What Are SaaS Products: The Ultimate Guide (2024)

Software-as-a-service companies host these apps using high-availability solutions like Google Cloud, AWS, and Microsoft Azure, offering zero downtime and low latency.

Hence, SaaS products provide better and more flexible services than traditional on-premises apps while eliminating the need for local installation.

Because the SaaS provider develops, maintains, and updates the software automatically, users don’t need to purchase ultra-expensive hardware like racks and high-end servers, thereby saving operational costs.

What Business Can Use SaaS Products?

One major benefit of SaaS solutions is their flexibility; they have several use cases in every business enterprise.

This means that SaaS-based products can be adopted in various industrial sectors, from banking, entertainment, manufacturing, retail, e-commerce, and enterprise IT solutions to run their operations.

For instance, e-commerce companies use Shopify to run online shops, manage orders, and facilitate sales.

Similarly, most brands rely on Hubspot for general marketing and customer relation management needs.

If none of these concerns your business, chances are that you’re probably using Google Workspace for your email, document processing, and spreadsheet needs.

So, whichever the case, every business with a digital presence uses one or more SaaS-based products.

Key Features and Characteristics of SaaS Applications.

Although almost every SaaS company has unique selling points, their products have similar traits that qualify them as SaaS products.

Here are some key features to look out for in a SaaS product:

Multi-tenancy Model

Multi-tenant SaaS is a cloud architecture in which a single instance of software infrastructure and resources serves multiple customers.

In this system, each customer is referred to as a tenant. Tenants can customize their part of the application, offering them a more personalized workspace.

Multi-tenancy models help achieve a reliable level of efficiency and security. They are easy to maintain, cost-effective, and offer swift onboarding.

Although the customers using multitenancy models share the same SaaS company computational, networking, and security resources, their data is kept private.

Essentially, the SaaS company deploys separate data storage for each tenant, making it inaccessible to other users.

Cloud Hosting

Cloud hosting offers many significant benefits to SaaS businesses, including improved reliability, flexibility, scalability, data protection and retention, capital and operational savings, and app availability.

Since apps are hosted in the cloud, they offer businesses stability and large storage capacity, as there is no need for hardware installation.

It is also cost-effective because it provides users and businesses with a pay-as-you-go (PAYG) payment model.

Another important aspect of cloud hosting is its ability to adapt and scale easily.

Subscription-Based Pricing

A subscription model allows businesses to pay for software only when needed.

So, instead of purchasing software to be installed on a data center, server rack, or workstation, users subscribe to a cloud-hosted software-as-a-service product by paying a recurring monthly or annual fee.

This payment usually includes support, maintenance, updates, and additional services, thereby minimizing upfront costs.

The subscription pricing model benefits customers and enables SaaS companies to generate a predictable revenue stream.

High Availability and Accessibility

Another characteristic to look out for in a software-as-a-service product is its accessibility and availability level.

High availability is the ability of the system to continue functioning properly even when one component of the product breaks down.

To achieve this, redundancy and load balancing can be employed to ensure the even distribution of traffic and the spread of resources, maintaining system operability and data recovery.

On the other hand, high accessibility allows users with different physical capacities and cognitive abilities to access SaaS products.

By making sure your platform is built with assistive technologies such as large fonts, braille, captions, or screen readers, you will attract and retain new customers.

Automatic Updates/ Maintenance

SaaS providers are responsible for software updates, maintenance, performance optimization, and security patches, ensuring users have access to the latest versions of apps without having to update them manually.

When selecting a firm to handle your business’s operations, ensure it has the expertise to ensure the smooth flow of tasks and that it’s familiar with recent trends in your business niche.

This is to maximize the efficiency and productivity of your organization’s output.

7 Types of SaaS Products

Vertical and horizontal SaaS are the two broad spectrums of software-as-a-service products based on the audiences and industries they serve.

But we can further classify these popular SaaS products based on their functionalities. Let’s take a look at them.

1. Customer Relationship Management (CRM) Software

CRM is one of the most popular SaaS products businesses and organizations use to manage customer interactions and streamline processes.

It is essential in improving customer-business relationships, allowing convenient and effective communication between brands and customers.

Examples of CRM SaaS companies include HubSpot, Zendesk, and Salesforce.

CRM software also helps businesses enhance their marketing strategies and gain customer loyalty by offering insights into consumer behaviors and patterns.

2. Project Management (PM) Software

Asana, Trello, ClickUp, and Jira are well-known SaaS applications in the project management niche.

These are a class of software designed to improve businesses’ efficiency by handling tasks, resource allocation, and project tracking.

Project management software enhances collaboration between team members in a shared workplace by allowing the project manager to distribute assignments, monitor their execution, and effectively communicate with the team.

When building PM software, you must integrate communication and document management tools for easy sharing of important updates and information.

3. Accounting and Billing Software

Accounting software automates, manages, and monitors your company’s day-to-day transactions, including revenue, fixed assets, and expense management while boosting productivity.

Many top SaaS companies use this software, which provides the necessary tools and insight to manage and run their businesses’ financial operations.

This is an alternative to the traditional method of keeping financial records in physical journals or ledgers, which is prone to human error, misplacement, and time-consuming.

Businesses can employ accounting software to manage receipts and automate business invoicing, billing, and payment services.

4. Enterprise Resource Planning (ERP) Software

Since the 1990s, SaaS companies have widely used ERP to streamline processes and improve data visibility.

However, due to the increasing cost of ownership, on-premise ERP couldn’t keep up with modern security demands and technology shifts.

Considering that, a new feature and functionality called cloud ERP was launched, offering a more affordable platform for businesses.

Cloud ERP helps improve business insights, enhance collaboration, and increase efficiency at a lower cost.

It also eliminates the need to install hardware or software on a device because all data are saved in the cloud.

ERP is a complex SaaS platform best suited for large companies.

It helps them manage various business processes, including manufacturing, marketing, sales, reporting, human resources, supply chain, risk administration, and financial allocations.

5. Sales and Marketing Software

Sales and marketing are all about pitching your SaaS products to targeted and non-targeted audiences and ultimately making sales.

Many software-as-a-service companies employ marketing applications to plan and execute their marketing campaigns and strategies and track their businesses’ sales success rate.

Marketing software helps generate new leads and automates your entire sales process, which gives you more time to focus on selling.

Hence, the right sales and marketing software must be integrated with B2B marketing automation to handle activities such as email marketing, lead scoring, and real-time analysis for customer satisfaction improvement.

6. Human Resources (HR) Software

HR software, also known as human resources management software, is a SaaS solution provider that manages and optimizes daily HR operations, including employee recruitment, interview scheduling, performance tracking, salary or benefits administration, etc.

HR software is so vast that it often consists of a suite of other niched down applications like, learning management systems (LMS), human resource information systems (HRIS), applicant tracking systems (ATS), employee engagement software (EES), and payroll management software (PMS).

Some SaaS companies offer some of these unilateral applications as standalone solutions.

However, as stated earlier, robust HR software tends to have two or more of them.

This software allows you to store all employee cycle information in a single database and provides easy accessibility from employee hiring to exits.

7. Analytics Software

Data analytics software, often called business analytics software, helps software-as-a-service companies track and analyze input and output data, allowing them to create actionable reports and dashboards.

Popular examples of data analytic tools include:

Tableau is used to examine data with SQL and build data solutions for business decision-makers.

Google Analytics is quite different in application compared to the others. However, it aggregates data from Google search engine to help organizations monitor the performance of their websites and tracks the success of their search engine optimization (SEO) and marketing.
Python is a programming language that structures large datasets and makes mathematical operations easier.

What Are Horizontal and Vertical SaaS?

SaaS solution providers can be broadly classified under horizontal and vertical categories based on their target audience.

Understanding the difference between these concepts is important because it will help you determine the best market fit for your product.

Horizontal SaaS is a cloud-based software solution designed and targeted to meet the needs of a wide audience from various industries.

Generally, they are concerned about satisfying the requirements of different businesses in multiple niches and not individual consumers or companies.

This software category includes email marketing software, CRM systems, accounting software, project management software, and cloud storage services.

Conversely, vertical SaaS products are targeted to a particular niche or industry and focus on satisfying the needs of smaller audiences and individuals.

Although they are not as popular as their horizontal counterparts, they are so important that their target audience cannot live without them.

For instance, in the healthcare industry, there are dedicated software that can run and manage patients’ records in ways that generic CRM solutions like Salesforce cannot.

This software is just as indispensable as the numerous SaaS solutions in the manufacturing industry.

Due to the limited number of target users, competition in vertical SaaS is small, leading to monopoly and customer overdependence.

Also, unlike horizontal SaaS technology, which has been around for over a decade and is a norm in the business landscape, vertical SaaS technology is a new trend gaining fast adoption.

Should You Scale Your SaaS Solution Horizontally or Vertically?

Here are a few factors to consider when deciding the type of SaaS your business will fall under:

Ask yourself what kind of SaaS products you offer and the problems you aim to solve with them.
Who are your target audience?
Would your products serve a broad range of users from different niches, or are you aimed at a specific niche?
What competitions do you intend to stand out?
What marketing strategies must you employ to reach your target market?

For vertical SaaS products, your marketing and sales team must be closely familiar with your targeted industry.

Providing very clear answers to all the above-listed points would give you a great start in determining what category of SaaS your business will fall under.

The Most Effective SaaS Marketing Channels and Strategies

Of course, there are many marketing channels out there that you could employ to help create visibility and attract potential customers for your B2B SaaS products.

However, it is important to know that deciding on the best channel depends on your target audience, business needs, and SaaS offerings.

Let’s take a look at the carefully selected and effective SaaS marketing channels:

1. Inbound Marketing

Inbound marketing is a digital marketing strategy popular with B2C and B2B SaaS companies.

It helps attract leads (users who need your product or are already aware of it) to your business website through creative content and experiences tailored to their needs.

With inbound marketing, your audiences are casually persuaded to make a purchase through blogs, user-generated content (UGC), webinars, infographics, white papers, etc.

The whole idea of this SaaS product solutions marketing channel is that your brand is always at the forefront and ready to offer customers the SaaS products they are searching for at any time.

2. Content Marketing

Content marketing is a multi-stage strategy involving the creation and distribution of content—such as blogs, emails, social media posts, and pitch decks—across different channels.

Having useful, relevant, and informative content drives targeted traffic to your website, converts your visitors to customers, builds reliability, and positions your brand as a leading authority in your business niche.

Search engine optimization (SEO) is an integral part of content marketing as it helps to bring much-needed traffic to websites.

3. Search Engine Optimization

Search engine optimization (SEO) is a practice that helps boost targeted traffic to your business website and makes it rank higher on search engine result pages (SERPs) like Google.

It is one of the most effective B2B SaaS marketing channels that optimize content, attract target audiences, and help businesses establish authority in the market.

SEO strategy helps you acquire new leads organically without relying on your paid adverts.

Also, with relevant keyword optimization, your business can be well-positioned and at the top ranking on major search engines.

4. Social Media Marketing

Social media marketing could be paid or organic.

Organic social media marketing involves creating social media posts on various platforms—on social media platforms like LinkedIn, Instagram, TikTok, Facebook, Telegram, etc.—that offer value with an elixir of virality.

On the other hand, paid social media marketing, also known as social media advertising, requires one to run ads on the platforms to reach a wide range of targeted audiences.

Most surprisingly, with over 5 billion people registered on various social media worldwide, many SaaS companies are yet to comprehend the power of these platforms and do not see the need for them to build a strong social media presence.

5. Email Marketing

Did you know that email marketing is considered the digital marketing channel with the highest return on investment (ROI)?

Despite the prominence of other social media platforms and mobile messengers, e-mail has remained an important channel for online business activities, with over 4.37 billion active users globally.

This is why an average of 333 billion emails are exchanged every day.

As such, email marketing is one of the best channels for creating and delivering personalized content to customers.

It is highly effective for lead nurturing, engaging, converting, and retaining consumers.

You can also use it to inform and announce to your customers about the availability of new SaaS products and services.

In addition, your leads are properly educated and guided throughout their buyer journey.

Step-by-Step Process on How to Develop a SaaS Product

We have developed an in-depth article covering the step-by-step process of how to create AI SaaS products, and, in fact, any type of SaaS tool.

While it’s modifiable, the process typically covers the following:

Conceptualization and ideation
Market Survey: Understanding Your Target Audience and Competitions
Product design
Infrastructure setup
MVP creation
Feedback gathering and iterations
Development and testings
Deployment and launch
Post-launch optimization and maintenance

Go through the article to understand all you need to get started with your own SaaS product development.

Conclusion

Building a SaaS product requires strategic creativity, planning, and delivery.

These are very helpful for streamlining and automating everyday tasks.

You can also take the initiative to add artificial intelligence to your SaaS product.

This will not only optimize your operations, but go a long way in ensuring your customers get the best service possible.

FAQs

1. What Is SaaS Model?

The software-as-a-service model allows users to access cloud-based SaaS products over the Internet using a browser on any device and at any location.

2. Is SaaS a product or Service?

SaaS is a service. It offers users the platform to access cloud-based products over the internet.

3. What Are SaaS Tools?

SaaS tools are cloud-based software that can be accessed over the Internet using any supported device. While some are fremiums, most require users to subscribe to the service monthly or annually.