The growth of SaaS was imminent. The proliferation of SaaS companies was an outcrop of the demand for SaaS. Some SaaS companies got it right; some are still in the process of maturing. Many SaaS companies have landed themselves on a violet patch. They are profitable and have long pipelines.
How have many SaaS companies turned their businesses profitable?
SaaS companies that have been profitable for a long time have focused on operational efficiency. They have stayed focused even after they have moved past their break-even point. It means that their total revenue volume is always at a higher value than their operational cost at any point. Also, their recurring revenue from existing customers is enough to cover the costs associated with new customer acquisitions.
SaaS companies have achieved a positive LTV/CAC ratio
A ratio of 3 and above is considered a good indicator. LTV is expanded as Lifetime Value, and CAC is expanded as Customer Acquisition Cost. Even a ratio of 1 is considered fair. The business is making money. Anything less than one indicates that the SaaS company is burning money on customer acquisition and probably customer retention.
Ideally, the business should be getting a value of 3 from the customer for every 1 value spent on new customer acquisition. This ratio has become a rule of thumb based on the experiences of many past failed SaaS business models. Between 1 and 3, the business must factor in expenses such as operations and payroll. Else, customer profit won’t be sufficient to cover business expenses.
Increasing LTV by optimizing price
Customers want to use SaaS because it is cost-efficient and saves them money. So, customers are always interested in a SaaS company’s price point. Successful SaaS companies have focused on optimizing their pricing policies. They have policies such as no overcharging of small and mid-sized businesses. This simple policy allows them to get volumes from small and medium businesses turning to them.
SaaS companies also don’t undercharge large enterprise customers. Large customers want value, too, more than the pricing. They are willing to pay five times more, if the SaaS company can provide stable and long-term services.
USPs and non-functional requirements
SaaS companies want to provide features that might not be new, but the workflow differs. There is a distinct difference in the end-user experience. The non-functional requirements such as performance, speed, and security are top-notch as well. As more companies join the SaaS bandwagon, the quality of programming differentiates one service from another from a speed and performance standpoint.
Providing unique user experiences allows users to get to their workflows faster, get things done, generate reports, use other tools in the ecosystem, and store their files – all of this is viewed favorably. Such SaaS companies draw customers and businesses on a permanent long-term basis, many of them inking deals to have dedicated bandwidth for their businesses on the SaaS data center fabric.
What are some of the fastest-growing SaaS companies in 2022?
Listed below are the top 9 fastest-growing SaaS companies in 2022.
A SaaS company providing travel management software that easily manages business travel booking is a welcome change. TravelPerk is a cloud-based single-window software application for companies to manage their business travel efficiently. TravelPerk is an excellent alternative to TripActions, a SaaS product that attempts to solve similar problems.
TravelPerk has the largest inventory for an all-in-one travel booking experience supposedly. The inventory consists of trains, car rental services, flights, and Airbnb accommodations. TravelPerk allows corporate business travel planners to get better visibility into their business travel bookings.
Organizations use FeatureSpace to use AI and safeguard their corporate networks. FeatureSpace has a sophisticated AI engine that interprets behavior. The analytics are adaptive – allowing the AI engine to learn and keep track of newer patterns of fraud. FeatureSpace has solutions for financial fraud.
The solution categories include card fraud, payment fraud, gaming fraud, anti-money laundering, merchant acquiring fraud, and application fraud.
FeatureSpace processes more than fifty billion events per year. One of the reasons for the phenomenal success of this SaaS company is its reduction of false positives by more than 75%. It ensures the accuracy of findings and also enhances the AI modeling systems with pertinent information.
The Swiss-based company for long has had an impressive track record of providing security. While most VPN providers claim to be secure, actions speak louder than words. ProtonVPN is ahead of most VPN providers in this regard. The SaaS company is also the creator of ProtonMail, the encrypted end-to-end mail service that is a popular alternative to Outlook and Gmail.
ProtonVPN is a fast-growing SaaS company even in 2022. Started in 2016, the company now has a presence in more than 63 countries and has a growing number of servers, a total of more than 1700. The company manages its servers and doesn’t rely on third-party service providers.
In the SaaS space, LinkTree had a unique product. The founders even dubbed it as “first of its kind”. Free to use, LinkTree offers a landing page to users. The landing page of a user lists their entire social media links.
The company was founded in 2016. Interestingly, the site was created in less than six hours. Overnight, the site saw about 3000 users. This caused the server to hang. Instagram initially banned the site, classifying it as spam, only to remove the ban later and issue an apology. By the end of 2022, LinkTree’s user base will be more than 16 million.
5. Flow XO
Many people want to build chatbots. But those who might not have the technical knowledge would think it is a distant affair. Building a chatbot for them might seem like a figment of imagination. But Flow XO allows anyone from any type of background to build chatbots.
The automation platform, backed by AI, allows users to create applications using a declarative workflow. The SaaS platform has integrated modules and several ready-made chatbot templates for platforms such as SMS, Telegram, and Facebook Messenger.
Flow XO provides a free and paid plan. Flow XO comes when chatbots are set to replace virtual assistants.
A Malta company, Hotjar has a collection of tools to interpret web analytics data at a more insightful level. The tools analyze data at a deeper level. Primarily focusing on behavioral analytics, Hotjar is used y product managers and marketers. The state-of-the-art and constantly evolving analytics tools interpret data and visually convey user behavior.
Hotjar can also be part of conversion tunnels. Data generated from customer feedback can be analyzed. The data can be cycled back into the product and help it grow. Hotjar’s success as a SaaS company and its growing popularity is because it does more than just interpret insights.
Hotjar can be used to design polls targeted at customers. The tools of Hotjar can be used to identify problematic areas on a website. Sessions can be recorded to understand user behavior.
Sales productivity solutions are plenty. But Groove is built for Salesforce and its more than 70,000 users. Groove allows sales teams to increase their sales representative productivity, automate workflows for sellers, and use AI-driven insights.
Groove works with Salesforce, even the customized versions too. Groove can complement all activities done on Salesforce and Salesforce cloud by providing zero sync errors and data latency.
Using Groove, sales reps can use the declarative UI to build custom workflows. All these actions are integrated into Salesforce. Groove, therefore, is very user-friendly, and allows better control over workflows, and offers another layer of abstraction to increase user-friendliness.
One of the reasons for Groove’s success in 2022 is customer satisfaction. Groove scores high on user interface experience, workflow automation, and support.
The effort to localize applications can be time-consuming and imperfect. Lokalise is a SaaS platform that allows applications to be localized and translated to different languages. Lokalise has already been used by companies such as Starbucks, Mastercard, and Hyundai, to name a few. Lokalise can be used by UI designers, developers, and translators.
Lokalise is a promising and fast-growing SaaS company because, as per recent research, localized apps have more appeal. Customers are more likely to buy from an app that communicates in their native language. For a long, app developers have relied on popular languages such as English, Chinese, French and German. But translating apps to local languages used in a country can provide better penetration of apps into markets.
Started in 2011, Miro peaked in 2022. Miro facilitates all types of collaborations, a SaaS whiteboard product that allows people to collaborate. It could be diagramming, brainstorming, agile workshops, or business planning. Miro has more than 20 million users, and the numbers are expected to go up.
In 2022, the fastest-growing SaaS companies will be the ones who have created unique products, features, and services that solve business and customer problems. And as with any company, even a fast-growing SaaS company needs more than just sales to keep it ahead. It requires sound management, positive LTV/CAC, and such aspects of staying on the hunt.