What Is B2B SaaS?

B2B SaaS stands for “business to business software as a service.

Acronyms are confusing – and the term “B2B SaaS” is doubly so, because it’s made up of a pair of them. Let’s unpack each one so that you can have a clearer idea of the total term’s meaning. Then, we’ll break down a few key categories of the B2B SaaS industry while providing examples of B2B SaaS companies. By the end, you should have a clear understanding of the term.

Ready to get to the bottom of B2B SaaS? Let’s dive in.

What is B2B?

B2B, as noted above, stands for “business to business.”

The key distinction here is that, as Disruptive puts it, “B2B businesses sell products and services directly to other businesses. Or, more specifically, they sell to the decision makers in any particular business.”

A few examples of B2B businesses:

  • A commercial cleaning company that sells cleaning services to other businesses – not to individual homeowners.
  • Cintas, a company that sells corporate apparel (uniforms, etc.) to service businesses.
  • IBM, which sells technology products and services primarily to enterprise businesses.
  • Our company, New North, which sells marketing services to businesses, not to individual consumers.

B2B offerings tend to be sold at higher price points, because products and services are more complex to deliver and because businesses have higher budgets to spend. B2B offerings are often purchased by buying groups; there’s often a single decision-maker, but multiple stakeholders involved in the purchase.

This is contrasted against B2C (business to consumer) businesses, which sell products and services directly to end consumers – take Nike, Coke, or Airbnb as examples – typically at lower price points.

What is SaaS?

SaaS refers to “software as a service.” It’s best understood when contrasted against on-premise software deployments. In the past, companies might pay a one-time licensing fee to have software deployed to their on-premise systems. This wasn’t SaaS – it was just software.

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There are two key distinctions that make SaaS unique from the old model:

  1. SaaS is provided via the cloud. This means that the infrastructure and hardware needed for the software come baked into the offering; instead of having to accommodate software on-premise, companies that choose SaaS simply need to be able to access the internet.
  2. SaaS involves regular service. In other words, software that’s delivered as a service typically includes ongoing support and access to updates. For this reason, it’s most commonly sold as a subscription product.

These are the biggest points of distinction. For more nuance, this video is helpful:

What are common B2B SaaS categories?

I’ve found that its easiest to think of B2B SaaS as an industry composed of three main tiers. Those are:

Almost-B2C B2B SaaS

At one end of the industry are companies that act more like B2C companies than B2B companies. These software platforms are typically sold at low price points and marketed toward individuals (rather than buying groups). There isn’t really a sales team – marketing leads directly to the sale, usually through a self-guided free trial.

Examples of this tier include:

  • Slack
  • Google Business Suite
  • MailChimp
  • Zoom
  • Atlassian
  • SEMRush

Enterprise B2B SaaS

This type of company is more in the vein of traditional B2B. It’s built on high-price-point sales and it’s marketed toward buying groups. There’s usually custom set up involved, and there’s definitely a sales team. Marketing’s job is to make connections, not to drive home the sale.

Examples of this tier include:

Hybrid B2B SaaS

This type of company is somewhere between a standalone software offering (i.e. almost-B2C) and a customized solution (i.e. enterprise). They tend to be less established than the companies in the previous two tiers; they build and customize their software, but they want to move toward a platform that’s customizable by clients.

Examples of this tier include:

The bottom line is that B2B SaaS is a broad term, but categorizing companies into these three tiers will help you to make more sense of the market.

Want help with B2B SaaS marketing?

Hopefully, this article has given you a better handle on what B2B SaaS means and what the industry actually looks like.

Don’t be intimidated by the acronyms – at the end of the day, the business model is a pretty comprehensible one. In a world that’s increasingly on the cloud, and in businesses where predictable costs are preferred, B2B SaaS simply makes sense.

And if you’re working on growing your B2B SaaS business with marketing, let’s talk.

At New North, we understand B2B SaaS – we’ve helped B2B SaaS firms to build user bases, drive more sales, and grow using the right marketing channels.

Tired of marketing that does not get the results you need? Stop trying and  start doing. See How ››

If you’d like a free review of your current B2B SaaS marketing efforts – and a path forward based on expertise – get in touch with us today.

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