While Software as a Service (SaaS) has become a dominant way to deliver innovation to market, there are two different approaches for companies that sell SaaS solutions to small businesses (SMBs): horizontal SaaS and vertical SaaS.
In contrast to horizontal SaaS solutions that solve a functional business problem (e.g. customer relationship management, email newsletter software, invoicing software, etc.), vertical SaaS solutions provide a full software stack for a particular industry. The approach of these vertical SaaS platforms is to integrate all the tools required to run a business in a specific industry (e.g. dentistry, real estate, etc.) into a single solution that an SMB can get from a single provider.
Small businesses know that having a robust, fully-functional website is critical to their success. Accordingly, forward-thinking SaaS providers are now offering SMB websites integrated with their vertical SaaS offerings.
This approach is gaining traction in the SaaS industry. For example, Duda, an industry-leading website builder platform, has partnered with many high-growth vertical SaaS platforms and helped them increase the value of their offerings by providing modern, conversion-driving websites at scale.
How SaaS platforms increase the value of their vertical solution
Verticalicalization is the way to go for SaaS companies that want to grow and scale.
In the article “Why I Am Long Vertical SaaS,” investor Brendan Wales from e.ventures showed that a typical SaaS company might start with the basics for their industry like CRM, workflow, communication and related capabilities, and include more breadth to their solution over time, such as websites, HR, finance, payroll, and other functions.
The reason for this vertical expansion is a practical one. Every new useful capability that a vertical SaaS provider adds increases the value of their solution to their customers. In simple terms, this means they can charge more per month, resulting in a higher Average Customer Value (ACV) over time.
Chart data source: Why I Am Long Vertical SaaS
A more complete solution increases the stickiness of a SaaS platform and can help decrease the likelihood of an SMB churning and going to a competitor. Adding more relevant products, including websites, to the SaaS stack can improve retention of those SMB customers. Vendasta found that “selling an SMB one product has a retention rate of only 30% after two years. Selling that SMB just one more product showed an increased retention rate of nearly 20%, while selling an SMB four products shows a retention rate of 80%.”
One notable high-performing SaaS solution focused on the property management industry is AppFolio, which selected Duda as their integrated website builder. At the time of their IPO, AppFolio was able to charge an average of about $5000 per year per account. However, after a few years of adding additional capabilities to their solution and building out their vertical SaaS stack, they were able to increase that number substantially. Today, their average account spends about $13000 per year.
The importance of including websites in the vertical SaaS product stack
For small businesses, the website is often the first impression their customers get of their business. If their websites are out of date, not well designed, not mobile-friendly, not modern-looking, not fast, or not tuned for SEO, their prospective customers are likely to bounce and move on to the next option on their list.
SaaS platforms can help their SMB customers be more successful by providing those customers with a modern web presence. This increases the likelihood they will stick with the SaaS provider over time for a number of reasons, including:
- A great website helps a small business succeed by extending their reach and improving discoverability of the business. This increases the likelihood of the SMB continuing operations into the following year.
- A tight integration between the website and back office functions of the SaaS platform means that the SMB’s data only needs to be managed in one place.
- Offering an easy way to create a strong and well-designed web presence can lower overall churn rates and customer downgrades, since customers can clearly see the value that the SaaS provider is delivering.
- When a SaaS solution delivers more value, they may be able to charge more, increasing their average revenue per account.
- A beautiful website seamlessly integrated with a SaaS company’s core solution can increase engagement with that solution, be it a booking widget, CRM or any other tool.
- Websites are a foundational element of any marketing stack and can be a stepping stone for future upsells such as SEO, SEM, review management, accessibility etc.
What SaaS companies should look for in a website builder partner
No two SaaS companies work exactly the same way, but when integrating and deploying a new product, all of them benefit from going to market quickly with a viable solution.
Duda has proven that its intense focus on creating a professional website builder designed for integration with SaaS platforms pays dividends for its customers. This is also why Duda has invested heavily in creating a well-documented, robust and highly flexible API, along with advanced tools that can address a wide range of use cases.
For example, let’s look at Duda’s integration with AppFolio.
Before Duda, AppFolio used WordPress Multisite to create property listings pages with structured data maintained in customer accounts on their platform. After creating their own solution based on WordPress, AppFolio realized they could reduce the security and scalability pains they had encountered with that approach by migrating to a professional website builder platform that offered an architecture designed for the SaaS integration use case.
AppFolio leverages Duda’s Dynamic Pages feature and flexible API in the integration, and programmatically generates websites using attractive, industry-specific website templates. Now, AppFolio can ensure its customer websites always have up-to-date listings data synced from their system of record. They also found that powering their websites with Duda provides other advantages as well, such as reducing the amount of time it takes to build custom websites for their customers.
In addition to bolstering business results, SaaS platforms also may be able to increase end-user engagement with their core technologies by tightly integrating a website offering into their solution.
For example, Duda has partnered with some of the premier players in the tourism and hospitality industry. Prior to offering their own integrated website solution, one of these travel-industry SaaS platforms offered an online booking capability that was provided to hotel and tour operators via an HTML embed that had to be manually added to third-party websites.
The problem was this: the platform had no way to control whether or not the tour operator sites featuring their booking engine looked good or encouraged prompt customer engagement with their booking solution. After white-labeling Duda and launching their own, custom-branded website solution that natively integrates their core technology, this organization now offers beautiful, fully functional sites that are integrated with their booking solution by default. This makes it easier for hoteliers and tour providers to manage, and benefit from, their online presence.
Adding a website builder solution to a vertical SaaS platform makes sense
For SaaS platforms looking for ways to increase their average revenue per account, expanding their offering by adding new capabilities is a logical choice. And for vertical SaaS platforms that sell to SMBs, expanding their offerings by partnering with Duda is a strategy worth exploring.
If you’re a vertical SaaS platform provider interested in learning even more about how Duda might fit with your solution, you can learn more here.
G2, a ratings and reviews analyst site that ranks software using real customer reviews, in 2020 ranked the Duda professional website builder as the:
– #1 professional website builder for “Best Results”
– #1 professional website builder for being “Most Implementable”
– The “Easiest to do business with” for Mid-Market and Enterprise website builder customers