When is the Right Time to Invest in a Cloud Marketplace Strategy?
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If you are a startup or an ISV, you most likely heard about Cloud Marketplaces and contemplated if and when to pursue a Cloud Marketplace strategy.
Today all the leading Cloud providers offer their customers to purchase products and services from their Marketplace. That way, they are providing their customers with one stop shop for solutions that can be easily purchased via a consolidated platform that they are familiar with. In these Marketplaces startups and ISV can list their product and potentially expend their customer reach. However, listing a product on a Cloud Marketplace takes engineering effort, and come with costs (more about the costs — below).
Whether you already have a product listed on one of the Cloud Marketplaces, or you are still considering if this is the right move for your company, here are a few insights to be considered that will help you to make the right decision for your business, or to make the most out of your existing marketplace listing.
Before diving into the key elements to consider in implementing a Cloud Marketplace strategy , let’s start with what not to expect from Cloud Marketplaces.
What NOT to expect from Cloud Marketplaces
Listing your SaaS product in a Marketplace can definitely help your product credibility, however, customers usually don’t go to the marketplace to look for SaaS products to help their needs. Meaning, usually marketplaces will not help you with to generate new leads. There were many efforts in the past few years to improve the way products are features, but based on what I have seen so far, lead generation will not be a strong selling point on why to use Cloud Marketplaces. While lead generation is not a good reason to consider marketplace, here are important factors that for me were the main reason to use cloud marketplaces.
Key Elements of Cloud Marketplaces Strategy to be Considered
Leverage your customers pre-approved Cloud budget
In most organisations, yearly or multi-year Cloud budget will be set in advance. If you would like to sell to these kind of organisations, you may have an easier rout if your product is listed on a Cloud Marketplace. The reason for that is very simple — the purchase of your product via the Marketplace, will be consolidated to the Cloud services that your customer is consuming. This way, you can leverage the pre-approved Cloud budget of your customer, in order to move quicker with the purchasing decision and budget allocation.
Shorter procurement cycle with Enterprise customers
When selling to enterprise customers, procurement cycle may take 6–12 months (sometimes even more). Sometimes, this fact alone can cause your customer to hold back, and look for another solution.
While companies are looking for innovative solutions, there is a concern, especially during the procurement process, that the startup that provides the solution is not mature/stable enough. As part of a procurement process, the procurement team will need to onboard your company as a new vendor, and will run different checks to verify that the commitment they are putting in is not at risk.
One of best way to mitigate this risk for these types of Enterprise customers is to purchase products that are available on the Cloud Marketplace. That way, they are dealing directly with the Cloud Vendor that they are already know and trust, and they don’t need to spend extra time to onboard another company as a new vendor.
Help your customers to meet their Cloud consumption commitment
The most common way for companies to get a discount from a Cloud Vendor on their cloud consumption is to commit for a certain consumption for a certain period of time, in exchange to a discount. In Microsoft, these kind of agreements are called “Microsoft Azure Consumption Commitment” or in short — MACC.
The consumption commitment includes Cloud services, as well as partner services that are available on the Marketplace. So if you are working with customers that have MACC (or equivalent), they will be more motivated to purchase products from the Marketplace, that can help them to attain their consumption commitment.
Enhance your Cloud co-sell strategy — motivate Cloud Sellers to promote your product
If a a co-sell strategy with one of the cloud providers is relevant to your business, I would say that a Marketplace listing is a must. One of the most effective ways that Cloud Vendors motivates its sellers to sell and promote partners products is the Marketplace.
Here is how it works. Let’s say that you have a successful co-sell strategy with Microsoft, and now you have a deal with Microsoft customer that is executed via the Azure Marketplace. In this case, the Microsoft seller (meaning Microsoft Account Executive) that manages your customer, will get quota retirement based on the deal size. Meaning, your deal helped this seller to get closer to his/her quota goals. Now, this seller is happy and see first hand how your product is helping one of his/her own customers. Getting this quota retirement for the Marketplace deal, will motivate this seller to offer your solution to other customers the he or she has in their portfolio. This is a huge incentive for Cloud Sellers, that helps them to meet and exceed their goals.
Marketplace Listing Costs
Listing your product in Cloud Marketplaces comes with cost. The cost varies between different providers and is based on a % of the deal size that is being executed via the Marketplace. Usually the cost is up to 20% of the deal size. The lowest rate today among the Cloud marketplaces is Microsoft’s, with a fee of 3% of the deal size.
If you are a startup or an ISV that already has a Marketplace listing with one of the Cloud Vendors, you can leverage the different motivations of the customer’s stakeholders — shorter procurement cycle and meeting Cloud consumption commitment. If your sales team is dealing with customers’ budget allocations issues — try to leverage the pre-allocated Cloud budget of the customer. And lastly, use your Marketplace deals to fuel your Cloud co-sell strategy and connect with the Cloud Seller to identify additional potential customers.
If you don’t have a Marketplace listing just yet, the decision on whether or not to create one, depends on your sales strategy and ICP (Ideal Customer Profile). If you are targeting SMB or Enterprise customers, I’d highly recommend to implement a Cloud Marketplace strategy, as part of your sales and go-to-market planning.
For more information about Marketplace strategies, check out this course that is provided for free for the Medium community.
Feel free to reach out to me on Linkedin if want to connect or have any questions. I also encourage you to join the Cloud Alliances Linkedin group where business executives share their insights and experiences about leveraging Cloud Alliances.