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AWS Marketplace GTM best practices - why and how you need to approach it differently

IT IS A BOOMING PLACE

AWS Marketplace continues to grow at a brisk pace, as illustrated in the stats that AWS shared on one of their recent webinars hosted by the SaaS Factory team:

  • 290,000 customers are buying solutions on AWS Marketplace
  • 1,600+ ISVs have listed over 8,000 offerings: the majority are AMI based
  • 900M hours of EC2 is tied to AWS Marketplace deployments, and there are over 900 SaaS products listed
FIRST STOP – X-FUNCTIONAL TEAM ENDORSEMENT

There are many stakeholders involved with driving a successful marketplace integration, and it’s really difficult to get alignment if your business partners don’t understand the channel. This is an attempt to help everyone understand some of the key differences, and appreciate some of the benefits of selling through this channel.

A MARKETPLACE IS WAY MORE THAN AN APP STORE

If you ask what a marketplace is, most people point to their phone and call out the App Stores. Easy installs at the press of a button, payment, and billing notifications are tied to my existing account info, and upgrades happen either automatically or upon approval. Unfortunately, the B2B experience is a little more complicated, so we would like to compare this to a traditional distributor.

WHAT A MARKETPLACE AND A DISTRIBUTOR HAVE IN COMMON

There are some clear commonalities:

  • Multiple products listed from multiple vendors
  • Payments are consolidated and flow through to the ISV, and in some cases, sales tax is already collected and reported, and the partner may be responsible for collecting from delinquent accounts
  • Orders are fulfilled and delivered to the end customer
  • Financial and customer information is consolidated and flows through the distributor to the ISV
  • Business managers can run marketing and sales programs with the possibility of joint Marketing Development Funds (MDF) for those programs
  • And everyone’s favorite – transaction fees
MISPERCEPTIONS AND PLACES WHERE BENEFITS ARE OVERLOOKED

The differences are where a lot of people get hung up and pushback:

  • SaaS ISVs may not have a channel play and would prefer to drive their business direct, but they don’t know what they’re missing out on (think Enterprise Discount Programs, Co-sell, referrals, etc.)
  • While there are channel partners reselling ISV solutions on AWS Marketplace, this method is not as mature as the models flowing through distributors. This creates a few misperceptions:
    • Less reach and pull through via VARs and SIs – if you are selling to a cloud customer, there is a good chance they are using AWS, i.e. AWS marketplace might be a more effective GTM
    • Inability to take advantage of existing vendor approvals for your channel – Marketplace purchases are sold from AWS, so there is no need to go through a new vendor approval, i.e. AWS marketplace lowers both the barriers to selling along with reduced buying complexity for the customer
  • This channel is an extension of your field. They can find opportunities, sell your products or services, deploy the products or services, and handle initial support requests. While this is incredibly valuable, it is short-sighted – AWS Marketplace simply adds another extension to your field, yet with different dimensions. AWS Marketplace will typically be more beneficial to selling your new lines vs. legacy and is more adept at selling to Cloud customers and users. This is an important and multi-faceted topic, so we’ll discuss this more in a later blog.
ADDITIONAL BENEFITS UNIQUE TO AWS MARKETPLACE

There are other benefits that most people aren’t aware of that can help as you enter into contract negotiations:

  • Large AWS customers can apply some of the commitment tied to their Enterprise Discount Program (EDP) to purchases through AWS Marketplace. This is a captive budget to utilize when negotiating commercial terms, i.e. EDP’s can co-fund or subsidize AWS Marketplace purchases.
  • You can use your own paper, but some customers already adopted Standard Contracts or Enterprise Contracts and prefer to buy using those. This can save you time by reducing the number of points you need to negotiate, if any, as most terms are already pre-defined, simplifying your sales and purchasing process for your customer. Terms and FAQs are located here.
  • AWS field sales are compensated on AWS Marketplace transactions carried out by their customers. This isn’t replacing your channel partners in terms of sourcing deals, but if you are successful in driving transactions via Marketplace, you are more likely to get referrals from AWS field sales. This is especially true if you are selling to the CTO, CIO, or other IT leaders since AWS field sales typically have relationships at this level.
THE MARKETPLACE IS WHERE YOUR CLOUD TAM IS

To summarize, AWS Marketplace has significant reach and in most cases, if not all, can be used to sell to your Cloud TAM (Total Addressable Market). There are programs and incentives in place for both customers and AWS field sellers to drive purchases on Marketplace, and with the increasing number of ISVs seeing the benefit of this channel, this will increase your competition.

THE RIGHT HELP WILL ACCELERATE YOUR GTM SUCCESS

Unlike other GTMs, this isn’t the Field of Dreams – i.e., if you list, they may come, but you should think about how to make this GTM successful. Here are some areas where you may need to make investments and where Coalesce can help ISVs like you:

  1. Your field teams may be leading the proof of concept or proof of value, so they need to understand AWS. Most stakeholders within your customer base are either going to be strong on cloud or strong on their domain expertise (ex. Security). There are people who are strong on both, and those can be faster sales cycles, but more often your team may need to help bridge the gap – similar to you supporting a conventional field channel sales opportunity.
  2. Customer information is obfuscated to meet regulatory requirements and to help ensure customer information is protected. Enhanced Data Sharing can provide more information to help determine which sales reps to pay, and Product Support Connection can make it easier to contact a customer for a support issue, but these programs have strict policies on how this data is used. You may need to think about ways to give customers a way to opt-in and share their information in your product, or better correlate information you are already capturing in your licensing systems. This is one way that Coalesce can help, we’d gladly explain in a conversation, schedule a meeting.
  3. Sales compensation tied to revenue can discourage your field teams from driving deals through AWS Marketplace because their commissions can be delayed. You may want to consider additional incentives for AWS Marketplace transactions, pay commissions on billings (usually reported within 30-45 days of usage), or based on customer usage data (reported daily). This is some of what we cover in our initial advisory sessions. To learn more, please schedule a call.
  4. Your customer may be the one responsible for deploying and managing your product, not a channel partner. You may want to – or we can do it for you – create more templates to help, or provide more content, demos, and other educational assets in your knowledge base.
  5. You may have more expertise selling through AWS Marketplace than your buyer has procuring through Marketplace. While these may not be steep learning curves, the time spent in the sales cycle educating the customer can help reduce friction when trying to execute the final offer.
HAVE YOU CONSIDERED A USAGE-BASED BUSINESS MODEL? HINT – YOU SHOULD

One of the biggest questions, and considerations, is whether to move to a more usage-based business model. This requires integration with AWS Marketplace Metering service that not all product teams want to spend time working through. We would argue that this helps drive organic customer acquisition and your revenue automatically expands with increased usage. Although this may not be the first business model you might select, this is one of the key reasons AWS has been so successful – easy to try on a small scale, and easy to negotiate more favorable discounts with historical usage information to inform discounts for future growth. CMD has experience when to use one vs. the other, again, it’s best to schedule a discussion given all the permutations involved.

JOURNEYS CAN START IN VARIOUS PLACES – CALL ON Coalesce FOR OPTIONS

Where to begin? We can do an initial consultation and provide recommendations on what to list for your offer based on your current GTM, and if you are an ISV, your experience selling to customers who are already running your product or service on AWS. For SaaS companies this is slightly more straightforward: can you accelerate your growth and expansion plans by co-selling with AWS while transacting those offers via AWS Marketplace? Either way, let’s talk – we are here to help you succeed.

COALESCE SOLUTIONS AND AWS

We serve ISVs utilizing AWS Marketplace to gain more incremental business value

Coalesce is a Solutions provider with deep expertise in compliance, cloud native application development, AMP and cloud migrations. We developed our long-standing AWS Marketplace reseller expertise in part as an exclusive cloud reseller for Adobe ColdFusion and gained deep AMI Solution Provider expertise in addition to vertical experience for all sectors including highly regulated markets e.g., Financial Services, Government.

Leveraging our experiences, competencies and insights of needs that similar solution providers and ISVs have, lead to the launch of Coalesce Marketplace Delivery Service including the development of our Reporting Portal.

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"Going to market with AWS is very different than the traditional channels, and you increasingly need to sell and deliver your service via AWS Marketplace. The Coalesce team has deep expertise in partnering with AWS, building successful AWS MP based GTMs, and has the supporting technology services depth to make you win."
Bob Layton,
CRO for Digital Defense