The SaaS industry is on a growth trajectory and there is no denying that.
With the popularity of artificial intelligence, machine learning, and data automation, more businesses are looking forward to integrating these into their SaaS platform. The aim is to use these developing technologies to make the data more manageable, accurate, and insightful.
Safe to say, with a data-driven approach the SaaS is going to flourish in the upcoming times and is here to stay.
With that in mind, let’s dive right into the top industry statistics and trends that will drive the SaaS market in 2022 and beyond.
SaaS Industry Trends
- 38% of companies say that they are running almost entirely on SaaS.
- 80% of organizations are predicted to migrate toward the cloud, hosting, and colocation services by 2025.
- Public cloud spending will be near $500B by 2023.
- 86% of end users say SaaS applications help them succeed more than desktop alternatives.
- North America is the most mature market in terms of cloud computing services adoption.
- 99% of businesses are using at least one SaaS solution.
SaaS Global Growth Statistics
- Only 2% of UK businesses have yet to utilize the cloud.
- Cloud Adoption in the EU is at 26%.
- More than 90% of businesses in the APAC region use, or plan to use a multi-cloud environment.
- The global cloud computing market size is expected to grow from USD 445.3 billion in 2021 to USD 947.3 billion by 2026.
- In 2021, the USA has over 15000 SaaS companies, followed by the UK which has 2000 SaaS companies.
- There were around 16 billion customers worldwide for the SaaS companies from the USA and UK in 2021.
SaaS Pricing Statistics
- 30 days is the most commonly offered free trial period.
- The most effective number of paid packages offered by SaaS companies is three.
- 39% of SaaS companies charge based on usage which allows customers to start small and trial a product.
- 40% of SaaS companies have taken a value-based approach to setting pricing.
- 29% of companies surveyed said that they do very little discounting.
SaaS Adoption Statistics
- In 2017, cloud workloads represented 86% of all data center workloads worldwide. By 2021, this increased to 94% of all data center workloads.
- In a survey of 786 technical professionals across a broad section of organizations, 94% respondents said they use cloud SaaS.
- Almost 50% of US government organizations are actively using cloud services.
- Worldwide end-user spending on public cloud services grew 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020.
- The public cloud service market is expected to reach $623.3 billion by 2023 worldwide
- 70% of CIOs claim that agility and scalability are two of the top motivators for using SaaS applications.
- 94% of SMBs appreciate the security upgrade that adopting the cloud brings.
- SaaS accounts for less than 15% of total enterprise spending.
- Companies that run entirely on SaaS use an average of 34 apps.
SaaS Churn Statistics
- The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9:1.
- SaaS businesses that make less than $10 million annually usually see a 20% churn rate.
- Yearly churn rate for SaaS companies targeting SMBs is 58%.
- Early churn rate for SaaS businesses serving large organizations varies from 6-10%.
- Acceptable churn rate is between 5% and 7%, depending on the size of the organization.
- The dollar retention rate of the very best SaaS businesses is higher than 100%.
- Only 32% of SaaS companies had an annual churn rate of less than 5%, whereas 20% had a churn rate exceeding 20%.
- Month-to-month contracts actually have a slightly lower churn rate of 14% than 1 to 1.5 year contracts of 15%.
SaaS Marketing and Sales Statistics
- 48% of SaaS Companies have an average contract length of one year. 11% said their average contract length was three years or more.
- Most SaaS products are biased towards monthly plans.
- Only 11% of SaaS contracts are for 2.5 years or more.
- SaaS companies that allow sign-ups without a credit card generate twice as many paying customers from their free trial.
- The likelihood of a trial user becoming a paying customer is as high as 70% when sales reps contact the users.
- 89% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority followed by 59% who treat “Existing Customer Renewals” and 46% who treat upselling and add-on sales as high priority.
- 11% of the world's biggest SaaS companies don't have a blog.
- 24% of SaaS companies have an educational blog.
- 31% of the fastest-growing SaaS companies use chatbots.
- North America to hold the largest market size and Asia Pacific (APAC) to grow at the highest rate during the forecast period, till 2026.
These statistics show that the SaaS industry is still going gangbusters and growing at breakneck speed. But that doesn’t mean that you need to play catch-up to keep up.
A great way to ensure that your organization is ahead of the competition is to partner with a growth consulting firm that will help you race ahead of the curve, and position your business to be a thought leader.