Vertical SaaS vs Horizontal SaaS: What is the Difference?

Vertical SaaS (Software-as-a-Service) is a cloud computing solution that focuses on a particular industry or area of interest as a targeted vertical (e.g., the retail, automotive, or insurance industry). With the favored trend of digitization of many, if not all, industries, increasingly vertical SaaS solutions goal specific industries and aim to resolve problems related to that vertical. 

While vertical SaaS has a smaller size of potential market and users, the proven fact that it targets a particular area of interest normally means such an answer will solve a particular problem in probably the most effective way. A few of these vertical SaaS solutions are, actually, developed by individuals from the precise industry they aim.

Horizontal SaaS is, however, a cloud computing solution that targets a large audience and different industries as their users. While providing solutions for a wide range of niches, horizontal SaaS solutions are universal and give attention to meeting business requirements normally, comparable to internal company communication – to say only one example – whatever the industry.

Vertical and Horizontal SaaS differ in several features, including the scope of targeted industries and market size. Moreover, your approach to customer acquisition and retention can even differ depending on whether you run a horizontal or a vertical SaaS. Let’s explore a few of these differences.

Vertical and horizontal SaaS solutions differ within the scope of their targeted industries and market size. Vertical SaaS caters to the demands of a particular group in a particular industry, while horizontal SaaS has a really diverse client base and provides solutions to a much greater audience of possible users. Moreover, they have a tendency to have a drastically different approach to marketing and user acquisition and retention efforts.

Horizontal SaaS solutions face stiff competition, as they aim a wide range of industries and must put in quite a lot of effort to distinguish themselves from the competition and stand out as one of the best solution amongst many which might be offered. Clients can easily compare their software to quite a few other solutions and switch to a greater or cheaper option, should they find it. 

Then again, by specializing in a particular industry or area of interest, vertical SaaS solutions face less competition and reach their clients more easily. With fewer alternatives to their solutions, there’s, naturally, less competition in user acquisition. Vertical SaaS solutions not only acquire users more easily but retain them as well – users of vertical SaaS solutions are likely to keep on with the software they use and are conversant in. 

A few of the common examples of vertical SaaS solutions are Health Assurance Plan, software developed for dental employees, and Guideware, which was developed for insurance firms. A few of the common examples of horizontal SaaS are QuickBooks, software used for accounting, Slack, a robust communications platform, and Salesforce, one of the vital widely-used CRMs (customer relationship management software).

Before you select whether it is best to scale your SaaS product vertically or horizontally, there are some key questions you have to ask:

• Primarily, what sort of SaaS product do you offer, and how much problems do you plan to resolve with it?
• Is it a product that shall be utilized by a large audience and in numerous industries, or does your SaaS product aim at a particular area of interest?
• Is there any competition you may face, and the way do you intend to distinguish your SaaS product from those?

Answers to those questions will certainly enable you resolve how one can scale your SaaS product and give you guidelines on how one can approach the scaling process, each from the marketing and the user acquisition and retention perspectives.

“Should Your SaaS Scale Vertically or Horizontally?”

Some SaaS hacks exist for growing your organization and helping your SaaS business scale.

Listed here are some additional aspects it is best to take into accounts before deciding whether to scale your SaaS solution vertically or horizontally:

• Marketing Efforts: What’s your targeted audience and the way do you intend to perform your marketing strategy? How do you intend to present your SaaS product to your potential user audience?

  You need to remember that your marketing strategy will differ depending on whether you should scale your corporation horizontally or vertically, and you could make sure that you’re properly staffed with marketing and sales experts before starting your scaling process and attracting recent users to your product. If you should scale vertically and goal a particular industry, it can be crucial that your marketing and sales staff is closely conversant in the industry and the issues your users might face. Your potential customers will feel that they’re “in secure hands” once they recognize experts within the industry amongst your staff, and it can be a lot easier to persuade them that your solution is the one they need to pick.

• Differentiating Factor: In the event you are facing competition to your SaaS product, how do you intend to face out and present your solution as a greater option? What are your selling points that can show your clients they need to select your product over one other, similar solution? 

  If you’ve a powerful differentiating factor, scaling vertically shall be a lot easier for you. Solve a particular issue in a certain industry in a clever and modern way, and the potential user base will recognize it. This can require strong marketing and sales teams that can get your message across and speak to your future clients.

• Team observations: Do you’ve a powerful and knowledgeable team that may enable you scale your corporation? Are your developers able to implementing your solution and ensuring it really works flawlessly? Do you’ve enough team resources to maintain up with the growing user base, which is able to inevitably occur once you begin scaling your corporation?

  These questions are crucial, no matter the way you scale your corporation, as your team will put in marketing and developing efforts and onboard your customers in the style needed for your corporation to succeed. And not using a strong team, it can be difficult for your corporation to achieve its highest potential. 

• Customer Support and Success: When you acquire your customers and so they are using your SaaS product, how will you ensure they get all of the support they need? Do you’ve enough experts and budget to offer stellar support to your customers? How are you going to help your customers grow their businesses? 

  In the event you may help your clients utilize your product along the best way, it can bring great advantages to each your and your customers alike. (In the event you plan to scale your SaaS product vertically, it is best to remember that your customers might need very specific needs and face problems which might be unique to their industry – and you could make sure that your strategy and support help them tackle those specific needs.)

• Customer Success: Good customer support can even cement your user retention – customers which might be using a very good product with good support are likely to keep on with that solution. This especially applies to vertical scaling. Offer a useful solution to a particular problem, and your customers will likely write good reviews that can attract potential future clients. The query of “how can I help my customers achieve success of their business using my product?” is critical, as your success relies on your customers’ success.

As presented within the points above, there are a lot of aspects it is best to take into accounts before deciding whether you’re able to scale your SaaS company horizontally or vertically. Scaling vertically normally tends to offer higher results, as you’re targeting a particular industry and the issues it faces. And if you’ve a powerful solution, the industry will recognize it – but make sure that you answer the entire questions presented above and have a solid plan before putting it in motion. 

SaaS is only one cloud computing model that can enable you construct and scale your corporation. Read in regards to the other cloud computing models in our article, “IaaS, PaaS, and SaaS.”

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Another advantages of VMware Private Cloud solution at Liquid Web are fast, 10 Gb networking, high-performance NetApp San Storage, free DDoS protection, integrated backups, firewall, and more. 

So with a view to scale your infrastructure in a cost-effective and secure way, take a more in-depth take a look at the Private Cloud solution.