How to Stand Out in Your Category: Buyer Insights for HR Software

Why buyers search for new HR software

According to our data, there are three main reasons businesses become dissatisfied with their current HR tool and search for new software: inefficiency (34%), insufficient functionality (29%), and unreliability (13%).

In fact, these problems are interconnected. For example, if your HR software doesn't offer digital onboarding forms or electronic signatures, new hires may need to complete paperwork manually, which can be less efficient and lead to errors such as data discrepancies in employee records or payroll mistakes. This can cause significant disruptions to HR operations and erode users' trust in the system prompting them to seek a more reliable HR solution.

→ Pro tip

Ensure your sales team can gather specific requirements from prospects and offer product demonstrations tailored to their unique needs.

Remember, while a free trial is designed to provide actual product use and experience, demos are best suited to highlight use cases.

HR software features buyers value most

When we asked software buyers what functionalities they were looking for to manage their business’s core HR needs, a specific set of five core HR features emerged as crucial, especially for healthcare, manufacturing, nonprofits, construction, and software industries.

Our research backed by advisor interactions indicates that almost half of the buyers (45%) typically request the following HR applications: personnel tracking, time and attendance, payroll, onboarding, and applicant tracking.

The importance of these core HR functionalities is validated by reviews. Feedback from actual software users highlights that these features improve overall HR management efficiency and drive organizational success.

Business size impacts the decision for standalone or integrated system

According to our conversations with buyers, businesses are faced with a major dilemma when purchasing HR software. Do they combine all of their needs in one integrated suite, or do they separate them and use various standalone systems from different software providers?

Our data shows that about half of buyers (54%) prefer integrated HR software suites, which provide seamless data flow between applications and are more cost-effective. On the other hand, almost half (46%) opt for standalone tools to adopt specific HR functions and to benefit from more customization. 

The preference for suite versus standalone tools can be influenced by many factors, such as budget constraints, organizational complexity, and specific HR needs. However, business size stands out as highly correlated with the decision. 

Small businesses with limited financial resources usually favor standalone solutions with basic functionality. At the same time, large companies with bigger budgets might also prefer standalone software that offers specialized HR features. These enterprises may have already invested in comprehensive HR software suites and may choose to fill any functionality gaps with separate tools that can be integrated with their existing HR tech stack.

In contrast, midsize businesses seem to shift towards integrated solutions that offer a more holistic approach to HR management. These businesses have more complex needs than smaller companies and require more advanced HR functionalities. Integrated suites help them streamline processes, which is essential as they continue to grow and expand.

→ Pro tip

Assess the needs and characteristics of your target audience and position your solution accordingly. For buyers looking for basic functionality who don't require a robust suite, cost savings can be a strong selling point. However, users who accumulate many standalone tools may find themselves investing a lot of effort in data integration and reporting, and ultimately, spending more than they would have on one bundled solution. 

Make sure you understand the software buying team and adjust your messaging depending on the business size, budget constraints, and specific HR needs.

Typical buyer budgets range from $10 to $21 per employee, per month

The average HR software budget varies significantly depending on the industry and several factors such as organization size, number of users, and specific features required. However, the overall average budget businesses are willing to pay per user, per month is $15.

Companies in the software and technology space are willing to pay a higher cost for HR software with advanced functionality such as applicant tracking systems (ATS) to handle high volumes of job applications, automated screening processes, and integration with job boards or career websites. 

Also, due to the seasonal nature of work and the prevalence of contractual workers in the construction industry, companies are increasingly recognizing the value of HR software in tracking time and attendance and ensuring regulatory compliance.

The healthcare sector relies on HR software to manage employee records, ensure HIPAA compliance with healthcare regulations, and handle scheduling and time tracking for clinical staff. 

Additionally, industries with remote or mobile workforces such as maintenance and field service companies, often require HR software with employee self-service portals and mobile access. 

Ultimately, HR software budgets can vary significantly depending on the industry in question and the complex nature of their operations, and the need for cutting-edge solutions it requires.

→ Pro tip

When determining the pricing for your HR software, it's important to consider the industry in which your target buyers operate, as some industries may have more complex requirements that can drive up costs. To evaluate how your pricing stacks up against your competition, you can use Capterra's HR software pricing guide.

Rise above your competition with strategic insights

HR software marketers face enormous pressure to set their product apart from competition in a crowded marketplace. But with the right insights, you can better understand the key priorities and pain points of your target audience and address them directly in your product messaging to claim your fair share of buyer attention.

With more than 9 million active software buyers on our sites every month, Gartner Digital Markets can equip you with the strategic insights you need to level up your marketing strategy and become a leader in your category.

Get access to top-quality software buyer data with our intent data services and gather the intelligence that will boost your conversion rates.

Caroline Hogan

Caroline Hogan is the Senior Director of Vendor Marketing at Gartner Digital Markets, where she manages the marketing strategy for the vendor platform. She has more than 20 years of marketing experience, leading initiatives from brand strategy and demand generation to customer retention and advocacy. Connect with Caroline on LinkedIn.

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Methodology and buyer demographics

Software buyers analysis 

Findings are based on data from conversations that our advisor team has daily with software buyers seeking guidance on purchase decisions. The data used to create this report is based on interactions with small-to-midsize businesses seeking HR tools. For this report, we analyzed approximately 6,700 phone interactions from March 2022 to February 2023.

The findings of this report represent buyers who contacted Gartner Digital Markets and may not be indicative of the market as a whole. Data points are rounded to the nearest whole number.

The buyers we interacted with are largely small businesses representing a growing majority of HR software purchases. Below you’ll find the demographics of the buyers so you can see the size and type of businesses, from annual revenue to industry.