Selling in Cloud Marketplaces can open up a new revenue channel for your business, but it doesn’t happen overnight. It’s an investment – but a worthy one! What does it take to do it truly well, though? Today we’re going to break down what separates the good from the great in Marketplace software sales.
Tackle currently supports more than 160 software companies that sell across the three largest Cloud Marketplaces: Amazon, Microsoft, and Google. We’ve had a chance to work closely with teams who are using Marketplaces to their full advantage, as well as reps and managers from each Cloud Platform, and have identified six common traits we see amongst the most successful Marketplace sellers:
- Investing in each Cloud Provider ecosystem
- Making Marketplace selling a C-level initiative
- Setting Marketplace-specific KPIs
- Incentivizing sales reps to build momentum
- Talking Marketplace benefits early in the sales cycle
- Recognizing renewals as deal expansion opportunities
Investing in each Cloud Provider ecosystem
Once you’ve identified where your buyers are strategically aligned (eg. which Cloud Providers they are spending the most money with), you’ll want to evaluate leveraging the Marketplaces that best align with your target audiences. While Cloud Marketplaces can introduce you to new customers and facilitate expansion with current customers, you do need to learn how to navigate these ecosystems for maximum gain. Each Cloud Provider operates a little differently, which means you’ll need to invest the time to learn about the specifics of each Marketplace to be successful.
For example, each Marketplace accommodates different licensing and pricing models. Cloud Providers will also have their own incentives for Marketplace buyers, which means you’ll approach buyer conversations differently depending upon which Marketplace they wish to leverage. With variations between Marketplaces, and evolutions happening all of the time, it’s critical to build your relationship with each Provider.
Megan Buntain, Director of Cloud Partnerships at Seeq Corporation, talked about how they leverage the relationships with the Cloud Providers in Tackle’s webinar on how to sell enterprise software remotely. “We have strategic alliances with Cloud Providers. They are creating value for customers in searching for software applications and the procurement of those applications, and the ability in some cases to leverage third-party software costs to decrement, or to count towards a larger commitment to the Cloud Provider on their consumption requirements for enterprise customers.”
The best way for your company to successfully partner with different Marketplaces is to hire an Alliance Manager to focus on several important aspects of your relationship with the Cloud Provider(s). People in these roles learn the ins-and-outs and own the relationship between your company and a Marketplace/Cloud Provider. This means understanding which programs make the most sense to leverage, messaging to the Cloud Providers on how your solution benefits their sellers and aligns with their goals, and sharing the knowledge of how to work with the Cloud Providers “back at home” with your sales teams. Generally, you’ll want to start with a single Alliance Manager, build a program, demonstrate success, and then expand to additional Marketplaces as necessary. Resist the urge to have one Alliance Manager trying to cover multiple Marketplaces for you (that’s an entirely different blog post for another day), as they will quickly get spread thin and likely become overwhelmed with information overload.
Making Marketplace selling a C-Level strategic initiative
Another common thread between successful Marketplace sellers is executive buy-in. When the C-Level is on board with the value of selling on the Marketplace, there can be alignment between company-wide and sales team goals. You’ll also need someone to rally different departments, since listing your company on a Cloud Marketplace is a company-wide effort. Sellers like Crowdstrike, Sysdig, Saviynt, Ping, Panzura, Ascend, Sonrai, and many others have made Marketplace a CEO-driven strategy and are vocal about the benefits of their relationships with the Cloud Providers.
Setting Marketplace-specific KPIs
Selling software through Cloud Marketplaces is new territory for many, and you have to adjust your KPIs to gauge performance accurately. Rather than focusing on the number of deals completed over a given time frame via the Marketplace, especially as a new seller, focus on attributes like deal speed and size.
The first KPI that successful Marketplace sellers evaluate is the average deal size. Typically, you’ll see larger deals on the Marketplace than through direct channels. If your buyer has already committed to a certain level of spend with a Cloud Provider, they may be more likely to sign a bigger contract or a multi-year deal to ensure they are meeting their spend commitment. You may also be able to increase the contract size if your customer can attribute costs to their operating budget, instead of as a capital expenditure or associate the purchase of your software with Cloud-related initiatives and budgets. Just being part of a Cloud Providers bill can associate your software with Cloud spend.
Successful sellers also recognize that the Marketplace offers shorter times to close. You can usually complete deals on the Marketplace quicker, thanks to the fact that you may not need to negotiate contract details, since you can become an extension of the contract that the Cloud Provider already has with the buyer. Easier access to an existing budget can also accelerate sales. Not to mention, there is no need to get set up as a vendor who your buyer needs to remit payment to. Your buyer pays the Cloud Provider (whom they are already set up with) – no need to generate Purchase Orders! This can decrease time spent in Vendor Management.
Finally, you should pay attention to your “transaction platform” costs. Fees for selling via Marketplaces are generally lower than traditional channels. The ease of completing Marketplace deals, paired with more substantial customer budgets, means that even if you don’t start out completing many Marketplace deals, your team can still come out on top. Many of the Marketplaces have incentives for selling more and/or consuming more core services and those incentives can translate to lower listing fees. Taking renewals through the Marketplaces can also result in a substantially lower listing fee (sometimes up to >50%).
Incentivizing sales reps to build momentum
There will be a learning curve when you’re first adopting Marketplace selling, but once your sales team has a few wins, momentum will build. To get your sales team started on the right foot, set Marketplace deals as comp neutral and/or consider an incentive plan to pay more for Marketplace deals. A common attribute of programs that start slow or fail entirely is a reduced or comp-negative plan for reps. This is a new channel and it will take time (and encouragement) to build. Plan for it. At the same time, resist the urge to treat MP like a traditional VAR channel. The relationship you build with the CP is strategic and will have many facets, with each party benefiting in ways that extend past solely monetary rewards.
Learning the ins-and-outs of Marketplaces and adapting strategies for this new channel takes work. That’s why we’ve seen the most successful sellers reward Marketplace deals the same as direct deals. Many of the most successful sellers also create Marketplace quotas and incentive programs (eg. First Marketplace deal gets an additional bonus or retires 2x quota, first rep to 3 Marketplace deals in a quarter receives a bonus or accelerated quota reduction, etc.). These programs will incentivize your team to work on Marketplace deals at the beginning, which helps them understand the value of the channel.
Talking Marketplace benefits early in the sales cycle
One of the best ways to set your sales team up for success is to start Marketplace conversations very early in the sales cycle. Expert Marketplace sellers know what questions to ask prospective customers to gauge if they are ready for Marketplace and then they can highlight the benefits of purchasing via this channel, such as flexibility in procurement, access to budget, etc.
By planting the seed from the start and beginning conversations with the right decision-makers, your sales team can secure larger deals faster. The best part is, you don’t have to be a Marketplace expert to ask a simple question, “Are you strategically aligned with one or more of the major Cloud Providers?” The answer will tell your rep which Marketplace (if any) to focus on.
Recognizing renewals as deal expansion opportunities
The final trend that we see among top Marketplace sellers is the ability to leverage Marketplace for expansion opportunities. Instead of jumping straight into trying to move new customers to the Marketplace, have your sales team focus on completing renewals there.
Moving existing customers over to purchasing via Marketplace is a good way for sales teams to get their feet wet, and there’s also room to grow. If your customer already has unused Cloud budget, upsells might be more accessible via a Marketplace. At a time when budgets are being reviewed very closely, taking a renewal through a Marketplace can offer one more way to get a deal done and preserve ARR. And, as noted above, these renewal transactions can also incur a lower listing fee, depending on the policy of the Cloud Provider.
Tackle customers, like New Relic, excel in this area and routinely see a higher expansion rate on deals done through Marketplace than those taken Direct.
Selling software on Cloud Marketplaces requires you to rewrite some of your sales playbook. However, if you can shift your perspective to track progress with the methods and metrics that matter for Marketplaces, you can use the new channel to its full advantage.
Want to accelerate deals even more? Chat with a Tackle team member about how we can make you successful in Marketplace.