What Is B2B SaaS?

Over the past decade, countless digital solutions in both the business-to-consumer (B2C) and business-to-business (B2B) ecosystems have become available under the software-as-a-service (SaaS) model. If your organization wants to modernize its technology stack, B2B SaaS offers the perfect solution.

In this guide, we’ll explore B2B SaaS technologies: what they are and what benefits they provide. We’ll also uncover the metrics you can use to ensure that your technology investments yield a strong return. 

What is SaaS?

Software as a service is one of the most well-known cloud service models. Under this model, you can access software applications via the internet. Instead of purchasing the license to the software and downloading it to your computer, you simply pay a small monthly or annual fee in exchange for access.

SaaS providers host the application in the cloud, meaning you don’t have to store data locally on your device. Cloud-based hosting enhances the speed and performance of the application while ensuring you can access additional computing resources on demand.

Although SaaS is the most popular cloud-based service model, it isn’t the only one. Others include platform as a service (PaaS), infrastructure as a service (IaaS), and, most recently, integration platform as a service (iPaaS).

Defining B2B SaaS

B2B SaaS is cloud-based software designed specifically for business use cases. Examples include B2B SaaS marketing tools, order management software, and customer relationship management technology. 

B2B SaaS offers a compelling solution for businesses that need to upgrade their technology suite but don’t want to incur the heavy upfront costs associated with on-premises applications.

By leveraging B2B SaaS technologies in place of traditional applications, your organization can reduce human resource costs, expedite the implementation process, promote scalability, and streamline operations.

Benefits of SaaS products

Investing in B2B SaaS products allows you to tap into various benefits, including the following:

Cost-effectiveness

Purchasing a perpetual (lifetime) license for an application can cost thousands of dollars. Conversely, B2B SaaS fees may be as little as a hundred dollars per month, depending on the size of your business and the number of users you need to enroll.

The cost-effective nature of SaaS solutions increases their appeal for budget-conscious businesses in need of better tech.

Scalability

When you deploy technology on-premises, whether it's a CRM or an ERP, you’re responsible for purchasing, installing, and maintaining the infrastructure. If you need more computing power, you’ll have to shell out for new servers and other hardware.

Conversely, B2B SaaS vendors often provide on-demand computing and data storage with simple onboarding instructions. As your business grows, the provider can scale up their resources and support, even when you reach enterprise operation levels.

Seamless updates

Although they offer distinct benefits, on-premises software solutions also present roadblocks — namely, that your team is responsible for maintaining them.

Conversely B2B SaaS vendors maintain their software, so you can focus on the day-to-day duties of managing your business. The vendor will also push out any updates and improvements so you can continue to derive optimal value from your B2B SaaS software. 

Accessibility

B2B SaaS technology is accessed via the cloud, meaning you and your staff can log into your platform from any authorized device with an internet connection. This increased accessibility supports hybrid and remote work, providing your organization the flexibility to be more productive.

Security

Leading SaaS technology vendors leverage robust cybersecurity technologies to protect client data. Even as a startup, working with a B2B SaaS provider is an excellent strategy for improving your security stance and making your business less vulnerable to cyberattacks.

B2B SaaS KPIs to measure profitability

If you want to get the most out of your B2B SaaS investments, you must thoroughly test them. By conducting end-to-end and integration testing, you can verify that your technologies provide a good user experience, perform as designed, and deliver a strong ROI.

That said, testing alone isn’t enough to maximize your ROI when you partner with a SaaS company. In addition to extensive testing, you should monitor several key performance indicators (KPIs) to measure the profitability of your B2B SaaS tools.

Some of the B2B SaaS metrics you need to keep a close eye on include the following:

Churn rate

The churn rate shows how many customers cancel a subscription or stop using a vendor’s service. If the churn rate is high, the business is losing customers at an unsustainable rate. 

By monitoring churn rate, you can better understand customer trends and identify issues before they threaten business continuity. You should promptly address any sudden spikes in churn to minimize profit losses and preserve your brand reputation. 

Customer lifetime value (CLV)

Customer lifetime value (CLV) measures the total value of an average customer over their relationship with a business.

For instance, let’s say an average customer’s retention time is one year, and they typically purchase $100 in goods and services from your brand each month. The customer life cycle in this scenario is one year, and the CLV is $1,200.

Customer acquisition cost (CAC)

Customer acquisition cost, or CAC, refers to the average cost of acquiring a new customer. CAC accounts for all your marketing and advertising efforts to reach your target audience. 

Ideally, you want to keep your CAC as low as possible while minimizing churn. If you can acquire customers at a low cost and retain a healthy percentage of your clients, your business should generate strong revenue. 

Embrace B2B SaaS tech with Orderful

From B2B SaaS lead generation tools to digital storefronts, the SaaS revolution has changed how businesses leverage technological resources. Thanks to trailblazers like Orderful, electronic data interchange (EDI) technologies are now available through a SaaS delivery model.

If you want to streamline communication and information sharing between your business and its vendor partners, Orderful can help. To learn more, talk to an expert and let Orderful modernize your EDI infrastructure.