To switch or not to switch, that’s the all-in-one vertical SaaS question

Embedded Partners
Build an all-in-one vertical SaaS platform.

To switch or not to switch, that’s the all-in-one vertical SaaS question

SMBs trust the SaaS application providers that know their business.

Here’s the conundrum: in our Embedded Payroll Research Report, 94% of the respondents are ‘very satisfied’ or ‘somewhat satisfied with their current payroll and HR solutions. However, 70% of respondents said they are ‘somewhat’ or ‘very likely to switch to new software” that offers all-in-one vertical SaaS solutions, including payroll, HR, and benefits providers.

So why are satisfied customers willing to take the time and expense to move to a new system of record that includes payroll? The emerging answer is that SMBs want to use all-in-one SaaS applications built specifically for their industry by experts in the vertical they support. In addition, they want to simplify their business processes with fewer platform providers, fewer invoices, and platform support from one provider to manage.

When we asked survey respondents from SMBs using vertical SaaS apps, they all leaned towards a common theme.

  • “Because they know the industry and know what my needs would be better.”
  • “I feel it would be tailored more to our needs and comply with industry standards and compliance.”
  • “Because I believe software that is created by people in my line of work will be most effective for my business.”

What does all-in-one mean for vertical SaaS platforms?

Opportunity. Essentially, vertical SaaS providers can grow revenue and retain customers by embedding fintech products like payroll to support their customers’ day-to-day operations. Because vertical SaaS companies serve their customer’s specific needs for their industries, it isn’t a giant leap for them to offer embedded services that keep their customers in their application.

Data shows that vertical SaaS companies that offer all-in-one solutions can outpace customer subscription spending with revenue from additional embedded services. 

Toast, a vertical SaaS app focused on the restaurant industry POS, is a great example. According to its S-1 released before its IPO, Toast’s revenue from financial services was more than nine times higher than its SaaS subscription revenue.

Toast doubled its attach rate in one year with embedded fintech.

Toast doubled its attach rate in one year by embedding financial services into
its customer workflow.

In numbers reported in Toast, Inc. (TOST) Q1 2022 Earnings Call, in 2021, they converted 15% of their 62k customers, roughly 9,300 customers, with approximately $18 million in ARR. And growth continued in 2022, doubling the attach rate to 30%, adding 500 new monthly payroll customers for approximately $20+ million in ARR.

Why is Toast so successful embedding fintech services like payroll? Because they understood that their core services hold a strategic position in their customers’ workflows and that they can add value to workflows by embedding financial services.

The path to success for embedding fintech in SaaS applications

As Gusto Embedded and other providers build their integrations with vertical SaaS apps in mind. We’ve learned a few things by speaking with leaders providing SaaS services to SMBs.

Familiarity breeds trust.

Many vertical SaaS platforms are already embedding other fintech services in their applications. Why? Because they understand how these services benefit their customers’ experience and keep them engaged with their application. And their customers are used to using these services.

“So as we bring more of these very powerful, embedded FinTech ideas to market, we can help our law firms better serve their clients.”

Jim McGinnis
President of AffiniPay and former MyCase CEO
Listen to The Massive Tech Shift Happening in the Legal Industry podcast

Embed versus build-from-scratch.

While many SaaS application providers have a “build” mindset, writing the code and integrations for embedded fintech services like payroll from the ground up is daunting. And keeping up with the ever-changing regulations and compliance changes is outside their wheelhouse. Embedding fintech is a faster path to growing your platform’s attach rate without the development and management overhead.

“There are two kinds of products in my view; the products that will help land customers, and the products that expand into customers.”

Henrique Dubugras
Brex’s Founder and Co-CEO
Listen to the Hard Choices, and Fintech Innovation at Scale podcast

Doing more with more.

Focusing on your core product is still a top priority, but a growth strategy to consider is adding embedding fintech services that increase revenue and LTV.

“I’d say the growth and the opportunity moving forward is going to be for more and more of these additional products and services, like benefits and payroll and tax compliance.”

Blake Adams
SVP at Bain Capital
Listen to the Embedded Finance: The New Big Revenue Driver podcast

Design and build a successful all-in-one vertical SaaS strategy with embedded fintech

While we can’t cover everything in this article about adding embedded fintech in your product, here are a few things to consider to kick off your planning process.


  • Work with a partner committed to helping hit revenue goals
  • Strengthens your value prop against the competition
  • Build an ROI model around embedded fintech products


  • Offer your customers an all-in-one environment within your app
  • Reduce churn and turn customers into advocates
  • Develop technical flexibility using customized UX and CX within your app


  • Ship new embedded features quickly and easily
  • Leverage new data sources in other parts of the product
  • Utilize APIs to solve new challenges

It all starts with your roadmap! By partnering with embedded fintech providers, you can build a sticky platform for your customers and lift the technical debt faced by the challenges of developing services on your own. Bottom line, if your roadmap doesn’t have an embedded fintech strategy, add it.

To learn more, join our free webinar Designing a truly unique payroll solution

Brian Busch Brian is currently Head of Marketing at Gusto Embedded; the only payroll API with 10 years of experience and actionable data behind it. Before joining Gusto, Brian held leadership positions at Cloud Elements, Kapost, and Captricity. He holds a BS in finance and a BA in philosophy from Boston College and an MBA from the Cal Berkeley Haas School of Business.
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