Want a market on an upward swing? Look no further than the Software as a Service (SaaS) industry, where research firm Gartner estimates that global spending on SaaS will rise 17.9% in 2012, to $14.5 billion. In North America alone, SaaS spending will rise from $7.8 billion last year to $9.1 billion this year. SaaS transcends industries – everyone needs some type of SaaS product, from airlines, to law firms, to medical offices – and SaaS is attractive to companies because products are typically sold via subscription, so large up-front licensing fees and capital costs can be avoided.
But like any industry, growth can be tempered by customer migration – i.e., churn. Entrepreneur David Cummings recently blogged about this “silent killer” of SaaS startups and the importance of tracking churn, both on a monthly and quarterly basis. Competition could be one reason for the migration, necessitating that these companies constantly innovate their products to keep customers.
Integrating payment processing into the SaaS platform, which is how Bluefin works with software providers, is one way to increase stickiness and prevent migration. It will be interesting to see other “bells and whistles” SaaS providers offer in the future to lower churn rates.
True indeed that more and more are turning into SaaS mainly because of its pay-per-use subscription. Company owners find this cheaper than the traditional on-premise setup which requires them to pay upfront. Other than SaaS being cheaper, it also is scalable and flexible, rapid to implement, hassle-free update, data privacy and security, and availability of SaaS support experts to answer queries about SaaS and help maximize SaaS end user experience.