Like any CFO, Tackle’s Ben Cook spends his days turning numbers over in his head, focused on end-of-quarter figures, ARR, and financial compliance — but at Tackle, he can add one more job responsibility to his resume: Cloud GTM strategist.
Cloud GTM is a strategy for leveraging the Cloud Provider ecosystems to drive lift to a software company’s revenue. It supports multiple routes to market, whether through direct, channel, consumption-based pricing, product-led growth, or Cloud Marketplaces. Cloud GTM helps companies reduce costs, drive growth, and increase revenue — all music to the CFO’s ears.
“As a CFO, there are two things I don’t like: extra work and extra cost,” said Ben. Here, he shares his insights into why CFOs need to be thinking about Cloud GTM and its relationship to the two factors that likely keep every CFO awake at night: revenue and cost.
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The revenue part of the equation
First, and most obviously, the Cloud Marketplaces represent an additional revenue channel, but beyond that, the revenue gained through this channel can sometimes come through as more sizable deals, thanks to cloud commitments and cloud budgets.
According to Tackle’s 2022 State of Cloud Marketplaces Report, cloud budgets are a critical element of Marketplace transactions, and 68% of companies expect to increase their cloud spend over the next year.
“As a CFO, one of my most critical jobs is to be a strategic partner to help my company hit our revenue goals,” noted Ben. “Customers want to buy via Marketplaces because it saves them money, but beyond that, they have already committed to spend large amounts with Cloud Providers and are looking for ways to spend that money effectively. I have had several situations where customers have come to us looking to spend money to meet their commitments, and by selling via Marketplaces, we were able to access those funds and at the same time provide our customers with a high ROI via our products.”
Secondly, Cloud GTM by its very nature breeds efficiencies through a more streamlined and compressed deal cycle — and as any CFO will tell you, creating efficiencies is crucial to the bottom line. “There’s a lot of truth to the adage that time kills all deals,” said Ben “When you sell via Cloud Marketplaces, both parties have often adopted standard contract terms, which leads to dramatically shortened deal cycles — and less opportunity for a deal to fall apart. How many times have you had a deal collapse after you had a verbal commitment, but were just waiting on or negotiating redlines?”
When you sell via Cloud Marketplaces, both parties have often adopted standard contract terms, which leads to dramatically shortened deal cycles — and less opportunity for a deal to fall apart.
Because of standardized agreements and simplified negotiation through Marketplace, a compressed deal cycle can also make a big difference during financial crunch times, or during an economic downturn. “You can shave weeks out of the deal cycle, especially if you get to the last day of the quarter and you just need a deal done,” said Ben.
Finally, co-selling is the keystone to Cloud GTM, opening up new possibilities for scaling revenue with Cloud Providers and laying the foundation for a more efficient revenue and sales team. “You can collaborate with your Cloud Partners on how to bundle things together and how you work together to do joint selling — and that can actually increase your win rates,” said Ben. “This takes some work, but is highly effective. But perhaps the biggest value is the opportunity to ask the Cloud Provider rep if they have other accounts facing problems that your product can solve, and then seeing if they can make intros. This access has led to opportunities within accounts that may never have surfaced otherwise.”
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“Cloud GTM and Marketplace are the best opportunity for you to capitalize on increasing revenue to your total organization,” said Ben. “You tap into new budgets, you get additional resources from other companies helping you to co-sell, and you shorten the time to sell.”
The cost part of the equation
Doing business incurs costs, regardless of the size of the company or the industry, and there are incremental costs associated with Cloud GTM, including (relatively minor) Marketplace fees. However, mitigating or eliminating those costs is possible. “By structuring your G&A functions in a Marketplace-friendly way, you can actually have a net reduction in overall costs,” said Ben.
By structuring your G&A functions in a Marketplace-friendly way, you can actually have a net reduction in overall costs.
Customers who make software purchases through a cloud commitment are far more likely to pay that bill, and aligning your technology with a Cloud Provider’s services vastly improves collection rates. In essence, the Marketplaces collect from your customers for you, and remit those payments to you.
“The cloud bill is usually the first bill that customers pay every single month,” said Ben. “And attached to that server bill is now your technology as well. Your collection percentage skyrockets when you collect via clouds versus otherwise. Thus collections via Marketplace deals have been nearly 100% for me, while collections are definitely lower on non-Marketplace deals.”
Because Marketplace transactions are largely automated and handled by the Cloud Providers, this can translate into cost savings in other areas of the company as well. “At Tackle, we have structured ourselves to operate primarily through Marketplace,” said Ben. “And that means we only have one person in accounts receivable, because the Marketplaces do all the collections for us and remit that to us. And so we don’t need lots of people in accounts receivable. We also only have one person in legal dedicated to red lines and contract negotiations. Why? Because over 80% of our Marketplace deals don’t do red lines because we have standard agreements with the Cloud Providers that both parties accept. It’s super efficient.”
Learn more: Webinar: Leveling Up Your Cloud GTM for Strategic Growth
Financial stability through Cloud GTM
Although Cloud GTM is not a silver bullet for every financial problem, it does offer a solid foundation for long-term strategic growth. It takes some work, of course, but the results are worth it. “Marketplace success doesn’t just magically happen,” said Ben, “And I have found that you need a strategy for both the revenue and the cost side to get the highest ROI. However, after a couple years of execution, it’s hard to imagine ever going back.”
“It only takes winning one or two extra deals to make the whole thing worth it,” said Ben. “And if you structure your company to do a large portion of deals through Marketplace, not only do you get all those benefits associated with it, but you can dramatically reduce your headcount costs and recoup a lot of the costs. If CFOs understand that story, it becomes an easy pitch.”
To see how Tackle can help you build a successful Cloud GTM strategy and scale your Cloud Marketplace revenue, schedule a demo.