In 2022, KrASIA partnered with the Singapore Economic Development Board to develop and publish a report titled “Enterprise SaaS in Southeast Asia: Actionable Insights for Customer Acquisition & Retention.” This report serves as an essential resource for international SaaS companies aiming to expand into the Southeast Asian market, presenting actionable strategies for boosting customer acquisition and retention.
The report also includes case studies of several prominent companies, including DocuSign, Airwallex, WalkMe, Cyclone Robotics, Revolut, Nansen, Quincus, Lark, Advance.AI, and DataRobot. These case studies provide real-life examples of how companies have succeeded in Southeast Asia’s unique business environment.
The Rise of Southeast Asia’s Digital Economy: Opportunities for SaaS Providers
One of the key takeaways from the report is the significant opportunities available for SaaS providers across various sectors in Southeast Asia, with a total addressable market worth billions of dollars. Let’s take a closer look at the breakdown of the market by sector:
- E-commerce: USD 89.67 billion (2022)
- Industry 4.0: USD 4.1 billion (2022)
- Digital Payments: USD 195.8 billion (2022)
- Unified Customer Experience Management: USD 51 billion (2021)
- Logistics: USD 47.6 billion (2022)
- Cybersecurity: USD 4.3 billion (2022)
In addition, numerous countries prioritize “wallet-first” approaches, where electronic transactions, primarily through mobile payment apps, outpace all other payment methods. Two factors highlight the vast potential for SaaS providers in this area. A 2022 study revealed that 37% of organizations in the APAC region trail behind their peers in digital agility, and 92% of IT leaders in the region believe that businesses stand to lose over USD 7 million in revenue if they fail to implement digital transformation strategies.
The region’s digital economy is on an upward trajectory, projected to attain a gross merchandise value of USD 300 billion by 2025. Furthermore, Singapore is home to more than 43% of Southeast Asia’s unicorns, totaling 15 companies, demonstrating the nation’s prominent role in the region.
Elements of Successful Customer Acquisition and Retention in Southeast Asia
Based on interviews with 19 SaaS providers that already operate across the region, the following actions are necessary components for successful customer engagement:
- Offer a unique solution that is difficult to replace
- Bundle services through partnerships with local and multinational entities
- Foster word-of-mouth recognition
- Engage C-suite executives to map service against clients’ business goals
- Survey clients regularly and score customer satisfaction
- Enter new markets along with partners
- Continuous customer education adapted to local awareness levels
Essential Considerations for SaaS Providers in Southeast Asia
SaaS providers that intend to operate in Southeast Asia should be prepared to build a full-scale operation that includes direct sales, marketing, events, operations, internal logistics, and more. Trade agencies can offer some assistance with the initial steps, but SaaS companies must go the extra mile on their own by performing the following actions:
- Use Asia-specific case studies
- Utilize Tech@SG programme for talent acquisition
- Consider strict budget cycles in Southeast Asia
- Build partnership ecosystems with local entities
- Adapt messaging and storytelling to fit Southeast Asian expectations and understanding
Cultural Nuances of Southeast Asia’s Business Environment
Southeast Asia is located at the intersection of global trade routes and has a diverse population of various cultures and religions. As a result, these trade-oriented economies have developed their own distinct business etiquette that differs from that of North America or Europe. Here are some tips provided by Steve Dawson, the CEO and Founder of Asia Market Entry, a consulting firm that helps international software and technology companies expand into the Asia-Pacific market:
- Schedule regular executive visits
- Dress in accordance with the culture and occasion
- Account for linguistic differences
- Communicate through chat apps that are commonly used in the local community
- Be mindful of physical contact and after-meeting socializing arrangements
- Allow for informal meetings on a regular basis to build relationships
Singapore: The Gateway to Southeast Asia’s Lucrative Payments Market
In 2022, the e-commerce sector in Southeast Asia, a key indicator for the payments and fintech landscape, experienced a 16% growth, reaching USD 130 billion. This surge in transactions represents just a fraction of the expanding market for electronic payments. Looking at the wider context, B2B payments in the APAC region are anticipated to hit USD 1.4 trillion by 2025. Singapore, as a vital business hub, offers an excellent opportunity for SaaS payments providers to tap into this lucrative market.
Supply Chain, Logistics, and Industry 4.0
Manufacturing organizations in the APAC region are increasingly acknowledging the importance of integrating advanced solutions into their operations. In fact, 93% of these organizations perceive this transformation as “very” or “extremely” important for their long-term success. Alongside this growing awareness, 38% have indicated their intentions to increase investments in supply chain planning. This trend highlights the significance of Industry 4.0 and the increasing focus on supply chain and logistics within the region’s manufacturing sector.
Southeast Asia’s MSMEs: Opportunities and Challenges for Digitization and Growth
Businesses throughout Southeast Asia are experiencing rapid growth. In the aftermath of the pandemic, this expansion involves adopting hybrid work arrangements and embracing a higher level of digitization to ensure flexibility and adaptability in various contexts. The region boasts 95 million micro, small, and medium-sized enterprises, which collectively contribute up to USD 1.5 trillion annually to Southeast Asia’s GDP.
Artificial Intelligence, Machine Learning, and Cybersecurity
AI/ML technologies are playing a pivotal role in driving digital transformation across various industries. However, research indicates that 42% of Asia Pacific enterprises using AI tend to apply it to individual projects rather than incorporating it holistically. As businesses continue to automate workflows and adopt data analytics tools, there exists a significant opportunity for more comprehensive utilization of AI/ML technologies, especially in the realm of cybersecurity.
For further guidance on building a high-performing team in Singapore and Southeast Asia as a whole, consider referring to the EDB business guides titled: “Guide to Hiring Your Dream Tech Team in Singapore” and “Setting Up Your Tech Startup in Singapore.” Additionally, explore the answers to the top 5 questions that tech companies frequently ask when expanding their operations in Asia. These resources will provide valuable insights and support as you embark on your journey to establish and grow your business in the region.