When analyzing Software-as-a-Service (SaaS) market types, it’s helpful to have different frameworks or patterns to compare against. While people like to talk about SaaS in general, the type of market a particular SaaS product is targeting greatly affects things like sales cycle, potential investor enthusiasm, and overall opportunity.
Here are three SaaS market types to think through:
- New Technology – Are customers replacing a legacy product or is this the first time they’ve ever bought a product like this because it’s a new technology? Almost all of Pardot’s customers had never used marketing automation before.
- Middlemen – Are customers replacing a legacy service that’s traditionally used middlemen (e.g. benefits, financial planning, etc.)? In this case, they’re spending money but not necessarily on a SaaS offering.
- Labor Intensive – Is the outcome that the SaaS product provides already achievable but labor intensive? Things like building a list of prospects (SalesLoft) or integrating ecommerce systems (Kevy) can be done by hand, but are time consuming and error-prone.
When evaluating an opportunity, it’s important to understand the market type and corresponding nuances. No type is perfect but each has example success stories.
What else? What are some other SaaS market types to consider?