The sales team at Styra had just won a highly contested bid for a RFP project. However, once it came to procurement, the prospect said that they had to transact on a specific Cloud Marketplace.
The problem? At the time, Styra wasn’t on Marketplace. Ultimately, the deal went to a competitor who was.
“Cloud Marketplaces are something you absolutely have to prioritize, whether you’re a startup or a bigger company.”
“The Marketplaces are like parties you’re not invited to. If you’re not into the party, you don’t get to have the beer,” said Ben Rice, Vice President of Business Development, Styra. “I would use that as a message to your company that participating in these Marketplaces is a necessity. There’s a sector of the market that is going to be cut off to you and you’re not going to be able to touch those dollars unless you’re in these Marketplaces.”
Read More: 10 Truths About Cloud Marketplace with Todd Osborne
Ben recently shared his thoughts on how and why startups need to use Cloud Marketplaces during a conversation with Tackle CEO John Jahnke and John Leon, Vice President of Business Development at Apiiro.
“Cloud Marketplaces are something you absolutely have to prioritize, whether you’re a startup or a bigger company,” Ben said.
Prioritizing Cloud Marketplaces
John Leon joined Apiiro at its Series A stage and had to create an ecosystem vision on how the company would go to market and how to specifically resource for Cloud Marketplaces.
“The consensus established was that it was an important part of our strategy to lead out of the gate with a Cloud Marketplace strategy. That’s different than in years past,” he said. “In companies I’ve been at in the past, Cloud Marketplace was usually fifth or sixth on the list and it’s amazing that in about three year’s time, it’s at the top.”
Cloud Marketplaces offer major opportunities—including access to otherwise impossible deals—and benefits for startups who use them strategically.
For example, buyers (and sellers) ultimately enjoy faster, more simplified transactions. “The Marketplace procurement process is much easier than going back and forth with legal documents, PDFs, and invoices,” said Ben. “One of the carrots for buyers and sellers is pre-approved contract terms and a digital procurement process. Everything can move much faster and accelerate your sales cycle.”
Cloud Marketplaces also open up access to buyers’ committed cloud spend, critical as cloud budgets continue to increase. Marketplaces offer access to both cloud-native applications and third-party services that buyers can use to burn down cloud budget, making it particularly appealing.
Learn More: 2021 State of the Cloud Marketplaces Report
But creating a Cloud Marketplace listing is just one piece of the equation. Startups will need to carefully consider four key areas for an effective strategy.
1. Create a Cloud go-to-market strategy
A Cloud go-to-market (GTM) strategy is a cross-functional program that companies build around their Marketplace presence. It combines people, processes, and technology to enable startups to scale efficiently with digital selling. An effective Cloud GTM requires full commitment across the organization from the CEO to the sales team. This is because it requires strategic leadership to successfully partner with, sell with, and sell through the clouds.
Startups have the unique opportunity to position themselves to incorporate Cloud Marketplace from the start alongside more traditional go-to-markets like channel or technology partners.“We’re going to nurture [our other routes to market] just as we are trying to nurture the Cloud Marketplace,” said Leon.
“We’re making sure that we’ve got our bets laid out appropriately and then we’ll fine tune as we can go, which is the advantage of being a small company.”
Read More: Build or Buy: A Practical Breakdown for Entering the Cloud Marketplace
2. Consider private offers versus public listing
Marketplace can support a variety of go-to-market strategies, including private offers, which work similarly to direct or enterprise deals, or public offers which function best with usage-based packaging. The key is creating a strategy that makes sense for your business goals.
We often recommend companies start with private offers if they are used to doing direct deals. Private offers allow for a minimum viable product (MVP) approach, give maximum control over pricing models, and offer the ability to negotiate custom terms and conditions. Nearly 60% of Marketplace sellers expect to do more than half of their Marketplace business through private offers, with 21% of those expecting to use private offers exclusively, according to Tackle’s State of the Cloud Marketplace Report 2021.
Read More: How to MVP Your Way to Cloud Marketplace Success
“People start with that private offer motion and grow into a self-service motion over time as they build the muscle to Marketplace and better understand how they want to price and package their product to deliver value,” said Jahnke.
As a Series A company, Apiiro is still experimenting with the right tiering structure, feature sets, and packaging for a public offering. Private offers enable the business to offer customized deals while keeping control of the pricing model and gathering data for a public listing.
But private offers aren’t the only starting point for Marketplace. For startups focused more on product-led growth, they may prioritize a public listing first built on consumption-based pricing and free trials, then grow into direct enterprise or private offers.
Product-based growth strategies make sense for companies looking to bring in buyers by allowing access to the product before becoming a customer. For example, introducing prospects to a free product version or trial with a pathway to additional features they’d be willing to pay for. Measure adoption, usage levels, and clicks on your free version to send an upgrade message at the right time.
Read More: How CrowdStrike, Nasuni, and Pluralsight scaled their Cloud Marketplace Strategies
For Styra, a product-led growth approach has helped the startup grow and they’ve focused on tailoring it to work for Marketplace.
“We’re wiring our free product to the Marketplace more and more,” said Ben. “[Buyers] will see [notices] within the free product that points you to, ‘hey, if you want more of this, go to the Marketplace.’”
This type of growth specifically targets developers who can use and integrate the product into their builds versus a more traditional marketing route.
3. Educate buyers early
It’s true that not all buyers know how to buy on the Cloud Marketplaces. Cloud enterprise agreements are shifting out of technical departments and into finance and procurement teams so there’s a high probability that the individual you’re selling to doesn’t control their company’s cloud budget. The buyer may not even know such a budget exists.
Read More: The Field Seller’s Guide to Cloud Marketplaces
That’s where cloud sellers come in. Sellers need to talk to prospects about Marketplaces and look for inroad to the cloud budget early in the sales cycle.
“There’s a strong incentive for a company to retire that pre-buy and when the person you’re talking to finds out they can get a fairly significant cash discount off because half of it can be AWS credits, that oftentimes can speed the sales cycle,” said Ben.
4. Partner with the Cloud Providers
A key piece of growing a Marketplace business will be driving leads. Startups who can demonstrate a strong value proposition to Cloud Providers will create strong partnerships.
“We know that we’ve got to show traction through the Cloud Provider to ensure that our partners at Google see activity through the listing that we have and that’s going to build the momentum to get where we want to be, which is lead activity,” said Leon.
This is where startups need to create a “Better Together” story to demonstrate the value proposition of their product to the Cloud Providers. The story should pinpoint exactly why a Cloud Provider would want to work with you and how your technology will benefit their sales, and this is largely centered around how your software adds to consumption of their products. For example, highlighting that a buyer who purchases your product via Marketplace will also want to purchase complementary cloud solutions. Ultimately, a Cloud Provider will want to know how your product will help them, so be explicit in how that can look to engage in a stronger relationship.
Another strategy is to tap into the existing ecosystems of Cloud Providers.
“A lot of the Cloud Providers have their own partner ecosystem, like consulting firms and referral firms, who can retire their committed spend requirements by working with us through Marketplace,” said Leon. “It’s a fantastic three-way win, since everyone gets something out of it and we’re all building relationships.”
To get into the ecosystem, search the Cloud Provider’s partner network and find out who’s in the consulting area for your field. Create a target list of Value Added Resellers (VAR) and firms to approach. “Seeing who’s transacting through a VAR is a great starting point because they’re aware of Marketplace benefits and they’re likely to have an interest in your technology,” said Ben.
Also, the Cloud Providers often have partner programs designed specifically to help startups understand how best to work with them like product development, go-to-market, and co-sell support.
Just get started
Whatever your specific Cloud Marketplace strategy looks like, just don’t hesitate to act.
“As a startup you don’t want to struggle to get into the Marketplace,” said Ben. “Don’t get everyone in the company excited and then take a year and a half to get it done. You need momentum. Get it done quickly with help from experts, like Tackle. That’s how you start transacting in days or weeks instead of months or more.”
Start Up Your Marketplace Journey to Revenue with Tackle. Apply now for our Startup Acceleration Program.