“Build it and they will come” is not a saying that has successfully applied to many companies who list their software on Cloud Marketplaces. Most of us need to put in the work to see the rewards and that means not only listing on Marketplace, but also initiating a go-to-market strategy.
In a recent edition of our weekly Office Hours, we focused on Marketplace Roadmaps and talked with attendees about:
How enterprise software companies can make the most of Marketplace
What to consider in your post-launch roadmap
Which KPIs to focus on at each stage of your Marketplace journey
Here’s what we learned:
Leveraging Cloud Commitments and strategic positioning are key
Cloud Provider relationships and commitments are only getting more popular; as Flexera found, at least half of companies are accelerating their Cloud strategy amid the COVID-19 pandemic and the shift to remote work. Cloud spend is accelerating.
That means a growing number of your potential customers will have larger committed spends (known as ELAs or EDPs) with their Cloud Providers. Companies can “burn down” their CP spend commitments by purchasing software through the Marketplace. (This also means they’re open to larger deals, which we’ll talk about in a bit).
So, that’s a great place to start to understand which Marketplace(s) is a good fit for you and for how your buyers want to buy.
Speaking of how buyers buy, in his experience as our Chief Revenue Officer at Tackle (and due to the history of Marketplace being largely developer focused), Don Addington has witnessed that “a lot of the time, the first inclination that most companies have about Marketplace is that it’s a great place for self-discovery and self-service.”
Unfortunately, Don adds that “that’s rarely a repeatable, sustainable pattern for significant business, depending on what you’re selling.” Namely, when “you’ve got a complex product that deserves a little bit more hand holding or may need things like deployment services.”
The good news is that Marketplaces (MP) have become highly adaptable to your company’s offer structures and billing options, but you will need to plan how you’ll set up shop and translate your pricing and packaging.
Who all is involved in a MP sale, what role do they serve, and how do they benefit? What training will need to be done to get everyone the information they need?
How are you going to make sure you get in front of Marketplace reps?
Setting realistic expectations with leadership is also essential
Another critical stop on your Marketplace Roadmap is getting leadership on board with your vision. Since it can be challenging to know what success looks like in a new environment, we’ve created a guide to your top priority Marketplace KPIs and initiatives for your first, second, and third years.
Not only is this view helpful for the team players who are “on the ground,” but it also helps get you and leadership on the same page about what to expect with this new revenue channel.
The Tackle team has found that companies tend to want to measure Marketplace by analyzing new revenue and customer acquisition from the start, but those goals come over time. Let’s explore what you should be focusing on at each stage of your journey.
Deal acceleration and size are likely the first benefits you’ll notice
When you hit the ground running with Marketplace, the first metrics to set your sights on are shorter deal cycles and larger initial deals. As your foremost Marketplace deals wrap up, Don suggests analyzing whether they moved faster than usual. Plus, consider whether you were able to secure a more significant deal size because of the additional budget access.
The two main reasons for these important year-one milestones are quickly apparent due to streamlined contracts and billing, and those existing Cloud Provider spend commitments we mentioned earlier.
Don noted that “the faster deals usually come by virtue of less time spent either in negotiations or in vendor management and onboarding.”
You can shorten negotiation times by using standard Marketplace contracts that the buyer’s company has already agreed to. At Tackle, we’ve managed to do 80% of our Marketplace contracts with no negotiation on legal terms because we use the standard CP contract (also known as a EULA).
Deals are also expedited on Marketplace because there’s no need to get new payment systems set up or be added as a provider. “If you’re going through the Marketplace, your buyer’s not cutting payment to you. They’re just paying the Cloud Provider as part of their existing bill, so there are some significant steps you can skip.”
Deal sizes grow as well because of that access to pre-committed CP spend. While budgets elsewhere are shrinking, tapping into a budget that’s already planned for opens up a world of opportunity.
We’ve seen this play out in real-time with our customers. Druva, for example, is a Tackle customer that has been on Marketplace for a few years. John Jahnke, Tackle’s CEO, shared that in their first year on Marketplace, Druva was “doing a single-digit number of deals as they established their value prop within the AWS ecosystem.” He added that “in those early days, they had international success by working with partners in the Marketplaces to expand their reach.” (You can read more about Druva’s Marketplace experience in their case study here.)
In year two, work on partnerships as deal volume increases
As Tackle customer Druva progressed into their second year on Marketplace, things started to evolve. “As year two played on, they saw a significant expansion in Marketplace revenue. They had 10x’d their first-year revenue because they built the play in year one and then executed the play in year two.” John noted.
As you spend more time on the Marketplace, you may see momentum pick up as buyers learn the benefits.
Don noted that “an interesting thing that we see is when one company buys from one of our customers, that same company will pop up and buy other customers. So once you have one or two Marketplace purchases, usually there’s a viral effect when buyers realize it was easy. They realize they want to consolidate and do less vendor management.”
You’ll also develop stronger co-sell relationships in year two, which can add more fuel to your fire.
“Each one of the Cloud Providers has increasingly geared their entire ecosystem to work together. Every CP has its own method. With AWS, you can register your opportunities, for instance. Once you get that opportunity registered, it doesn’t commit you to selling through that provider. It just lets the field rep and the other associated supporting cast on the account know that you’re talking to the customer,” Don clarified.
Don remarked that “when we close a deal, we go back and talk to the Marketplace rep who is responsible for that account to let them know that it was a Private Offer or Private Plan. You can say, ‘I know that you have compensation plans that require you to sell a bunch of Private Offers. We just sold to one of your customers, just wanted to let you know. Here’s who we are, here’s what we do.”
“We also let the CP know through their registration systems, and invariably we get an email back from one of the many hands that touch that account to ask who we are and what we do.” Don added.
As years progress, new partnership opportunities exist alongside large deals
Beyond direct compensation to Marketplace reps from Private Offers and Private Plans, you can also nurture broader strategic relationships moving into year three. If you can show your MP partners how your product drives their core service consumption, you can really accelerate opportunities.
John noted that New Relic, another Tackle customer, started on Marketplace with the idea that it was simply a place “to sell some new customers and do some renewals.” As time went on, they analyzed patterns in their deals that they could use to bring to their MP reps and excite them with customer stories.
“Over time, they evolved into ‘wow, there’s a great compliment with the broader migration program.’ That put them in a position for a bigger, broader story with AWS. Just this year, they have an available free trial and a joint promotion with AWS, and New Relic is a headline item in AWS Marketplace.” (You can read New Relic’s story here.)
John finished by saying, “to get to that point of prominence inside of AWS takes some time, repeated motion, and building those stories over time. I think that’s a great example of someone going through that maturity curve and seeing AWS lean more and more into them as a partner as they scale.”
Every company’s Marketplace journey will come with evolution and adaptation, and Tackle is here to guide you every step of the way. Want to hear more about Marketplace roadmaps? Listen to the full Marketplace Roadmap Office Hours here.