The global SaaS industry has transformed and thrived, time and again, in the face of huge challenges and opportunities. 2024 is unlikely to be any different. In fact, the market is predicted to grow by 18% in 2024 to a whopping $232 billion a year.
Despite this show of overall strength, the industry continues to suffer from two Achilles’ heels. One is poor cash flow, and the other is revenue leakage. These concerns are what keep business executives up at night, especially in an uncertain business environment.
Against such a backdrop, subscription management solutions have become an indispensable component of financial tech stacks.
What else does the year bring for the SaaS universe? To answer this question, we rounded up 10 experts at Younium’s ‘State of SaaS’ event and collated their insights (and advice around) about pivotal SaaS industry trends in 2024.
They address concerns around managing finance teams, improving cybersecurity, helping Chief financial officers (CFOs) and Chief marketing officers (CMOs) work closely to hit revenue targets, driving business optimization, growth, and so much more.
Here is a TLDR list—“too long; didn’t read,” of the trends shared by our experts:
For a longer and a more detailed 2024 trends outlook, let's dive right into the heart of this article:
Key takeaway: A new era of marketing that is efficient and revenue-focused will shine
The 2024 macroeconomic outlook calls for businesses to continue doing more with less. This means your SaaS business must have scrappy, smart initiatives and super-efficient teams. And given the existing tough financial climate, it's important to keep track of ROI in terms of everything you do.
Coming from a sales perspective, I'm truly happy about the growing awareness around the need to link marketing more closely with revenue and sales. This positions marketing as a growth driver instead of a cost center.
And to build a better relationship between the CFO and the marketing team, it's fundamental to have a revenue attribution tool in place. Aside from that, you must adopt a data analytics and visualization tool to help visualize the lagging and leading performance indicators.
Key takeaway: Cash flow automation and process innovation will flourish
In these obviously challenging times, we will see a lot of SaaS businesses eating, sleeping, and breathing automation. Many will focus on improving their financial tech stack. And many will focus on innovative processes related to cash flow efficiency.
Anything that makes your customers pay faster will be of great importance in 2024.
As a CFO, I think it's always critical to stay on top of your customer subscription metrics and run absolutely lean operations, without jeopardizing the service quality.
Also, always track and analyze customer payment patterns, net retention metrics, and renewal processes carefully.
Next year, there will be an additional focus on optimizing your time to cash. Thus, try to improve every stage of the process. For example, avoid manual and time-consuming steps by integrating your CRM with your subscription management tool.
And if your company is in the middle of budgeting and forecasting for 2024, be sure to relook at the subscription metrics and how the subscription converts into cash flow.
Key takeaway: Do not waste another minute to improve cybersecurity
A lot of cybersecurity-related regulations will come into play in 2024. CFOs of SaaS companies will be forced, by the likes of NIS-2 and Dora legislations, to implement appropriate security measures that protect against cyber incidents.
But, do not wait to be coerced into upping your defenses. After all, it's not a question of if you'll get hit by cyber things, because such crisis situations are inevitable. And the longer you wait to protect your digital assets, the bigger the problems get. So, it's better to be prepared now.
Finally, to achieve business optimization and growth at a time when cash flow is critical, you must focus on business simplification, understanding your business model, and reducing revenue leakage.
Key takeaway: Expect to deliver a better customer experience with the fourth-generation model of subscription management
In 2024, the SaaS industry will see more integration of AI into managing financial metrics, the adoption of product-led growth (PLG) for traditional companies, and a shift towards usage-based pricing models.
These trends will lead to greater emphasis on execution and optimization, customer-centricity and personalization, data-driven decision making, and flexible pricing and subscriptions in the years to come.
Specifically, it's time for business-to-business (B2B) SaaS companies to transition to a more integrated and customer-centric subscription management approach. This fourth-generation model goes beyond mere billing and basic subscription handling. Instead, it focuses on delivering a comprehensive and seamless experience for prospective clients and existing customers.
The fourth-generation subscription management model emphasizes delivering an integrated platform approach, which involves merging various business functions – sales, customer service, and billing – into a cohesive system. Ultimately, the goal is to eliminate costly silos and align all functions towards serving the customer more effectively.
Key takeaway: Talent that improves customer experience and meets ESG goals will be snapped up
Considering the economic climate that we're in, I think very few businesses can afford to build a large finance team. Instead, they are doing more with less and focusing on efficiency, scalability, and automating functions.
But if I were to mention one thing to focus on: hire those who will look after your existing customers better. This would mean investing in roles that are customer-facing and understanding that finance plays a very important role in the whole customer experience.
Sales companies are also looking to hire those with knowledge and experience around Environmental, Social, and Governance (ESG) -- an important topic that will continue to feature in everyone's agenda in 2024.
Key takeaway: Tools tailored to your industry and supportive of the complete subscription lifecycle will become indispensable
The market of point solutions, tailored to different businesses, has grown significantly. Thus, there are now options built from the bottom up for varied use cases.
Tools tailored to your industry will speak the same language as your business since its expertise lies in understanding and solving issues similar to yours.
SaaS companies are also recognizing that ready-to-use solutions are the way to go in terms of robustness and cost-effectiveness. Hence, the market for custom-built solutions or non-standard platforms (such as CRM or CPQ) is getting smaller and smaller.
At Younium, we have witnessed first-hand (and enabled) this industry shift towards ready-to-use, point solutions that fully support the complete life cycle of subscriptions.
CRM and CPQ platforms traditionally had a very flexible approach to customizations and add on-developments. But, over the last few years, we have transitioned many users from CRM and CPQ solutions onto our platform, which is built to support the complexities and challenges faced by SaaS companies.
When choosing a subscription management platform for your business, you must ensure that it offers a balance between seamless integration and the ability to effortlessly manage tech compliance and automation of your business processes.
Additionally, we find standard connectors for ERP and CRM systems are must-haves in your subscription management platform. In the absence of said connectors, the effort and cost of building such solutions in-house will be high. And, ultimately, it is not likely to even give you the expected end-result.
Key takeaway: Proactive networking will help promote your software, build a personal brand, and establish valuable connections
The growing importance of proactive networking was a recurring theme that I noticed upon engaging with 200+ leaders in the SaaS industry. Prioritizing genuine connections was talked about as a means to navigate the SaaS landscape with purpose, thus opening doors to unforeseen opportunities and sustained success.
Looking ahead to 2024, here is my list of key points to consider to attain full business potential: Continuous learning and adaptation in the face of new technologies and industry shifts; a user-centric approach towards product development; building strategic industry partnerships; and responding promptly to market changes by embracing agile development methodologies.
Key takeaway: Leveraging AI efficiency and human empathy is the future of customer success
Artificial intelligence (AI) will play a very big role in customer success in 2024. For instance, generative AI will continue helping customer success managers with creative and administrative functions. And predictive AI will keep foretelling what a customer is going to do based on historical behavior.
That said, something that customer success is not doing yet (but must) is harnessing natural language processing (NLP) to capture the sentiment from support tickets or customer contact emails.
Even in the face of all this automation potential, it's unlikely that AI will replace humans. After all, SaaS is largely a human-to-human business. What AI will do though is help humans execute their jobs better and more efficiently, by equipping them with the right information.
Thus, a combination of human empathy and machine efficiency and accuracy is key.
Lastly, the business-to-customer (B2C) level of personalization will become more prevalent in B2B settings like customer success.
Key takeaway: Customers will expect more flexibility and choice in subscriptions
I’d like to think of the marketing, revenue, and subscriptions teams as players of a good football team. Each with its own role to play, while they work together towards a common end goal. For example, marketing will continue to attract new customers, revenue generation will help prospects buy more, and subscription management will take care of the existing customer relationships. Together they strive to ensure the success of the SaaS business.
The only conundrum is that today SaaS companies are trying to sell more yearly subscriptions (to stabilize revenues in the face of the current market volatility), while the new-age customers are seeking increased flexibility in payment terms.
It can seem like you are caught between a rock and a hard place, but there are no easy answers here. It's important though to accept that since the customer is indisputably king, more subscription choices are a must-have in 2024.
Key takeaway: Significant savings in cloud services costs will feature large on everyone’s agenda
Controlling cloud costs is poised to be one of the biggest opportunities for SaaS CFOs in the new year.
Historically, SaaS companies have deprioritized cloud cost optimization measures and instead focused on growth and innovation. However, these costs are increasing by 35% year-on-year, and need to be managed better.
The challenge is that cloud costs tend to be complex and lack transparency.
In 2024, we expect to see CFOs demanding access to more accurate cloud usage forecasting, along with automation of processes, to deliver significant cost savings.
To ensure that 2024 is a transformative year for your SaaS business, here are some strategies you can start implementing today:
Did this article inspire you to think a little bit more about your business goals for 2024?
If yes, for more in-depth insights, don't forget to check out the full ‘State of SaaS’ recording here.