The SaaS app stores era

The growing importance of app marketplaces in the B2B landscape

Clement Vouillon
Point Nine Land


In the past couple of years, a growing number of B2B software companies have launched their marketplace / app store where users can find apps and plugins built by third-party developers. The godfather of these SaaS marketplaces is, obviously, Salesforce’s AppExchange which was launched back in 2005 (!). Since then many have followed. Of the twenty biggest public SaaS companies (by market cap), fourteen now offer an app store. And this trend is not limited to public companies: private companies such as Slack, Stripe or more recently Intercom also provide one to their users.

It seems that every SaaS company grows big enough until it develops its app marketplace.

Why is there an increasing number of SaaS app stores?

This rise of app stores is driven, in my opinion, by two trends.

Industry maturity: more and more established champions. We are in a phase where SaaS is not the “hot new thing” anymore. The SaaS landscape, in many software categories like Sales, Marketing, or HR, seems to have reached maturity and doesn’t evolve as fast as it used to. Big SaaS companies dominate many verticals (Salesforce, Zendesk, Workday, Hubspot) and have reached such a size and control such a market share that it will be hard for newcomers to disrupt them.

Now that they have established dominance, they need to solidify it and create new moats. A good way to do that is by launching a software marketplace. It enables them to provide value to their customers without developing too many products in-house, and it also creates network effect dynamics: a critical mass of users and third-party developers can lock the market even more.

Source: Salesforce earnings reports

Users’ consumption habits: a convenient model when dealing with too many apps. In 2018 there is no shortage of SaaS to choose from. Faced with this explosion of tools, customers privilege convenience. The app store model is relevant in that case as it is one that most people are used to (think of how you consume apps on your mobile). Many SaaS users have now settled with a bunch of main software (Google suite, Slack, Salesforce…) that they use as hubs to consume other apps.

Source: BetterCloud

Why does it matter for SaaS founders?

Product: building integrations to the major app stores becomes a must. A benchmark conducted by Profitwell showed that products with +4 integrations have 25–30% higher retention than products with no integration at all. In another survey conducted by BetterCloud, the respondents (IT professionals) placed “integrations” at the fourth position of the criteria they care about when purchasing a SaaS (behind cost, security, and Ease of use). It is crucial for SaaS founders to consider developing integrations with the major SaaS platforms early on.

Source: Profitwell & BetterCloud

Marketing & Sales: app stores are viable distribution/acquisition channels. In the current environment, several SaaS app stores have become significant distribution channels. To a point that many startups generate the majority of their revenue through these platforms (especially on AppExchange). This trend will definitely grow and cannot be ignored by SaaS founders.

Source: Shopify

How does it impact running a SaaS?

Product strategy. The increasing importance of SaaS apps stores directly impacts the product roadmap:

  • On which platforms are our customers? (if they are on any)
  • Is it crucial to offer them an integration?
  • What should this integration do (features)?
  • How should it look like (UI/UX)?
  • How should we build it?
  • How should we maintain it?

Go to market strategy. In a crowded SaaS landscape, building an integration / plugin can be a great way to:

  • Validate demand before building a standalone product.
  • Testing new lines of products.

HR / recruiting strategy. The different aspects mentioned above imply that new skills are required to build and market on these platforms. This is why there is an increasing demand for “Partnerships and API” roles on the:

  • technical side to build and maintain these integrations. For instance, there’s a big ecosystem of “integrators” who are specialized in building / maintaining AppExchange apps. There’s a real industry behind, and the skills required can be quite specific.
  • marketing side to promote and distribute the app properly on these platforms. As we’ll see in a subsequent post, many of these platforms offer co-marketing actions.

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