How to Win in Intensely Competitive B2B SaaS Markets

15 min readNov 16, 2022

For most B2B SaaS companies, winning in crowded markets is a key area to focus on. The playbooks will vary depending on the context, and your position in the market. This article aims to outline some of the strategic decisions that need to be made as well as some tactics you can test in your particular category.

Cool illustration rather than a bog standard stock image.

Context

For anyone working in B2B SaaS, a typical context is being faced with intense competition with most software categories increasingly consisting of saturated markets. The reasons for this are numerous, and include:

Access to Capital — VC cash has flooded into B2B SaaS, largely due to the attractive unit economics of SaaS business models as they scale, and the depressed interest rates in major markets (reducing the appeal of other asset classes).
Lower Startup Costs — the cost of building a Minimum Viable Product (MVP) is a lot lower than it has ever been and the upside gains can be significant.
Ability to Learn from Incumbents — most software applications are easy to study and replicate, and review sites like G2 and Capterra help you to assess competitor strengths and weaknesses, signposting where you need to focus on from a positioning perspective.
Lower Barriers to Entry — The cost structure means upfront fixed costs are not significant and costs can scale with growth, and the sector lacks the artificial protection other industries benefit from (patents, membership credentials).
Large Addressable Markets — A key attraction for many B2B SaaS companies is that the Total Addressable Market (TAM) can be significant and is often accessible from Day 1.

Where once a “Michael Porter” analysis of the industry attractiveness (using his Five Forces model) would likely put off newcomers to many B2B SaaS markets, the risk-reward tradeoff ensures that regardless of the competition levels B2B SaaS markets continue to attract new entrants. Over time, these factors (and others) help explain why B2B SaaS categories eventually converge into a market structure of intense competition. What is also noticeable is that the category can reach saturation in a pretty short time frame (when compared to historical industries).

Why Does Your B2B SaaS Market Lack Competition?

If you find yourself in a B2B SaaS category not yet subject to intense competition some of the following conditions likely apply:

It is a market with a small ‘current’ Total Addressable Market (TAM)
It is a market with weak ‘current’ demand
In a market with unattractive unit economics e.g. high cost of acquisition relative to Life Time Value, high churn rates due to ad hoc usage, geographic limitations etc
You have some valuable IP (true innovation)
You have spotted an opportunity for a “vertical saas” play i.e. you are positioning a SaaS offering for a narrow niche.
You are early, in an emergent market where you are the “category creator”.

NB creating a category is not for the faint-hearted — it costs a lot of money so is best suited to heavily VC-backed startups, as you need to invest a lot of money in education.

Most SaaS markets are thus very much ripe for growth, however, patience is needed as the timelines for most exits are over 10 years.

Assessing which of the above conditions apply to your market is a key exercise to undertake, married with an assessment as to whether the assumptions you are making about the future likely trajectory of the market can be supported by leading indicators as evidence. After all, the journey for all B2B SaaS startups starts small.

It is also worth pointing out that those not following the “VC-backed playbook” may be perfectly content with serving a small market where they can still make a decent living, while also building in optionality if the market takes off.

The Context for Crowded B2B SaaS Markets

The following are some of the elements to be aware of if you are operating in a competitive market.

1. Buyers Can Get Overwhelmed by Choice

It will be hard for buyers to navigate (buyers may opt to retain the status quo if faced with too many options i.e. The Paradox of Choice). Or they may simply default to the category leader.

2. Positioning and Messaging Become Key

You thus want to ensure you offer clear messaging as to why you are different.

An often-overlooked element of website design is website copy. Using a specialist B2B SaaS copywriter like Rachael Pilcher, Josh Garofola or Helen Peatfield can ensure your messaging resonates and that your solution is well-positioned.

You need to consider the basis on which you will compete (Porter Generic Strategies).

Are you going to compete on price, and provide a significantly differentiated offering or are you going to focus on a specific niche?

“Clear positioning helps us clearly communicate where we win and why. We need this internally to focus marketing and sales and we need that externally so we can craft a story that helps our best-fit customers understand that and choose us.” April Dunford

3. Features Tend to Converge Over Time

Feature differentials get eroded over time i.e. competitors aggressively copy valuable features. A feature race is pretty much a zero-sum competition. It is thus best to avoid competing solely on features.

4. As Markets Mature Incumbents Usually Move Up Market

Another characteristic typical of maturing markets is that VC-backed players often look to cede less profitable parts of the market as they seek to move upmarket and to increase their unit economics i.e. increase Annual Contract Value (ACV) and LifeTime Value (LTV).

As bigger SaaS companies cross $100m in ARR, and then $1B in ARR, they stop focusing on smaller niches. They might give up on SMBs, or freemium, or higher churn segments. But you might be able to do well there. Jason Lemkin, SaaStr

5. The Cost of Acquisition for Paid Channels Can be Uneconomical

Understanding the financial standing of competitors is important when assessing what strategy to follow. For some (often those companies backed by US Venture Capitalists) the attraction is the “winner takes all” characteristics of many of these markets.

They believe the lion’s share of the prize goes to the category leader and thus tend to invest heavily to secure this position. Competition with players pursuing such a strategy can be difficult as they’ll invariably have deep pockets and they will usually take a long-term perspective so they’ll happily incur losses in the short term.

For more modestly founded European competitors it is wise to avoid competing too heavily in head-to-head channels like paid acquisition (Google) as the cost of acquisition can get too high where market pricing occurs.

Others play the infinite game (Simon Sinek) believing that there is room for numerous actors, and rather than worry about “market share” they will happily focus on more manageable growth.

“Basecamp has been profitable since day one, and we are profitable to the tune of many millions of dollars every year. I think part of that is that is not why we are in it; we are not chasing becoming a billion-dollar company thinking all our hopes and dreams will be fulfilled. No, we have perhaps simpler goals and simpler KPIs. Run a kind company, one that is reasonable to employees and to customers, and that often is incompatible with the steepest growth curve. Most of what’s called growth hacking today is seriously unsavoriness, dark patterns, and greasy marketing approaches. We wanted none of that. For example, we declare Basecamp to be a Facebook free business. We don’t have a presence on Facebook, WhatsApp, and we don’t buy advertisements with any of those platforms.
David Heinemeier Hansson

In short, knowing the broader market context can thus help shape your plan for winning.

Preparing to Win in Crowded Markets

Before we look at specific actions there are a few things to think about first.

1. Your SaaS Application Needs to Offer Value to an Individual as well as to a Company

Offering a compelling value proposition is key in B2B SaaS. Given the need for the buyer to invest time in learning a new (behaviour) application and then committing to using an application (which means not doing something else) the value created has to be significant. It is important to differentiate here between the value to the company the individual works for as well as their unique requirements. Employee resistance can inhibit adoption so ensuring they are gaining value from the solution is also paramount. As Tom Tunguz argues convincingly, B2B Salespeople are in the business of “selling promotions”.

Ultimately, software is purchased by an individual on behalf of a corporation. Behind the logo on the lead list is a person. That champion stakes some part of their reputation on the investment they beseech the company to make.
Successful salespeople sell promotions. They articulate a value proposition to the potential buyer that aligns the incentives of the buyer with a value proposition offered by the startup’s product. This tactic has the additional benefit of creating urgency within the prospect. Who doesn’t want to be promoted faster?

2. You Need to Offer A Compelling Solution in a Clearly Defined Category

Crowded markets tend to be mature and thus the existence of substitutes means inferior solutions simply won’t cut it. Defining your category is an important element of the process. Some maturer markets begin to splinter as innovations take hold. An appropriate strategy is identifying your best fit category and then ensuring you are well-positioned in a significant segment (ideally one that is not being well-served) or pursuing a vertical SaaS strategy.

3. Think About “New to Market” Sales Differently to Switchers

When looking at new client acquisition strategies it is important to create separate playbooks based on the client’s current status.

Are the target prospects “new to the category” and looking to move away from manual processes or Excel-based approaches or are they switching from an incumbent (if they are switching it is important to surface the motivations behind the switch)?

So what tactics should you embrace to win in competitive markets?

How to Win in Crowded Markets?

Winning in crowded markets consists of a mix of strategic decisions that are taken followed by tactical elements you need to execute. Decisions need to also be taken in the context of the wider market context including the competition (or more likely the amounts the competition has raised) as well as your own context (resources in terms of team size and budget) as well as the strategic vision for the company (often linked to historic fundraising). Finally, if there is a category king i.e. dominant brand synonymous with the category, it is important to choose a strategic option that enables you to compete more effectively.

“Just because a market looks crowded, does not mean you cannot build a viable business upon it or even disrupt it with a new vision and broader ambitions… Competition offers validation, usually means strong demand and is easier to beat than non-adoption. In that sense, competition maximizes your chances of making something people want.” Thibaud Clement

Strong Positioning — Differentiation (Strategic)

A key part of the thinking needs to be how you plan to position your SaaS offering. You need to answer questions like:

Why are we different?
Where do we win?
Why do we win?

Knowing the answers to these helps shape a strategy that helps you create a clear position in the mind of the prospect as they look to evaluate their options. Messaging this clearly on your website helps ensure site visitors can quickly evaluate if they are the intended target or not.

Product differentiation is a marketing and messaging strategy that uses your product’s characteristics to distinguish it from others that are vying for your audience’s attention and dollars. Sometimes referred to as the USP — Unique Selling Proposition — product differentiation helps create a competitive advantage by targeting a specific audience segment with a clear and persuasive message about how your product is truly different from (and superior to) anything else that’s available. Kyle Poyar

Convertkit is an example of a B2B SaaS startup that entered a crowded market and crafted a position by focusing primarily on creators as their primary market helping them to position themselves successfully against Mailchimp.

2. Brand Leadership (Strategic)

With an investment in your brand, you are trying to ensure that you are featuring as part of the consideration set or shortlist either as the category leader or number 2. To achieve this you will have had sufficient investment to invest in ‘the brand’ which is more common for B2C than SaaS B2B. Many pre-Series C SaaS companies focus more on lead generation or demand generation activities than brand awareness and it is a more suitable strategy for well-resourced companies playing the long game.

Monday is a great example of a B2B SaaS company pursuing this strategy. They were previously called dapulse, raised $50M in Series C funding back in 2018 and used this to fuel a rebrand and aggressive sales and marketing engine which was happy to acquire logos at a loss to grab market share in a very crowded CRM market.

“ The company that develops the greatest of customer relationships in the first few years is often the winner….The first company to reach a prospect frames the buyer’s lens for a long time. The features that matter, the price point and pricing model, insufficiencies in competitors’ offerings. Each subsequent bidder for the business must either conform to that mental model and spar for position within its confines, or exert enough energy and spend enough money to challenge and subvert the first framing. That’s a tall order, and exactly the position a startup should wish upon its competitors.
I’ve watched buyers in new categories. They prefer the best-known brand, the one synonymous with the category. They will work with the leader for a few years before deciding to re-evaluate if things aren’t going well, justifying a change with the attitude: “I’m working with the leader in a new category, let’s see how things evolve.” Tom Tunguz

3. Geographic Focus: US v Europe (Strategic)

For some prospects, it may be that certain aspects of your solution are more important in the purchase decision than you may have initially thought.

Some prospects may be concerned about where data resides i.e. which geographies your servers are located in (some clients want data to reside in the UK or EU)
Others want support available “in person” in the same time zone
Others may need seamless API access to popular local solutions (or domestic banks)

There are also opportunities where English is not a first language and some companies craft successful strategies focusing on the DACH region for example, although it does limit the addressable market significantly.

4. Product Lead Growth (Strategic)

Product lead growth (PLG) is another popular strategy for SaaS companies and refers to a situation where the product itself is the primary driver of customer acquisition, conversion, and retention.

“Companies with a PLG strategy — think Slack, Calendly, and Dropbox — are able to grow faster and more efficiently by leveraging their products to create a pipeline of active users who are then converted into paying customers. Although it’s rightfully associated with viral, freemium, bottom-up distribution, product-led growth is more than a simple go-to-market formula. Any company — even those selling to large enterprises or operating in niche vertical markets — can adopt PLG principles to improve user experiences and increase go-to-market efficiency. And they should: Product-led growth isn’t going away any time soon.” Open View Partners

The challenge with a product lead approach is that incremental innovation is unlikely to be sufficient to generate a significant source of competitive advantage. One of the key characteristics of B2B SaaS is that it is generally easy for others to copy features that competitors have built and are viewed as being valuable. However, there are always product decisions that can help you stand out.

Perhaps the incumbent is 10+ years old and you can build on a more modern stack
You may invest more heavily in UI/UX and your offering is demonstrably easier to use
You may take different views as to how your offering is used (mobile first or desktop).

5. Vertical SaaS — Pick a Viable Niche (Strategic)

As markets mature certain verticals may represent key niches that become significant in their own right. Selecting a growing vertical where you have some unfair advantage (perhaps domain knowledge or existing relationships) means you can own a niche as your larger competitors will likely look to stay broad. Vertical SaaS is emerging as an increasingly credible route for companies, however, it is not suitable for those seeking ‘global dominance’ or category leadership.

“Competing with every other invoicing company for the same ads, organic search rankings and press mentions is time-consuming and expensive. Especially when many companies building invoicing software are massive enterprises with millions in the bank. This is not a good situation for a tiny outfit looking to get noticed by “every small business that needs to invoice clients.” Luckily, focusing on a smaller niche like “businesses that need to invoice clients and have an in-house .NET developer” is surprisingly more effective. The market isn’t as large, but the marketing channels are available and affordable, and in a vertical niche word of mouth gets around quickly. Pursuing a vertical niche has been a cornerstone of the success of DotNetInvoice. Rob Walling

6. Target Segments Ceded by the Market Leader

As markets mature and attract a lot of investment, VC-backed companies tend to move upstream as the board pressurises them to increase their Average Contract Values (ACV) and to drop commercially unattractive segments. A credible strategy for follow-on entrants is to target the segments that are low margin for the leaders with aspirations for growth through increased wallet share. Once you have established a viable foothold you can then look to expand into an ever-increasing segment which may be attractive to you given your unit economics, but may be less attractive to the larger players who are doubling down on serving the enterprise end of the market. The bigger players will struggle to drive B2B SaaS growth at the end of the market where you are carving out a beachhead.

In short, there are several strategic decisions that can be taken to help B2B SaaS startups win significant market share.

Winning Tactics

So what are some of the tactical activities you can take to help you win?

Target Branded Search of Competitors (Tactical)

Competing on branded search is common for those in intensely competitive markets, after all, branded searches are what bring the bulk of organic traffic to websites. So well-known brands can be targeted via Google Ads.

The below example is Asana competing on a branded search for Wrike, one of their competitors.

This tactic is best utilised if

a) you have deep pockets, and

b) if the evidence on review sites indicates that your solution is a better choice than the brand you are bidding on.

2. Double Down on Independent Review Sites (Tactical)

For mature categories, many customers will look for solutions that are category leaders in a Gartner Magic Quadrant or have favourable reviews on a site like Get App, G2 or Capterra.

These sites are popular for those with high purchase intent (as they are evaluating their options). Baking in a strong focus on reviews from satisfied customers needs to be a key tactic as your numbers grow. In some instances incentivising responses via charitable donations for reviews is worthwhile if you are struggling to gain decent volumes from customer success outreach.

3. Word of Mouth (Tactical)

When faced with an array of seemingly similar options and choice feels overwhelming it is likely that Word of Mouth referrals will increasingly come into play. However, this is not a lever you can easily deploy as a tactic. Word of mouth will typically favour the category leader, but all participants can benefit from it when the value proposition is strong.

4. Battlecards (Tactical)

Sales Development Reps (SDRs) and Account Execs (AEs) should be equipped with Battlecards covering all major competitors and positioning all relative to each other. These should fit on one page and outline things like areas where the competition is weak, pricing information and positioning information.

The aim is to have aide memoirs to hand that can enable you to help the buyer navigate the category rather than to talk down on competitors. Like all information, it can be used selectively to help influence the purchase decision in your favour.

“Clear positioning partitions out a market so you can clearly communicate who should choose you and why. It lays out: “We’re the best at delivering value X, for customer A. There are other ways to solve this problem — but they are for customer B who wants value Y.” April Dunford

5. Run Switcher Campaigns (Tactical)

With some categories, it is possible to run switcher campaigns. This is an enticement to switch someone from their current provider to you. Offering a concierge migration to overcome inertia and to “derisk the move” is worth considering. Again it will depend on the SaaS category as to how likely this route is. A basic assessment of switching costs incl training costs and data portability will help you assess how realistic this approach is.

Summary

About the Author

Alan Gleeson is the CEO and Co-Founder of Contento, a B2B SaaS content platform that helps B2B and SaaS companies scale via a best-of-breed website.

He was formerly a B2B SaaS Consultant focused on strategic marketing and helps fast-growing B2B SaaS startups optimise their sales and marketing functions.

Follow Alan

Twitter: @alangleeson

Linkedin: Alan Gleeson

Medium: @alangleeson

Website: www.contento.io

About Contento

Contento is a B2B SaaS content platform that powers leading B2B SaaS companies looking to scale based on a best-of-breed website.

Recommended Resources

How to Win Business From Your SaaS Competitors ? (Alan Gleeson)

7 Proven Strategies to Win Customers from Your B2B SaaS Competitors (Alan Gleeson)

How B2B Companies Need to Win in Mature, Crowded Categories (Peep Laja)

Product Differentiation: A Guide to Standing Out (Shannon Curran)