KPIs for Tracking Cloud Partnership Health

Useful metrics to help you check the pulse of your Cloud GTM strategy

If you’ve kicked off a Cloud GTM strategy with one or more of the hyperscaler Cloud Providers (AWS, Google, or Microsoft), now is the time to start thinking about how to set your KPIs and track success. 

Cloud GTM is, at its most fundamental level, all about building meaningful partnerships with the Cloud Providers. Companies that find the most success with Cloud GTM have done so because they’ve engineered their products to complement the cloud ecosystem. On top of that, successful co-selling is absolutely dependent upon a cooperative relationship with the Cloud Provider, clarified and evangelized through a “better together” story. In short, an ISV that fails to cultivate a strong partnership with a Cloud Provider will have a difficult time getting a Cloud GTM strategy off the ground. That’s why keeping tabs on the health of that relationship is critical.

Complimentary download: Create Your Own “Better Together” Framework 

There are a few KPIs that you can track that will paint a fairly complete picture about whether your relationship with the Cloud Provider is yielding positive results. These KPIs can show you where your strengths are, or where your Cloud GTM strategy may be coming up a bit short. 

Before we dive into those KPIs, let’s cover some preliminary guidelines to ensure the best outcome for tracking Cloud Partnership health.  

Resist setting unrealistic goals

One of the most common traps that ISVs fall into is setting unrealistic Cloud GTM goals and initially focusing on the wrong metrics.

For example, you may be tempted to focus on how your Cloud Partnerships have yielded net-new logos. While customer acquisition is essential, gaining Cloud GTM momentum can take some time. By comparing net new logos in, say, your first six months of a Cloud GTM motion versus net new logos over the same time with your direct sales channel (where you’ve probably had the sales motion down pat for a while), you may get discouraged and think of Cloud GTM as a failed experiment.

That’s why it is crucial to think strategically and set realistic expectations around a multi-year journey. Tracking the number of customers acquired in the early stages of building your program can lead to disappointment and obscure the impact of some very important Cloud GTM benefits. 

Keeping things in the proper perspective is not only 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. Ensuring that both sales and the C-suite agree on goals and the criticality of Cloud GTM as a defacto go-to-market system—and how to track it at each stage—is vital. 

Learn more: 4 Tips to Build a Persuasive Pitch for Cloud GTM 

But what KPIs make sense for tracking the progress of your partnerships with the Cloud Providers and, by extension, the health of your Cloud GTM strategy? Here are three KPIs that best convey the value of your Cloud Partnership and Cloud go-to-market efforts.

1. Larger overall size and speed of deals 

When you hit the ground running with Cloud GTM, the first metric to set your sights on is overall deal size by analyzing whether you were able to secure more significant deal sizes via Cloud Marketplaces. This is a key indicator that your partnerships with the Cloud Providers are paying off in a tangible way.

Also keep in mind that Cloud Provider relationships and commitments are only getting more popular as cloud spend is accelerating. Companies with existing budgets dedicated to Cloud providers are more likely to increase their deal size or to agree to multi-year contracts. Instead of looking at net-new logos, compare deal sizes through legacy channels versus Marketplace. You may be able to show that, on average, your deals made through Marketplace are more substantial.

In general, if you’ve got a healthy cloud partnership and an active Cloud GTM strategy, deals through Marketplace should be of increasing size.

In general, if you’ve got a healthy cloud partnership and an active Cloud GTM strategy, deals through Marketplace should be of increasing size. Because Marketplace and co-sell are becoming inexorably linked, larger deal size through MP may also come about when your co-sell motion is healthy as well (more about that below.)

Also, by transacting via Marketplace in a Cloud GTM strategy, existing contracts and budgets generally mean that deals can be completed faster. While deal volume can take a few cycles to steadily increase, another good metric to track is how fast your Marketplace deals are closing (Average Sales Cycle) versus your direct deals. 

2. Increased partnership involvement through co-selling and partner programs

An additional indicator of Cloud Provider relationship health is strategic partnerships and joint promotional activities. These take time to develop and evolve gradually, and essentially happen after you’ve shown your Cloud Partner how your product drives their core service consumption, and you have a handful of customer stories that have caught the attention of the Cloud Provider.  

Pointing to an increased number of co-marketing, joint promotion, case studies, customer references, invitations to join exclusive programs for highly successful sellers, strategic intent letters, or funding directly from the Cloud Provider is a powerful indicator that you’re on their radar — and an excellent gauge of the health of your Cloud Provider relationship. 

3. ACV, close/win rate, opportunities through co-selling, and percentage of revenue 

If there’s one overarching barometer of Cloud Partnership health, it’s the robustness of your co-sell program. After all, successful co-selling depends upon the strength of your relationship with the Cloud Provider.

However, there’s an important caveat: co-selling takes time. Just because you may be struggling with co-sell at this point, that doesn’t mean your Cloud Provider relationship is on the rocks. Rather, it just means you may need to be patient or put additional resources into your co-sell efforts.

Read more: The Alliance Leader’s Cloud Co-sell Playbook   

One of the best ways to track metrics in this area is the average contract value (ACV) of those deals. Obviously, if your co-sell efforts are netting higher than average ACV, that’s a good sign that the Cloud Provider/co-sell relationship is working.

If co-sell is helping to bring your overall close/win rate up, then your Cloud Provider relationship is healthy, and is positively moving the needle. 

A second co-selling KPI to consider is to tabulate the close/win rate of co-sell-influenced deals. How many deals have been closed through co-sell, and is that number increasing? If co-sell is helping to bring your overall close/win rate up, then your Cloud Provider relationship is healthy, and is positively moving the needle.

Another co-sell KPI to consider is inbound versus outbound opportunities. An “inbound” co-sell opportunity is one the Cloud Provider funnels toward the ISV, while an “outbound” opportunity is generated by the ISV and shared with the Cloud Provider. Take a look at the ratio of inbound versus outbound opportunities: If you’re receiving more inbound opportunities—or that rate is steadily increasing—it’s a good indicator that you’ve established a pretty healthy relationship with the Cloud Provider, and they recognize you as a valued partner in the ecosystem.

Finally, it’s worth tracking the percentage of revenue generated through co-sell and Marketplace deals in relation to overall revenue as a barometer of your cloud partnership health. This metric usually comes into play down the line, after a Cloud GTM strategy has matured, as top-performing ISVs build an incremental path to year over year growth. It typically starts at less than 5% of total revenue but Cloud GTM channels can easily account for 10%-20% of your revenue over time and tracking that growth makes a compelling argument for additional investments in Cloud GTM. 

Making the most of these KPIs  

While the KPIs you use to gauge success with Cloud GTM and your CP relationships may take some internal discussion and alignment, here’s how to build social proof based on these KPIs so that you can keep the momentum going:

Use them to refine stories for your three key personas. There are three parties involved in a Marketplace sale—the seller, the buyer, and the Cloud Provider. For each of these personas, you need to develop the value prop story that you can use as fuel to continue to drive support for your Cloud GTM program.

  • For sellers, highlight why Cloud GTM is important for your sales organization. Think bigger, faster, easier deals and the natural uplift you can get from aligning with the hyperscalers. Also, don’t dismiss the need to stay competitively relevant and ahead of (or on par with) your peers
  • For buyers, define why buyers want to buy this way and the benefits of buying via the Marketplace. What are the benefits for them that you can use in discussions?
  • For Cloud Providers, make it easy for them to understand the value of your product. By educating your Cloud Provider sales and partner teams, you can work together to accelerate co-sell activity and further partnership goals.

Use them to continue to build the internal case for Cloud GTM. A successful Cloud GTM program requires continued enablement: you’ll need to make sure your sales team is always up to speed on the mechanics, benefits, and processes of Cloud GTM. If your sales team is properly equipped with everything they need, it will only strengthen your relationship with the Cloud Provider. The hyperscalers will recognize that your sales team is enthused and properly educated about how your product drives their business (the “better together” story.) In essence, if the Cloud Provider sees that you’re leaning in to the relationship, they will be more inclined to do so as well.   

Take our three-minute Cloud Go-to-Market Readiness Review to see where your business is on its Cloud GTM journey.