If your SaaS company is anything like ours, you're busy wrapping up your 2024 initiatives and getting excited for 2025 as you finalize plans for everything from budget to major product initiatives.
Since we're all in that same boat, I thought it would be helpful to share my predictions for the SaaS industry in 2025 and what product leaders should be thinking about.
I'll get into details, but here's how I see the coming year. In 2025, SaaS companies will need to focus on product enhancements that provide tangible value fast and help their offerings stand out in a crowded marketplace.
Forces shaping the SaaS landscape
It's obviously been an interesting few years in SaaS, which is unsurprising given the broader economic climate.
Here's what I see as some of the most noteworthy forces shaping the SaaS landscape right now:
- SaaS spend is still increasing. This will continue in 2025. Companies' appetite for AI initiatives is driving some of that increase, and it's worth noting that some of the overall spend is being diverted from other SaaS to AI products.
- However, the era of unchecked SaaS growth has ended. As the SaaS industry expanded over the past decade, companies' tech stacks have grown to include over 300 apps on average. That number finally began to decrease in 2023. As companies face pressure to cut costs, they're starting to scrutinize their tech stacks, questioning the ROI of their apps and eliminating the ones that aren't delivering value. If you want further evidence, check out the rise of SaaS spend management platforms.
- The SaaS marketplace is crowded. Just look at your own category on G2 or another marketplace or review site. Businesses have plenty of options to choose from.
- Risk-averse investors are pushing SaaS companies to focus on retention. GRR matters more than ever for proving – both to yourself and your investors – that your product is necessary to your customers and can survive this era of increased scrutiny.
Given that landscape, I believe SaaS in 2025 will focus on proving product value and doing so quickly. Here are my predictions for what that will look like and what savvy product leaders can do about it.
Buyers will expect to see ROI even faster
As part of the increased scrutiny of tech purchases and a desire to cut costs, buyer expectations for time to ROI will grow even shorter. Smart product teams will ensure their roadmaps in 2025 focus on enhancements that provide users tangible value and make that value easy to see and understand.
This might look like improving your product's first-time use or onboarding experience so customers can begin realizing benefits faster. It might also mean making the value you're already providing clearer. I envision more in-app messages highlighting saved hours, dollars, or lines of code.
AI enhancements will become more thoughtful
AI enthusiasm isn't going anywhere. Buyers will continue to ask, "What's your AI story?" However, many AI plays we've seen so far have been half-baked, allowing SaaS companies to check the AI box without providing real value to customers.
Many of them in 2024 have actually diverted engineering resources from other initiatives that might have provided greater user value.
As we head into 2025, we've had time to observe what's working and what isn't with AI, conduct user research, and identify real use cases. Product leaders in 2025 will focus on more thoughtful, carefully planned AI enhancements.
Integrations will continue to be a key buying (and renewal) factor
G2's 2024 Buyer Behavior Report revealed that integrations are a top buyer consideration for new software purchases. (Security, of course, was right up there as well.) Buyers' desire for new SaaS purchases to include in-app integrations to the other products they use makes sense for many of the same reasons as their appetite for AI: fewer manual tasks, increased productivity, and better data insights.
There's no denying the value of a connected tech stack to buyers or SaaS companies who can provide those integrations as part of their offerings. Heading into 2025, product leaders should ensure they have the capacity to provide the integrations their customers need.
That might take the shape of a marketplace offering a variety of integrations out of the box. It could also look like an in-app workflow designer that lets customers build exactly what they need. Either way, SaaS companies need to be able to stand up integrations quickly to help buyers achieve productivity wins and fast ROI.
Integrations also help at renewal time. It's much harder for customers to replace a product that's not only tightly connected to the rest of their tech stack but is providing those connections.
R&D teams will increasingly lean toward "buy" in build vs buy decisions
Given the heightened pressure to provide product value, SaaS teams in 2025 will look for ways to conserve R&D resources for initiatives that offer unique value to their customers. As a result, they'll increasingly choose "buy" in build vs buy decisions.
It hasn't always been this way. I've been there and have sometimes chosen the "build" option.
I like to use the example of authentication. There was a time when engineering teams would spend months building auth in house. Today, few of us would consider it. We know that auth is a really time-consuming, really hard thing to get right and that incorporating a tool like Auth0 is a solid way to get it right without spending precious engineering cycles.
Over time, we're coming to believe that in more and more areas. We're seeing this in things like security, feature flagging, and, of course, my own area of expertise, integrations. Smart product leaders in 2025 will continue to lean toward buying tools like this – after careful consideration, of course – to free up R&D for initiatives that enhance their unique value propositions.
Product teams will collaborate with Sales and CS to ensure fast time to value
Thoughtful product initiatives can go a long way to helping customers see ROI quickly, but R&D teams can't do it alone.
Smart teams will collaborate with Sales and CS to make sure the entire customer experience contributes to fast time to value and a strong likelihood of retention.
Product leaders should work with Sales to ensure everyone is focused on the best prospects, with well-matched use cases, and who will remain long-time customers. They should work with CS teams to ensure they're learning customers' desired outcomes and providing smooth onboarding journeys to help them get there quickly. And, of course, they should create a strong feedback loop to capture insights from Sales and CS on product enhancements that can help prove value fast.
Here's to 2025!
Overall, I believe providing value fast will be a key theme for SaaS teams in 2025. Of course, every SaaS product is different, and every SaaS team will find the best way to do that. I hope these predictions give you and your team a useful idea or two as you consider your roadmap and other initiatives for the new year.
Here's to 2025!
