Leveraging Cloud Marketplaces for a strong Q4 close
It’s the fourth quarter for most of us in the software business. If you’re a software sales org, this is your Christmas, New Year’s Eve, and Superbowl all in one. Years will be made. Quotas will be exceeded. Commissions earned and earned again. All of which come with the requisite amount of stress, scrambling, and obsessing over every last deal and detail.
As we all look for angles and advantages, there is no better avenue to explore than leveraging Marketplaces to drive deals. To help ensure your year-end is full of joy (and success), we’ve compiled a list of Marketplace tips to land new deals and renewals. Those of you who have an offset fiscal calendar can still benefit from the tips below – just with less December-centric stress on your heads.
The budget flush
It’s no secret that companies are voting for the hyperscaler Cloud Providers with their wallets. Every year, organizations you are selling to are dedicating budget dollars to their Cloud Provider of choice, whether it’s AWS, Google Cloud, or Microsoft. An estimated $90 billion will be added to the total yearly cloud spend by the end of the year, according to IDC — the highest annual growth rate since 2018.
Just over 40% of surveyed buyers stated they have had an enterprise agreement—a committment to spend a certain amount of budget with a Cloud Provider over a specified amount of time—with at least one of the leading Cloud Providers for at least one year, according to Tackle’s 2022 State of Cloud Marketplaces Report.
That’s good news for you. Why? Because committed spend is generally “use it or lose it.” When companies commit $50M, $100M, or $200M to a Cloud Provider, there is rarely a concrete plan to consume all of those dollars. With many of these agreements expiring in Q4, there is often an excess of dollars left unspent. Purchases made through Cloud Marketplaces help to burn down committed spend, which means you can help your buyer meet their contractual obligations.
- PROTIP 1: Engage your prospect’s strategic sourcing group and find out if they have an EDP (Enterprise Discount Plan) with AWS, an EA (Enterprise Agreement) with Microsoft, or Google Commit with Google Cloud. If so, make sure they know buying your software can help to count against their spend.
- PROTIP 2: Register your Q4 opportunities with your Cloud Partner. Then you can work with your cloud counterparts (e.g. the rep who is selling to your prospect) to learn who their buyers are within your prospect’s organization. From there, you can target your burndown conversation at the person to whom it matters the most.
The diving save
If ARR is the lifeblood of a SaaS company, churn is its kryptonite. How about some churn insurance? This time of year, many renewals are due. Unfortunately, many happy customers find themselves unable to renew (or expand) your subscription because their budgets have been cut. Budgets shrink, we get it. You know what budgets continue to grow? Cloud budgets. In fact, 68% of buyers said they will increase investment in their cloud budgets in 2023, according to Tackle’s 2022 State of Cloud Marketplaces Report.
Learn more: Brace for Budget Tightening with Cloud Marketplaces
Have you asked your customers if their company has cloud budget with one of the hyperscalers? “What if we could shift this to your cloud bill, would that help?” Renewing your customers who are in danger of churning (because they lost budget or had budget cut) by bringing their renewal through a Cloud Marketplace can offer your buyer access to a different budget.
- PROTIP 3: Suggest landing your renewal on your customer’s cloud bill as a means to tap into an alternate budget.
- PROTIP 4: Leverage the same motion (renewal via Cloud Marketplace) to suggest expansion to customers who want to buy more of your software but don’t have the budget.
- PROTIP 5: Combine the Budget Flush with the Diving Save and suggest a multi-year deal (with expansion) to maximize your buyer’s spend with you and meet their cloud spend commitments.
Using Tackle Prospect, we can help you identify any customers who have previous purchase history with the Cloud Providers so you can target your conversations at those who are most likely to answer “yes.” Fun fact: Some of the larger deals we’ve seen happen in the Marketplaces are expansions of existing licenses (originally sourced directly) which move to cloud procurement because there is far more budget available there.
Top line, baby
One trend we are seeing as top Marketplace sellers really scale their business is extra attention on how Marketplace fees are accounted for. This also frequently comes up as a compensation discussion around keeping channel and Marketplace deals “comp neutral.” If you are closing a deal worth $100k and a hypothetical 7% Marketplace listing fee, are you booking $100k or $93k? To make the point, are you leaving $7k out of your top line, your quota achievement, and the resulting commission payment?
Comp neutrality is rapidly becoming the norm, with 64% of ISVs having a comp neutral model, according to Tackle’s 2022 State of Cloud Marketplaces Report, up from 54% last year. This means that these ISVs compensate Marketplace deals the same as direct deals instead of penalizing salespeople for leveraging Marketplaces.
Savvy ISVs are making these necessary changes by shifting listing fees into cost of goods sold (COGS), driving up their top line performance and reducing any related friction to embracing Marketplace selling in their field organization. Your organization likely has a very good reason for how the dollars are allocated.
- PROTIP 6: If you are a sales leader and you are not comp neutral on your Marketplace transactions, use Q4 as an opportunity to incentivize your reps by going comp neutral (spoiler alert: you probably want to give it at least 2 quarters, but start with Q4).
- PROTIP 7: Keep an eye on industry trends. We are still in the very early days of Marketplaces and digital selling and new best practices are being developed frequently.
Read more: The Digital Future of Software Sales
Get loud and proud
When it comes to driving co-sell, there is no better way to influence the Cloud Providers than through successful customer outcomes and related use cases. You have Q4 pipeline hanging in the balance and want the Cloud Providers to help you get those deals across the finish line. Guess what, so does every other ISV in the ecosystem. Why you? Simple answer: Because the solution you are offering delivers real customer value, as documented by your win at ACME Corp, who had a very similar use case, or was in the same vertical market, or saw a successful co-sell motion with a peer at that Cloud Provider.
- PROTIP 8: Market to, not just through, your Cloud Provider relationships. Remember they have hundreds of their own services and thousands of ecosystem partners. Don’t expect them to know you, to remember you, or to help you. Be specific in your ask and be prepared with the data to back it up.
- PROTIP 9: Know why it’s good for them, keeping these in mind: 1) a great customer outcome (case study) carries a lot of weight; 2) the more consumption or native cloud service integration your solution delivers when it is consumed, the more it matters to the sales teams at the Cloud Providers; 3) they are very likely incentivized to work and win with the ISV ecosystem. Be familiar with those details.
Read more: A DIY Approach to Co-selling
By understanding the mechanics of your customers’ agreements with the Cloud Providers, leveraging the flexibility of Marketplaces, designing smart incentive plans, and/or making sure you’re clearly communicating your value to the right teams within the Cloud Provider ecosystems, you should be able to do what hundreds of your peers are doing in Q4: leveraging the Cloud Providers and Cloud Marketplaces to increase your chances of success and tap into the power of digital selling to smash your quota.
To see how Tackle can help you scale your Cloud Marketplace revenue, schedule a demo.
