Customer demand for cloud solutions is growing exponentially, as both the practical and financial benefits are becoming too attractive to resist. If you’re a software vendor, this is great news: it’s creating ever-expanding opportunities for you, because customers are seeking the very cloud solutions you want your partners to sell.
What it really takes to attract and support partners as they develop cloud services
But if you want your partners to develop a sustainable cloud business with you, you need to understand their perspective on this transition.
First, keep in mind that you’re asking partners to make radical changes – possibly the most radical changes they’ve ever considered. In the past, partners may have easily adapted and aligned to your business model as it evolved, but the transition to cloud solution selling is unlikely to be as smooth. You are asking them to fundamentally change from an upfront value-added services model to a licensing managed services model where the revenue is spread over a longer period of time – impacting how they execute and profit from their business. This is not just a product shift; it’s a shift in their entire business.
Many of your partners will be fearful, as these are high-risk changes to make. The shift to cloud is on par with the shift in retail over the last 10 years, with the rise of e-commerce disrupting traditional brick and mortar selling. And just as in retail, not all your partners will make it. Best case scenario, only 20% of your partners will successfully make the full shift to cloud along with you.
For those that do make the shift to cloud, there are a few critical things vendors must get right in order to attract, support and grow a successful cloud partner ecosystem.
First, while the need for cloud solutions may be inevitable, the need for your solutions is not. Your partners have choices, and the cloud vendors they select now are likely the vendors that they will remain loyal to for years to come. So it is crucial that partners adopt your platform now in order to stick your business to theirs for the long haul. And by picking your platform, they will likely pick your stack as well, embedding many of your products and services into their customer offers. The bottom line: it’s critical to get partners to choose you now as they move into cloud services. Winning them back later on will be tough.
But, it’s not enough for partners to just pick you - you want them to lead with your cloud solutions, not just keep them in their back pocket if the customer asks. This requires a compelling partner value proposition – partners will lead with where they make money. So ensure partner satisfaction and drive loyalty by building your offers in a manner that enables partners to monetize them.
One key component of a strong value proposition is allowing partners to manage the customer relationship. Structuring your solutions in a way that lets partners bundle with their offers allows them make more money. If monetization isn’t easy, partners will look elsewhere. And anytime your offer destabilizes the customer relationship, partners will become wary.
But coming to the table with a strong value proposition is only part of the equation. You have to support partners through their transition to cloud. You can’t push them too far or too fast from what they currently do, or they will go out of business before they make a profit. Help them transform their businesses at a high level by creating a roadmap that allows them to maintain their current business while building their cloud practices.
You also need to determine your cloud customer acquisition model. If you are going to push leads to your partners, make sure you have an effective lead generation engine that delivers real prospects. If you expect your partners to create their own customer base, don’t expect them to do it all. Partners are not typically good at generating their own customer pipeline; they are better at keeping up with current customer needs. Help them either focus on upselling to current customers or expansion, but not both.
Last, you need to get clear on how many partners you need to reach your cloud goals. Remember that not all your partners will survive – or even attempt - the cloud transition. For example, if you need 4,000 partners, you must target at least 20,000 current partners or start looking elsewhere for new partners.
Looking for help with your cloud partner channel? We’ve helped several vendors with cloud partner transformation strategies, and whether you’re just developing an approach or refining an existing strategy, we can help.