Written by Sam Yadegar on Nov 14 , 2022

The SaaS industry is an open road of opportunities for massive revenue — prepare for the ride with the the latest SaaS market statistics.

Here, you’ll find: 

  • Statistics about SaaS market growth
  • Quick facts about popular SaaS needs (with proven examples)
  • Why SaaS applications are in high demand
  • How these businesses can benefit from a unique digital marketing blueprint

Highly competitive yet rewarding, the software-as-a-service (SaaS) market is rife with innovation and opportunity. 

But poor market research or a laissez-faire attitude will stand in the way of success. Staying current on the latest SaaS market trends, growth, and size statistics will give you a leg up against your competitors.

Want a piece of this $200 billion pie? We’ll help you get up to speed and share insider tips for optimizing PPC management and SEO. Let’s go.

person driving outside

The software-as-a-service market is hot in the U.S. but also fiercely competitive. (Image: Unsplash)

SaaS market highlights 

  • SaaS end-to-end user spending will surpass $200 billion USD in 2023. (Source: Gartner)
  • The US has 17,000 SaaS companies. (Source: Statista)
  • SaaS-powered workplaces are expected to jump from 45% to 79% in 2024. (Source: Statista)
  • SaaS companies that improve customer service and experience can improve customer lifetime value by 25%. (Source: McKinsey
  • 43% of professionals use 4-6 data platforms. (Source: SD Times)
  • Adobe Inc. is the top publicly traded U.S. SaaS company in 2022. (Source: Statista)
  • The global SaaS market has a compound annual growth rate (CAGR) of 27.5%. (Source: Fortune Business Insights)
  • Companies are choosing more annual SaaS subscriptions than monthly subscriptions in 2022. (Source: Cledara)
  • Sales and marketing make up over 50% of today’s successful SaaS companies’ expenses. (Source: McKinsey)
  • Only 1.6% of SaaS businesses can sustain 30% or higher growth for 10+ years. (Source: McKinsey)
  • The average customer churn rate for SaaS businesses is between 3-5%. (Source: Forbes)
  • The healthcare SaaS market is expected to hit a $50 billion value by 2028. (Source: Grand View Research)
  • The banking SaaS market is expected to hit $40 billion by 2029. (Source: Fortune Business Insights)

SaaS size and growth statistics

1. SaaS end-user spending will surpass $200 billion in 2023

This projection is about $24 billion more than 2022’s projection. The research firm’s VP Sig Nag isn’t surprised by the steady growth, given SaaS application utility for DevOps (development operations) processes. He describes public cloud services as a “powerhouse that drives today’s digital organizations,” noting the increasing shift of workplaces moving to hybrid and remote work models after the pandemic. 

The enormous end-user spend also speaks to the vast possibilities for SaaS providers. Any industry can hop on the money-making wagon as long as they have the technical know-how and live and breathe artificial intelligence. 

Legal and accounting organizations are embracing SaaS software for bookkeeping and legal practice management, like CLEO and FreshBooks.  

2. The U.S. has 17,000 SaaS companies

Just to put things in perspective, the UK comes in second with only 2,000 SaaS companies. The software-as-a-service market is hot in the U.S. but also fiercely competitive. If you want to stand out, you’ll need to bring your A-game. 

Maybe you offer a vacation rental management SaaS solution — we can think of a few competitors right off the bat. Your customers have hundreds of options, so you need to stand out and convince them you’re the best one.

Step 1? Serious brand awareness and bold UVPs. 

“When it comes to standing out, positioning, differentiation, etc., it’s important to consider your core value propositions,” says Steven Dang, Growth and Strategy VP at Hawk SEM. “Know what they are and distill them into an essence so you can help your customer know how you’re different and what you have to offer. Competitive matrices, video explainers, infographics, and customer testimonials are easy ways of communicating your core value propositions.”

This is where SEO (search engine optimization) and PPC (pay-per-click) management become vital for today’s SaaS companies. Any slack in ad management will dim your light in Google’s eyes, with competitors all too eager to overshadow you. 

Our SEO experts approach PPC management with a fine-toothed comb, helping you strategize, manage, and execute a data-driven methodology that brings you more traffic. For example, the cloud monitoring SaaS niche is filled with big names like Azure Monitor and Amazon CloudWatch. 

We helped our client Datadog take up more space, aka double their lead volume by fixing up their landing page, tracking URLs, revamping their keywords. Specifically, we noticed long-tail keywords were more relevant for Datadog’s integration partners. 

#3: SaaS-powered workplaces are expected to jump from 45% to 79% in 2024

With the rise of both remote work and competition, companies rely more and more on SaaS solutions for efficient business operations. Today’s remote office has a full tech stack. 

Here are some key players you’ll find in today’s office SaaS roundup:

  • Project management: Basecamp, Asana, Monday, Dubsado
  • Accounting: QuickBooks, FreshBooks
  • Collaboration and messaging: Slack
  • CRM (Customer relationship management): Salesforce
  • Direct automation: Zapier
  • Payment management: HoneyBook
  • Dotting i’s: Grammarly
  • Private cloud hosting: IBM, GlobalLogic, Microsoft

Thousands of SaaS solutions exist for specific industries too, further promoting the SaaS-powered workplace. Companies need SaaS applications for day-to-day operations, as well as to compete in this bustling digital landscape.

If competitors are enhancing productivity and engagement with SaaS tech, companies need to jump on the automation train, too. 

4. SaaS companies that improve customer service and experience can improve customer lifetime value by 25%

Your customers don’t hope for accessible tech — they demand it. McKinsey tells us it’s vital for SaaS companies to make the entire customer journey, from start to finish, as customer-friendly and streamlined as possible. 

We’re talking easily accessible content and instructions, intuitive interfaces, and crystal-clear transparency on where those subscription dollars go. Many big SaaS companies see partnership as a way to ensure customers get what they need. 

The more convenient you can make things for your customer, the better. A good place to start? Optimize your SaaS company website with brand-related keywords, image tags, and quality content.    

5. 43% of professionals use 4-6 data platforms

Data management and analysis is a huge motivator for SaaS subscriptions. This survey data also indicates that 11% of respondents use 10+ applications for data. Clearly, data is a prominent interest across various industries in picking a SaaS solution. 

What does that mean for your SaaS business or startup? You can start by looking for data-focused audiences that could use your product, and market to them accordingly. 

Data features have a place in most SaaS solutions — even Amazon Prime. Ever notice how the platform recommends shows that pique your interest just enough to hit “play?” That’s based on data collected from your streaming behaviors. 

#6: Adobe Inc. is the top publicly traded U.S. SaaS company in 2022

Adobe is worth a staggering $192 billion, with revenue steadily growing each year. Adobe’s success crowns it with the highest SaaS market share. The famous Adobe Creative Suite sits center stage in many companies’ marketing strategies, offering design services like Photoshop, Lightroom, and Adobe Premier. 

Moreover, Adobe has a popular PDF editor that virtually every business can use. Did you know Adobe invented the PDF in 1993, a dramatically innovative solution for companies going paperless?

Clearly, Adobe is a SaaS leader with more and more services to meet their audience’s needs. The company is also famous for releasing open letters to their customers before big changes.  These marketing moves continue to be critical (and effective) in solidifying trust with Adobe’s audience.

Note: Some consider Apple the largest SaaS company, not Adobe. Technically, Apple is worth more at $2.26 trillion. However, the company is primarily a hardware brand, selling popular iPhones, laptops, and iPads. 

However, some experts consider Apple in the SaaS conversation because of the company’s growing SaaS product base, with its increasing paid subscriptions, like AppleCare, Apple Music, and Apple TV. 

saas screen

Home in on your target audience, and don’t be afraid to identify sub-niches for focused targeting. (Image: Unsplash)

#7: The global SaaS market has a compound annual growth rate (CAGR) of 27.5% 

Which industries contribute to this whopping statistic? Fortune Business Insights gives credit to a few notable ones: 

  • Retail, consumer goods, and ecommerce
  • Healthcare
  • Education
  • Manufacturing
  • Travel and hospitality

The report covers SaaS globally, examining market players in North America, Europe, South America, the Middle East, and the Asia Pacific. SaaS market growth is coupled with emerging AI technology and virtualization, meeting growing needs for productivity, database management, and security.

Is your brand in any of the above industries? There are strategic ways to leverage this potential: Home in on your target audience, and don’t be afraid to identify sub-niches for focused targeting — there are enough online browsers to go around. 

#8: Companies are choosing more annual SaaS subscriptions than monthly subscriptions in 2022 

Who doesn’t love a discount? Cledara examined curious month-to-month increases in May 2022 that weren’t consistent with more subscriptions. Turns out, companies are opting for annual pricing plans to save money. 

While the increase in annual subscriptions isn’t ostensibly significant, it signals a growing commitment to a SaaS tech stack, as Cledera notes. 

But what can you do to encourage annual subscriptions? You might consider remarketing to remind visitors of your discounted pricing, using a mix of email, advertising, and social media strategies. 

A segmentation strategy could also be useful, where you’re offering more pricing options and a greater number of tiers. Think about Netflix with their new ad-supported tier. The best way to promote bigger spends? Let a PPC agency take the reins and help you scale. 

Pro tip: Wondering how to pick an agency? Always review case studies to verify results and visualize how they can help your business. 

9. Sales and marketing make up over 50% of today’s successful SaaS companies’ expenses 

You don’t need us to tell you how easy it is to overspend on Google Ads and SEO — the problem is spending the budget on the wrong strategies (or on no strategy to begin with). 

So, how do you maximize value out of your sales and marketing budget? The goal is to merge sales activities and use insights across multiple channels for a cohesive digital marketing strategy. McKinsey sees data collection as key, coupled with artificial intelligence and advanced analytics. We agree.

In fact, those goals sound a lot like what our proprietary marketing technology, ConversionIQ, can accomplish. By gathering actionable insights from campaigns, we can better target high-value audiences. Here are some problems we use ConversionIQ to solve: 

  • Siloed data
  • Slow account red flags
  • Uncertain paths for scaling
  • Lackluster reporting
  • Low average order values (AOV)

Interested? Here’s more info.

10. Only 1.6% of SaaS businesses can sustain 30% or higher growth for 10+ years 

McKinsey studied 200 companies between 2011 and 2021 and found few instances of long-term growth. They note this as a key rationale for setting realistic growth targets that account for rapidly changing market conditions. 

If you project too high, you run the risk of spending revenue you don’t have and losing out on strategic market opportunities.

Is it possible to sustain long-term growth in the SaaS market? Going it solo exposes you to the shifting tides. But recruiting a team of industry experts can gear you up to weather the storm and generate long-term success.

The slim number of companies with high growth long term might feel disheartening. But hey, at HawkSEM, we like a challenge. Our clients see an average of 4.5x greater ROI after employing our PPC management, SEO, and content marketing services. 

healthcare saas

Healthcare is an industry primed for digital transformation. (Image: Unsplash)

11. The average customer churn rate for SaaS businesses is between 3-5% 

Customer churn is a vital metric for SaaS businesses to keep a close eye on. It measures the rate at which customers stop subscribing to your service — all that hard work and marketing down the drain. Canceled subscriptions are a drag, but they tell you a lot about where you can improve.

For example, at what point in the journey are customers abandoning your business? Is it after one month? Two months? Maybe your onboarding is off.

CRM Dialer President Dimitri Akhrin tells Forbes about the power of re-engagement emails. Of course, we can channel re-engagement through many remarketing tactics, including emails and ads.

The bottom line? Customer retention is just as, if not more important, than acquisition. A little churn is normal, and even exceeding 5% could be OK as long as it’s temporarily part of a growth stage. But anything ongoing? It warrants an audit. 

#12: The healthcare SaaS market is expected to hit a $50 billion value by 2028

Healthcare is an industry primed for digital transformation. And innovative SaaS brands like CitiusTech, Veeva Systems, and MindBody have answered by offering unique database management capabilities for healthcare providers. MindBody differs slightly, offering an appointment platform for patients in the fitness and therapy realms. 

How can you make a healthcare SaaS business scalable? Prioritize UX (user experience) and carefully consider your audience’s business requirements. You might need some support collecting accurate data to best inform your PPC ads. 

13. The banking SaaS market is expected to hit $40 billion by 2029 

Also referred to as BSaaS (banking software as a service), the possibilities are endless. From speeding up customer resolutions to visualizing data and increasing security, SaaS offers today’s bank the world on a silver platter. 

Experts at Fortune Business Insights predict the shift heavily favoring large banks, with smaller ones playing catch-up. Of course, FinTech continues to find solutions not only for banking business models but also consumers. 

Companies like Wave and Stripe help business owners with smooth payment processing, while Venmo business accounts make getting paid for business or casual events a whole lot easier. 

The takeaway

As these stats show, today’s SaaS company is faced with endless opportunities for growth and success as well as overspending and competition. 

The best way to harmonize all of the channels and opportunities available is through a thoughtfully crafted, data-informed digital marketing strategy. Equipping yourself with these stats will help you better navigate the ever-shifting tides of the SaaS market and be set up for long-term growth.

What’s cramping your SaaS brand’s style? Is it too many prospects stuck on your free trial? Or perhaps a lot of traffic without conversions. Whatever your pain point, we’ve either faced it or have the right tech and expertise to blast through those obstacles and take your business to the next level. Want to know more? We’d love to connect.

Sam Yadegar

Sam Yadegar

Sam Yadegar is the co-founder and CEO of HawkSEM. Starting out as a software engineer, his penchant for solving problems quickly led him to the digital marketing world, where he has been helping clients for over 12 years. He loves doing everything he can to help brands "crush it" through ROI-driven digital marketing programs. He's also a fan of basketball and spending time with his family.

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