Marketplace Overview
Cloud providers offer digital marketplaces that enable you to sell your products through their platforms. These marketplaces provide significant exposure and streamline transactions, billing, and implementation processes for customers. In this guide created in collaboration with Tackle.io, we will cover considerations and best practices for using these marketplaces as a sustainable revenue channel.
About Tackle.io
Tackle.io specializes in assisting software companies in selling and distributing their products through various cloud marketplaces, such as the AWS Marketplace, Azure Marketplace, and Google Cloud Marketplace. They offer a platform and services that simplify and accelerate the go-to-market strategies of software vendors by streamlining the listing, selling, and deployment processes. Luca Gianaschi, as the Head of MSFT Partnership at Tackle.io, oversees their VC engagement program and strategic partnership with Microsoft. For further information, you can contact Luca at luca.gianaschi@tackle.io.
Cloud Marketplaces
Listing on a cloud marketplace provides access to a vast customer base, consisting of businesses actively seeking cloud solutions. This exposure can significantly increase the visibility and reach of your product, making it a valuable sales channel.
In addition to visibility, marketplaces also offer streamlined purchasing for customers, making it convenient for buyers to discover and buy software. Marketplace platforms often provide valuable resources and support to vendors, including marketing assistance, technical integration, access to a trusted platform, and co-selling opportunities. While there are several challenges to navigate (discussed below), listing on a cloud marketplace can be a strategic move to tap into an active ecosystem of potential customers.
+ Pros
Increased Reach
Cloud marketplaces provide sellers with access to a large customer base actively searching for software solutions.
Pre-Committed Budgets
Cloud providers often require customers to commit to multi-year contracts and a certain amount of infrastructure spend in exchange for discounts. Marketplaces provide sellers with a captive audience of buyers with active budgets.
Shorter Sales Cycles & Streamlined Purchasing
Selling through cloud marketplaces enables startups to shorten the sales cycle and increase deal sizes. Marketplaces offer faster access to software for buyers, resembling the streamlined experience of online retailers. This generally results in shorter sales cycles and reduced time-to-value.
Consolidated Billing
Purchasing software and renewals through a marketplace allows buyers to consolidate their spending under a single bill from the cloud provider.
- Cons
Time Investment
Getting listed on marketplaces requires significant time and effort from the engineering team, diverting their focus from product development. Managing listings and adapting to changes imposed by cloud providers can also consume valuable engineering resources.
Resource Investment
Navigating cloud marketplaces and understanding their programs can be complex, demanding specialized expertise and dedicated resources. Each marketplace has unique requirements, rules, and setups to consider.
Operational Investment
As startups scale their business through marketplaces, they may encounter operational challenges. Invoicing, revenue booking, and sales operations differ from traditional methods and may strain a small accounting/operational team.
Understanding these challenges before listing on a marketplace can help mitigate wasted cycles. This is where companies like Tackle.io can provide valuable support in streamlining the process.
Creating a GTM Strategy
The key element of a strong cloud go-to-market strategy is recognizing that cloud marketplaces are revenue channels that require dedicated attention. Adopting a trial and error or set-it-and-forget-it approach is not effective as marketplaces require mindful nurturing and adjustments to fully realize their benefits.
Startups often make the mistake of assuming that listing their product will automatically generate revenue. However, marketplaces are not typical lead generation tools; customers typically come to the marketplace with the intention to buy software they are already familiar with. It's important to understand that marketplaces are meant for scaling your business, not for discovering product-market fit. Tackle.io recommends to approaching cloud marketplaces when your product-market fit is proven and you are focused on scaling your business.
Creating a successful cloud GTM strategy requires a systematic approach and understanding of marketplace dynamics. Key steps include assessing your marketplace situation, aligning marketplaces with organizational goals, identifying stakeholders, setting clear targets, and developing a comprehensive plan.
Are You Marketplace Ready?
Companies should have established product market fit before listing on a marketplace. Indications that you might be ready for a cloud marketplace:
Product-Market Fit (PMF)
Your product has demonstrated market demand and meets the needs of your target customers. Positive feedback, high customer satisfaction, and repeat business indicate that your product has achieved PMF.
Scalability
Your infrastructure and operational capabilities are prepared to handle increased demand and usage that may come from being listed on a cloud marketplace.
Clear Value Proposition
You have a compelling value proposition that sets your product apart from competitors. You can clearly articulate the benefits and advantages of your product to potential customers.
Technical Readiness
Your product is technically compatible with the cloud marketplace platform and meets any specific requirements or standards. You have conducted thorough testing and integration to ensure a seamless experience for customers.
Customer Base and Testimonials
You have an existing customer base and positive testimonials from satisfied customers. These references can help build trust and credibility when listing your product.
Team Readiness
You have the team support in order to maximize the marketplaces as a channel. You've likely hired your first sales leader and have moved from founder-led sales to a team-led sales motion.
Established Sales and Marketing Processes
Your sales and marketing teams have well-defined processes and strategies in place to drive customer acquisition and revenue growth.
Financial Readiness
You have the financial stability and resources to invest in the listing fees, marketing efforts, and ongoing operational costs associated with participating in the marketplace.
Strategic Alignment
Listing your product on the cloud marketplace aligns with your overall business strategy and goals. It presents an opportunity to expand your reach, acquire new customers, and enhance your market position.
Strategy Components
Map Out Your Cloud GTM Journey
Begin by assessing your current marketplace situation. Evaluate your historical listing status and performance. Identify what is working well and areas that need improvement. Keep in mind that building a successful sales pipeline in the marketplace takes time, often spanning months or even years.
Align Strategy with Organizational Goals
Where can cloud marketplaces add additional coverage or reach for the company. Are there specific types of buyers that traditional sales channels are currently not touching? Align your marketplace plan closely with your overall company goals and objectives.
Identify Key Stakeholders
Most companies will require a team effort to effectively manage and scale their marketplace efforts. Sales, marketing, finance, and operations are typically involved and should have a joint plan for who and how the channel will be managed.
Set Clear Annual Targets
Establish measurable targets that focus on revenue, customer acquisition, and product adoption. Make target challenging yet realistic goals and regularly assess progress, ideally on a quarterly basis.
Pricing & Co-Selling
Marketplace pricing strategies typically consist of two components: public pricing and private offers. Public pricing allows customers to make self-service purchases directly through the marketplace. Private offers involve negotiating customized contracts with customers, providing greater flexibility and options. While public pricing is a convenient and streamlined option, it's worth noting that around 90% of marketplace transactions occur through private offers.
Public Pricing
Public pricing is accessible to customers on the marketplace platform. It typically includes standardized pricing tiers, plans, or usage-based models that customers can select based on their requirements and budget. Public pricing is ideal for self-service customers who prefer a quick and straightforward purchasing process without the need for personalized negotiation.
Private Offers
Private offers enable sellers to engage in direct negotiations with customers to create customized pricing agreements. This approach is beneficial for customers with unique needs or specific contract terms. Private offers provide greater flexibility in pricing, contract duration, and additional value-added services. Engaging in private offers allows for a more personalized and tailored customer experience.
Co-Selling with Cloud Providers
Cloud marketplaces offer valuable opportunities for co-selling, where you collaborate with cloud providers to sell your product to customers. To initiate co-selling, focus on engaging with the cloud provider's organization and aligning your product with their sales efforts. This involves dedicating resources and personnel to build relationships, strategize, and discuss joint selling approaches. Successful co-selling is measured by increased engagement from the cloud provider's sales team, leading to more meetings, sales updates, and potential leads. As your product gains visibility and recognition within the marketplace, you can expect to receive inquiries and opportunities from the cloud provider's sales reps.
Customer Reviews
While customer reviews and ratings do carry weight, they are generally not the determining factor in an enterprise buying process. Enterprise buyers engage in extensive research, leveraging their networks for feedback before interacting with sellers. While written reviews are an aspect of an established bran, it's important to understand that software transactions in marketplaces largely cater to enterprise buyers. These buyers value networking, seeking advice from colleagues, and engaging with sellers to gain deeper insights into the software. While reviews play a role, they are just one aspect among many that influence enterprise purchasing decisions.
