Hi, it’s Roman from Partner Insight. Welcome to my weekly newsletter, where I deconstruct winning Cloud GTM strategies and the latest trends in the rapidly evolving world of cloud marketplaces.
Today, we'll dive into AWS marketplace growth strategies with the insightful Phil Soane, Senior Marketplace Development: EMEA at AWS. We'll explore how Marketplaces are "changing the game" with Nima Badiey, drawing on his incredible experience leading alliances at GitLab, Google Cloud, and now managing strategic partnerships at NVIDIA. Finally, we’ll discuss a case study on how Cloud GTM, PLG, and partnerships can reinforce each other. Let’s dive in.
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Navigating AWS Marketplace: A Blueprint for Accelerating ISV Growth
In the 'Cloud GTM Leader Course' session Phil Soane, Senior Marketplace Development: EMEA at AWS shared his insights on go-to-market strategies for Independent Software Vendors (ISVs) to accelerate in AWS Marketplace. The session underscored the importance of AWS Marketplace not just as a distribution channel but as a strategic component of an ISV's overall business growth strategy.
Given Phil’s extensive AWS experience, his insights offer actionable strategies for companies aiming to tap into the vast AWS Marketplace's potential. His team’s vision for ISVs in AWS Marketplace is to achieve a state where the digital marketplace becomes as integral and fluid as water within their business operations. The end state is a frictionless normalization of marketplace practices within ISV businesses, a point at which real momentum and success are achieved. But it’s a process and Phil likened his role in helping ISVs leverage the AWS Marketplace to that of a running coach - someone who knows the course and is committed to helping ISVs complete their marathon in marketplace adoption.
Continued adoption and Normalization of AWS Marketplace in Today's Software Industry
Tracing the evolution of AWS marketplace, Phil highlighted the significant shift in marketplace dynamics since its launch in 2012. Initially focused on self-service public offers to reduce procurement friction for DevOps engineers and cloud architects, AWS Marketplace has evolved to include much broader use cases today. This expansion responds to customer demands for greater control and governance of software and cloud spend, helping to modernize and digitize their procurement processes
Today, AWS Marketplace reached a critical mass with over 2.5 million active subscriptions and 300,000 active customers, integrating more than 4,000 ISVs and 15,000+ product listings into its catalog. Phil also highlighted the shift of marketplace adoption beyond traditional infrastructure software categories like security and data. A notable recent trend is the increasing integration of business applications, exemplified by Salesforce's adoption of AWS Marketplace that was announced in re:Invent 2023. This development marks an expansion towards more diverse software types benefiting from growing via their cloud marketplace.
The term 'normalization' is what best describes the current trend in AWS Marketplace usage. This trend reflects the growing acceptance and integration of marketplace strategies into the GTM plans of various software providers. High-profile success stories like CrowdStrike, who have transacted more than a billion dollars through AWS marketplace, and other significant players like Palo Alto, Splunk, Trend Micro, Wiz and Snowflake in the public domain certainly underlines this trend.
Today AWS Marketplace is becoming an integral component of ISVs' GTM, presenting a vital avenue for revenue and market expansions.
Expanding Benefits of Using AWS Marketplace
Features and Benefits to Drive Customer Demand
The underlying reasons why AWS customers adopt marketplaces are shifting too. It's no longer just about using their committed cloud spend to buy via AWS Marketplace. Many customers are turning to AWS Marketplace as part of their broader modernization strategy. AWS Marketplace helps customers accelerate and simplify procurement, improve governance and control, and optimize software spend with features including custom pricing and agreements, cost management tools, Private Marketplaces, and Vendor Insights.
Features and benefits to help ISVs build, grow, and scale
For ISVs, AWS marketplace is increasingly seen as a crucial element in their GTM strategies.
There are two primary categories of MP benefits for ISVs: growing existing businesses and accelerating revenue growth generally. By embedding marketplace strategies early in the sales cycle and incorporating them into sales playbooks, ISVs can significantly accelerate their revenue growth. This approach can lead to winning more deals, closing them faster, and achieving larger contract values as cited in the Forrester report.
By engaging with customers and AWS account teams well ahead of renewals or new sales opportunities, ISVs can create scenarios where, at the very minimum, they experience smooth and easy flat renewals. In the value-add scenarios, early engagement leads to discovering new opportunities, upselling, and closing new contacts – all facilitated smoothly through AWS marketplace.
This highlights the necessity of not just meeting at the 'cash register' for transactional purposes but front-loading engagements for more significant impact. The idea is to build marketplace transactions into the sales playbook as a habit, rather than an afterthought.
Co-Sell to Accelerate and Expand your Deal Flow
We dived deeper into nuances of co-selling and how ISVs can accelerate and expand their deal flow with AWS. The key to unlocking this potential lies in understanding and utilizing the AWS ACE program (APN Customer Engagements) effectively.
The ACE program is not a tool for blindly uploading opportunities at bulk - it's about quality engagement. One of the main aspects of ACE lies in its ability to foster trust with cloud sales teams and facilitate optional co-sell discussions with AWS account managers. ACE can help ISVs to understand the AWS Marketplace engagement score for each opportunity and to assess the customer's propensity to use AWS marketplace.
Phill suggests for ISVs to use ACE qualitatively and to trust their sales team to input opportunities into ACE, knowing that this action triggers an optional co-sell discussion with an AWS account manager. This conversation can offer insights into the customer's likelihood to engage via AWS marketplace. Habitually using ACE in this manner can lead to joint successful outcomes, turning it into a powerful mechanism for ISVs sales strategy.
The desired outcome of engaging with ACE is to create a positive feedback loop, a flywheel effect. As ISV account managers observe successful outcomes from their ACE entries – for instance, good discussions leading to closing deals through AWS marketplace with AWS account managers – it builds confidence in the process. The ultimate goal for ISVs in leveraging AWS ACE is not just to increase the volume of opportunities but to target new business and customer engagements. By focusing on the quality of these engagements and building trust with the cloud teams in the process, ISVs can see a tangible impact on their revenue growth.
Leveraging Sales Methodology for Effective Sales Team Engagement
It’s well known that adopting cloud marketplaces requires effective change-management inside the organizations. One of the most important strategies of implementing marketplace change management with CROs and sales VPs, is to integrate AWS marketplace into a company sales methodology like MEDDIC.
Embedding the AWS co-selling and marketplace processes into MEDDIC, makes it more easier for sales teams who are already accustomed to this or similar sales methodologies. For instance, during the economic buyer stage of sales qualification and discovery, sales teams are encouraged to ask about the customer's spend commitment, who the economic buyer is. This approach also extends to understanding who owns the marketplace strategy within the customer's organization and who will be responsible for the final purchase decision.
Optimizing Co-Sell Strategies with AWS: Acceleration, Expansion, and Building Trust
One of the key insights on co-selling to remember is that co-selling is not about AWS selling software on behalf of an ISV or vice versa. It's about finding the sweet spot for mutual benefit - acceleration and expansion, the twin pillars of effective co-selling.
When discussing co-selling, starting the conversation with the cloud teams focusing on the pain being solved for the customer can significantly enhance the engagement. This approach aligns the champions on both sides - the ISV and AWS - fostering a collaborative solution that benefits customers and all parties involved.
A practical strategy for co-selling involves leveraging the support from AWS teams. This support may include sharing account intelligence, assisting in offsetting proof of concept and migration costs, etc. It's about working together on a catalyst opportunity, where AWS field teams contribute wherever they can and see fit.
One of the frequent questions in co-selling are cold introductions. However, asking cloud account teams for introductions without any context or established relationships within the customer organization can be ineffective. One of the effective alternatives is when a company already established a connection, has previous context and is asking for help to accelerate it.
Another successful strategy is to share wins and context from previous engagements. When AWS account managers have positive experiences with an ISV in a specific use case, they are more likely to recommend that ISV to other customers facing similar challenges.
Communicate Wins for Building Trust and Incremental Growth
It is strategically important for ISVs to communicate wins to their cloud counterparts not only to serve as a record of success but also as a tool for educating AWS account managers about the specific customer challenges addressed and solutions provided by ISVs. By clearly articulating the customer problem, the resolution, and the metrics of success, such as how much was saved in a customer's migration strategy, ISVs can significantly enhance their visibility and credibility within the AWS ecosystem.
Wins are not just about closing a sale but about creating a positive, repeatable experience that encourages AWS account managers to introduce ISVs to new leads, thereby driving incremental revenue growth.
Navigating Public Offers and Private Offers for Optimal Sales Impact
Understanding the distinctions and strategically approaching public and private offers is essential for ISVs to effectively leverage AWS Marketplace.
Public offers
Public offers, often synonymous with self-serve purchases, are predominantly utilized today by customers who directly buy from AWS Marketplace low-mid cost pay-as-you-go type products. Examples are users like cloud architects who seek immediate access to software solutions. The ease of use and seamless integration with existing pay-as-you-go services make public offers an attractive choice for these users.
Private offers
When it comes to larger, higher priced, contract-based commitments however, this is where Private Offers become essential. Typically user personas who are here committing to large 2-3 year contracts are different from those who make smaller, pay-as-you-go purchases. Additionally, procurement departments might not engage with high-priced offerings directly from AWS marketplace without deeper considerations and negotiations. This persona alignment should be central for ISVs choice whether to use Public or Private offers.
A promising middle ground lies in the use of SaaS free trials. This approach allows ISVs to maintain visibility in AWS marketplace while catering to the right user personas. By offering free trials, ISVs can place their product directly into the hands of potential users, facilitating a smoother transition to more significant commitments. Once the user appreciates the value of the software, ISVs can then engage with procurement teams for private offers, leading to longer-term contracts.
The increasing trend of SaaS free trials underscores the shift in marketplace dynamics. For ISVs with SaaS high LTV contract-type products, leveraging both free trials and private offers can result in a more effective sales strategy, tapping into the right customer personas at different stages of the buying journey.
In conclusion, our deep dive into AWS Marketplace strategies revealed that the key for ISVs to succeed is strategically embrace co-selling with AWS, leverage both public and private offers judiciously, and effectively communicate wins to build trust with clouds and drive incremental growth. The session underlined that success in AWS Marketplace is not just about transactional engagements but about embedding marketplace strategies into the ISV’s sales DNA.
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Marketplaces are Changing the Game
Nima Badiey, explained in our Cloud GTM Leader course how Marketplaces are Changing the Game, drawing from his incredible experience in leading alliances in GitLab, Google Cloud and now strategic partnerships in NVIDIA.
The Meteoric Rise of Cloud Marketplaces
Nima highlighted the forecasted leap in transactions on major marketplaces from $15Bn in 2023 to $100Bn in 2027, unlocking a massive potential for SaaS vendors (ISVs). Many leading ISVs now put cloud marketplaces among their top 5 priorities.
“That's a phenomenal growth rate to take advantage of. So marketplaces as a business construct as a value added service provided by the CSVs is definitely here to stay.”
The Gravitational Pull of Marketplaces
The combination of vast customer bases, a staggering $340Bn in customer cloud commits, and the ability to drive procurement efficiencies have made top marketplaces a central hub for customers and partners.
“Spending gravity, this kind of cloud gravity has made it very attractive for customers and partners alike to actually have a positive book of business with the hyperscalers and use marketplace as that mechanism. Marketplace is important because it gives you access to the customer budget the it gives you access and ability to do co-sell it drives procurement efficiency.”
Need of Cloud GTM Strategy
Nima emphasizes that success demands much more than just being on the marketplace.
“Marketplace listing... - that's your entry fee that gets you into the marketplace… You have to continue investing and part of that investing might include things like actually building on top of their platform, putting together a resale capability on top of it… You're in a crowded environment with 30,000 other listings. You've got to figure a way to promote yourself.”
He also advises treating marketplace fees as an investment, not a cost, focusing on long-term growth potential.
Understanding Co-Sell Dynamics
Clarifying a common misconception, Nima highlighted that hyperscalers and marketplaces “don't act as resellers - they're not actively hunting new customers for you."
This distinction is crucial for understanding co-sell opportunities and developing smart strategies, because “when they're selling to a customer if there's hedge room within the deal they're pretty open to the idea of bringing third parties”.
If hyperscalers “can throw a couple of ISVs into the big PO, into the mix when a customer is buying something, and then they hit their commit number - that's what they really want to see.”
Ruba Borno shared on AWS re:Invent stage, that marketplace deals are "50% faster close rate and 5X richer”.
“Anecdotally, I have examples that are 2,3,4,5 times better than this” adds Nima.
The rapid growth and scale of cloud marketplaces gravitates partners and customers to them. Are you leveraging this gravity to your advantage?
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Can PLG, partnerships and cloud marketplaces not only coexist, but reinforce each other?
Freshworks' transition from a PLG model to experiencing 2X growth rate in partner-sourced ARR (vs direct sales) while also co-selling with AWS, is a prime example. Let's examine it.
Freshworks is known for its CX and CRM products that compete with Salesforce and Zendesk. It achieved $596 million ARR in 2023, surpassing Wall Street's forecasts with a 20% growth rate. But what's driving this growth?
Overlaying Partnerships on PLG
Originally Freshworks was built on PLG motion. The company explained,
“PLG is the core foundation of Freshworks…The simplicity and powerful functionality underpinning our Freshworks solutions acts as the primary driver of customer acquisition, conversion, and expansion.”
However, to grow, Freshworks needed to unlock the enterprise segment, where PLG has its limits.
This is why the company is making significant investments in partnerships.
Freshworks boasts 67K customers, including 2.5K with >$50K ARR, and has cultivated a network of 400 partners.
Dennis Woodside, its President, highlights,
"We continue to see growth, particularly in larger accounts. While our history was in SMB ...But today about 60% of our revenue is coming from larger accounts”.
Partners now drive 25% of the company's new ARR.
Enterprise Co-selling with Hyperscalers
This has led to the company's partner-sourced revenue to grow at 37%, double that of their direct sales.
Freshworks demonstrated its strategic focus further, signing strategic collaboration agreement with AWS and becoming a finalist for AWS Business Applications Partner of the Year.
This week company’s President underscored the potential of the AWS partnership for growth. AWS not only helps it co-sell and close deals faster, but customers also can buy Freshworks products using cloud commits.
“We announced a couple weeks ago a partnership with AWS, where they're bringing us into new deals. We're working with them on deals. One of our largest deals with a large apparel maker this year was assisted by AWS…”
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