently update their software to improve performance, security, and features. Users benefit from these updates without the need for manual installations or maintenance.
B2B SaaS tools can easily adapt to your business’s changing needs. You can often upgrade or downgrade your subscription as your business grows or contracts, ensuring you pay for what you use.
This also applies to the vendors. Working with cloud infrastructure providers like AWS makes it easy to scale a SaaS tool to cater to a larger customer base.
Cost and revenue predictability
With traditional tools, you must pay a higher up-front fee to support the initial implementation. Pricing structures are often vague and have various hidden fees. Conversely, SaaS platforms usually have predictable, transparent pricing models.
Vendors can also benefit from revenue predictability as they have a fairly predictable revenue to rely on.
B2B SaaS solutions are typically quicker to implement than traditional on-premises software, allowing businesses to start using the software and seeing results more rapidly.
The B2B SaaS customer lifecycle
The customer lifecycle journey represents how customers interact with a specific brand. It illustrates their engagement with the business, starting as an anonymous visitor, progressing to a purchaser, and ultimately evolving into a devoted advocate.
Most B2B SaaS businesses have a similar customer lifecycle consisting of the following (or similar) stages:
A customer journey map is a valuable tool for marketers to comprehend how their product can bring value to customers at each stage of this process. It aids SaaS owners in comprehending their consumers’ real-world behavior, allowing them to better align the product with customers’ needs.
Examples of B2B SaaS Companies
There are currently over 30,000 SaaS companies in the market. To demonstrate what some of the popular SaaS companies do, we’ve compiled a list of five with their most common features.
Salesforce is a leading customer relationship management (CRM) software provider. They help businesses manage customer interactions, sales, marketing, and service operations.
Features: Contact management, lead tracking, sales automation, marketing automation, analytics, and reporting.
HubSpot is an all-in-one inbound marketing and sales platform. They offer tools for content marketing, social media marketing, email marketing, and lead generation.
Features: CRM, email marketing, social media management, blogging, SEO optimization, marketing automation, and analytics.
Slack is a collaboration and communication platform for businesses. It simplifies team communication and offers features like channels, direct messaging, file sharing, and integrations.
Features: Instant messaging, file sharing, video calls, integrations with other tools, and team collaboration features.
Zendesk is a customer support and service software company. They provide solutions for helpdesk ticketing, knowledge base management, and customer engagement.
Features: Ticket management, knowledge base, live chat support, automated workflows, and reporting and analytics.
QuickBooks Online is an accounting and financial management software for businesses. It helps with tasks like invoicing, expense tracking, payroll, and financial reporting.
Features: Invoicing, expense tracking, accounting reports, payroll management, and integration with bank accounts.
How to start a B2B SaaS?
While we can all agree on the benefits of running a SaaS business, creating one from scratch is extremely tough.
On average, new SaaS companies today have more than 9 competitors. But that’s not your biggest problem. Finding, validating, and launching a product that delivers real value and has product-market fit is.
The standard process of launching a SaaS business involves the following steps:
- Define an idea – choose a problem to solve and hypothesize a solution for a specific market.
- Validate the idea – build a minimum viable product and test your idea in the real life.
- Create the first version – build the first version of the product.
To help you get started, we recommend checking the following materials on our blog:
- SaaS Marketing: The Complete Guide. Chapter 1: How to Validate SaaS Ideas
- SaaS Marketing: The Complete Guide. Chapter 2: Pre-launch Marketing for SaaS
- From an Idea to Exit: How I Launched, Marketed and Sold My First SaaS – HeadReach
How to market a B2B SaaS?
Similarly to launching a SaaS, marketing and promoting one can be a complex endeavor, but a well-executed strategy can help you big time.
Below, we’ll list the steps we recommend when you market your first audience.
1. Start by understanding your target audience
Identify your ideal customer profile (ICP) and buyer personas. Understand their pain points, needs, and preferences.
2. Develop a strong value proposition
Communicate what problems your SaaS product solves and how it benefits your users. Highlight the unique features that set your product apart — i.e., your USPs (unique selling points).
3. Create a user-friendly marketing site
Your website is often the first point of contact for potential customers. Ensure it’s well-designed, informative, and easy to navigate. It doesn’t have to be the best website in the world, but it should highlight the strengths of your tool and attract people to sign up for your app.
4. Focus on valuable content
Produce high-quality content that addresses your target audience’s challenges and interests. This can include blog posts, whitepapers, ebooks, webinars, and videos.
5. Optimize your site for search engines
Optimize your website and content for search engines to increase organic traffic. Keyword research and on-page SEO are essential in the long run.
6. Run paid ads
Use pay-per-click (PPC) advertising on platforms like Google Ads and social media ads to drive targeted traffic to your website.
7. Employ email marketing
Build and nurture an email list. Your email list is one of the most valuable marketing channels you have. Send newsletters, product updates, and automated messages to engage and retain users.
Use an email marketing platform built for SaaS businesses like Encharge.
8. Promote on social media
Maintain a strong presence on social media platforms where your audience spends time. Share valuable content, engage with followers, and run targeted ads.
9. Build relationships with influencers
Collaborate with influencers or industry experts who can endorse your product and reach a wider audience.
10. Implement a referral program
Encourage your existing customers to refer others through referral programs, offering discounts or incentives for successful referrals.
11. Offer a free trial or freemium to get initial traction
Offer free trials or a freemium version of your product to allow potential users to experience its value firsthand.
12. Get users to review your app
Encourage satisfied customers to leave reviews on platforms like G2 Crowd, Capterra, or Trustpilot. Positive reviews build trust and credibility.
13. Explore partnerships and build integrations
Explore partnerships with complementary SaaS companies or platforms to expand your
14. Build a community
Create a community around your product where users can interact, share experiences, and provide support to each other.
15. Run webinars and events
Host or participate in industry events, conferences, and webinars to showcase your expertise and connect with potential customers.