Over half of companies are planning to replace, modify or right-size software more frequently this year compared to 2023. This is a sign that budgets may be opening up again after a more conservative year, but what’s driving these investments?
To understand the state of software buying, Gartner Digital Markets surveyed nearly 2,500 decision makers at companies of all sizes across multiple countries and industries to identify the organizational challenges, macroeconomic factors and triggers driving software purchases.
3 Buyer Priorities to Know in 2024
- Buyers are placing a greater emphasis on pricing.
- Buyers want expanding product functionality and AI.
- Buyers are prioritizing IT security.
Findings from our survey emphasize three key buyer priorities most likely to impact software purchases this year: cost control, utilization of emerging technology such as artificial intelligence (AI) to enhance efficiency and mitigation of security vulnerabilities. Let’s explore how SaaS leaders can leverage buyer insights to transform these priorities into growth opportunities.
1. Buyers Are Placing a Greater Emphasis on Pricing
With many businesses facing leaner budgets, the price of software is a pivotal factor. Software price was voted the top factor buyers look for in new software, just above security.
The emphasis on cost is not surprising in an economic environment marked by uncertainty, and additional data points from our survey substantiate this claim. Nearly one-third (31 percent) of buyers plan to replace software because it costs too much, and 53 percent disqualified a provider from purchase consideration because the software price was not in line with their expectations.
Given the considerable emphasis on pricing, understanding the finance team’s role as part of the software buying committee is crucial for software sellers. The finance team is involved in software purchase decisions always or most of the time in 81 percent of organizations. This marks a significant shift from 2023, underscoring how important pricing has become in the buying conversation.
Providers should learn how to appeal to decision makers in finance roles so they understand the value of the software and how it can drive revenue growth and operational efficiency. To foster trust with prospects, SaaS providers should also be transparent about the price breakdown, including implementation, training and operating costs.
2. Buyers Want Expanding Product Functionality and AI
Once buyers purchase a product, the role of the seller is far from over. Retaining customers has always been the key to maintaining efficient growth, but how to do so has evolved.
Customers always want great experiences, and they want to get more out of the products they already have. A majority of software buyers are planning to upgrade software they recently purchased to gain more functionality in 2024.
What’s new is that buyers are looking to achieve an advantage from functionality upgrades with advances in technologies such as AI. This is the most influential external factor impacting business goals this year.
Almost every company we surveyed (92 percent) are considering investing in AI technology in 2024 to take advantage of efficiency and productivity benefits. This is an encouraging sign for SaaS providers offering AI-powered features and capabilities.
B2B software providers should showcase how their product and its features leverage AI to help buyers automate tasks and boost productivity to gain a competitive edge.
3. Buyers Are Prioritizing IT Security
When questioned about the top triggers influencing software investments in the last 12 months, our survey respondents ranked security and cyberattack concerns second, just below productivity improvements, with large enterprises expressing the most concern.
As technology becomes more complex, businesses require IT security tools to protect against financial, legal and reputational damage. Therefore, it’s no surprise that IT security software was the top recent software purchase among all respondents.
However, the importance of security goes beyond the need for IT security software. Buyers look for security credentials when purchasing any type of software. Buyers often selected security certifications, reputation or data privacy practices as the top reason they’d purchase certain products over others.
We recommend SaaS providers to start highlighting their security features — including encryption and enhanced authentication — in marketing materials and channels. This includes adding screenshots of security certifications across the product website and in email communications, as well as publicizing verified reviews gathered about the product’s security credentials.
How to Turn Buyer Insights Into Sales
Our survey results demonstrate the importance of understanding the needs of software buyers and how these insights can impact strategy. Although some factors, such as a buyer’s need for product security, are consistently important, new trends emerge each year shaping the software market.
There’s a simple way for software sellers to start turning insight into opportunity with their buyers. By establishing a customer review collection program, you can tap into feedback and discover insights to fine-tune your marketing messages, tailor sales talk tracks and inform your product roadmap, all of which give buyers the confidence they need to choose your product.
