Many startups are feeling the pressure in today’s uncertain economic climate, but for SaaS companies, the next 12 months could present major opportunities for growth: 70% of small and mid-size businesses (SMBs) globally are reporting higher investments in technology this year, according to Gartner Digital Markets.
But businesses are changing where, how and why they invest in technology. Companies are making buying decisions faster, too: In 2021, 35% of SMBs took three to six months to complete software evaluation and purchase; that figure jumped to 47% in 2022.
Buying decisions have also become more self-driven as businesses refer to multiple sources to research software. This means startups need the right insights into buyer behavior to create more growth opportunities in 2023.
To maximize growth at every stage of the buying journey, here’s what you need to know about how your potential customers are purchasing software:
Understand why a business starts searching for software
About 54% of businesses that bought software in the past year opted to pay more for a customized solution instead of buying an off-the-shelf product.
Productivity improvements, outgrowing current technology and security concerns are the top reasons SMBs are purchasing software in 2023.
Keep in mind that at the awareness stage, businesses are looking to solve a problem or challenge using technology. Therefore, it’s essential to clearly communicate the benefits of your product and develop use cases tailored to the challenges businesses are facing.
Your messaging should reflect the features your prospects care about and the type of purchase they want to make whether they’re expanding current capabilities, replacing existing software or buying software for the first time.
Identify the sources businesses trust when evaluating software
Businesses are turning to rich, analytical sources for advice. More than one-third of SMBs seek advice from industry experts, but they don’t stop there. Free consultations with software analysts, websites or magazines of professional or trade associations, feedback from peers and colleagues, and product trials play an important role during the consideration phase.
Since businesses rely on a mix of information sources and shift back and forth between them during their research, you should establish a strong presence across both online and offline channels to maximize brand recognition and meet prospects where they are.
Buyers consider customer reviews an unbiased source of insight into software quality and use them to back up the information they’ve gathered. In fact, 41% of SMBs say user reviews and ratings play a critical role in shaping their purchase decision.
Accordingly, make an effort to be featured as a top product on third-party software review sites such as Capterra, GetApp and Software Advice by updating your brand profile and collecting fresh customer reviews.
Ensure you make the shortlist
On average, businesses narrow down their shortlist to five SaaS providers before making a final decision. However, as the SaaS marketplace becomes saturated, businesses are expanding their shortlists to include additional providers.
You should offer free trials and demos to help businesses explore your software and take the chance to emphasize the features most important to them. In 2023, ease of use and security are the top features businesses want in their software, followed by product features and functionalities. While price was a leading pain point for SMBs in the past, security concerns have taken center stage lately.
When evaluating software providers, buyers also assess your sales team’s trustworthiness, your flexibility to adapt to their purchase processes and how smoothly your product can integrate with their tech stack.
About 54% of businesses that bought software in the past 12 months opted to pay more for a customized solution instead of buying an off-the-shelf product. Highlighting personalization options in demos and customer interactions can help strengthen your case and may even lead to higher retention rates.
Close the deal
Companies often get cold feet when they’re ready to finalize their purchase. That’s why it’s important to understand why businesses walk away.
Pricing tends to be the top reason businesses drop software providers from their shortlists. This is closely followed by ambiguous/contradictory information and low-quality sales presentations or pitches.
If your prices are competitive, you have an opportunity to capture market share. However, ensure your sales and marketing materials are clear, concise and accurate, and that your sales team is attentive to buyers’ needs.
Continue support post-purchase
Once a purchase is complete, onboarding sets the tone for the rest of the customer journey.
Your goal is to ensure customers adopt your software successfully and continue to use it. To achieve that goal, leverage communication channels that your customers use most, such as chat, email, customer portals and communities, to maintain seamless communication.
Additionally, customers often like having support services and training materials in their primary language, so make sure you offer multilingual support when it’s needed.
By investing in your customers’ post-purchase success, you’ll increase the opportunities to retain them.
Retain your customers
With all this change in the world of software, it makes sense that businesses are regularly upgrading the tech they use. Over two-thirds of SMBs have replaced or modified software more frequently since the start of 2021. In fact, 55% are planning to scale up their licenses to manage more projects or tasks, and 50% are planning to upgrade to gain more functionality.
This shows how important it is for SaaS providers to proactively understand unmet customer needs to identify cross-selling and upselling opportunities.
Be transparent with your customers about your product roadmap to give them reasons to stay. Leverage discounts, extension options, supplementary products, early-adopter programs and upgrades to retarget customers close to their renewal date and keep showcasing the value of your offerings. Stay ahead of potential problems by using buyer intent data to identify dissatisfied customers so you can intervene early on and retain them.
Successful SaaS startups see the glass half-full and leverage opportunities to turn headwinds to their advantage. Understanding shifts in how buyers are researching, evaluating, selecting and purchasing software is critical to accelerating growth. With these insights, you can adapt your strategy, serve customers better and set yourself apart from competitors in the long run.