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The Value of Cloud Marketplaces — And How to Seize It

Millennials have rapidly growing purchasing power, spending an estimated $1.4 trillion in 2020. As this new generation’s buying power continues to grow, there has been a shift in how buyers are purchasing products. They no longer want to be sold to but would rather make their own decisions. 

Instead of having solutions shoved in their face, buyers want a marketplace to shop for their products and services. In fact, according to Accenture, 75% of CEOs believe their current business model will be unrecognizable by 2022 due to the growing demand for cloud marketplaces and growing subscription-based models.

Multi-cloud and hybrid cloud models are adopting the direct-to-consumer route. Zoom, Dropbox, Slack, and other industry leaders are massively growing their channels in a non-transactional way, demonstrating the value of these models. Are you prepared to serve the next generation of buyers?

Marketplaces are Multipliers

Marketplaces allow consumers to piece together their own solutions. These companies will sell your product as well as theirs to reach a total sale. The Amazon Web Services (AWS) Marketplace, for example, implements quotas and enterprise agreements with their buyers. When buyers commit to spending a certain amount of money over a set time, AWS rewards them with discounts. By being part of the AWS Marketplace, buyers can purchase from you as part of their annual quota.

In order for sellers to reap the benefits, marketplaces typically charge a percentage of the total sale to accommodate platform costs. However, with the potential to reach even more buyers and bundle incentives, this is often a worthwhile investment for sellers. Additionally, Microsoft recently cut their platform fees down to 3% from 20%, which will undoubtedly push other marketplaces to lower their fees as well.

Marketplaces grew more in three months during the pandemic than they did in the ten years prior. With 60% of buyers thinking marketplaces are a convenient way to shop and 17% of B2B purchases happening through e-commerce, it’s clear that this is a platform poised for growth (Forrester). Regardless of your size, at some point, you will be a part of someone else’s marketplace as part of their value add. Approaching marketplaces as a strategic part of your strategy will help you best utilize the sales model.

Subscription Models Become Mainstream

Marketplaces aren’t the only business model scaling at a rapid pace. Subscription models have found immense success in recent years. In a subscription model, your buyers “subscribe” to your service on a monthly or annual basis. As a result, you’re able to collect recurring revenue, helping with financial projections. This model is focused on retention over acquisition and often increases the customer lifetime value.

Subscription models have been around for hundreds of years, originally meant for publications. Subscribing to the local newspaper ensured you would always have the most up-to-date issue on your doorstep when you woke up in the morning. In recent decades, subscription models have taken on new industries like gyms, meal delivery, and personal care products. Now, subscription models have gone fully mainstream, with many popular technology companies adopting them, including IBM and Cisco. 

While subscriptions enable recurring revenue, one issue is that the buying journey never ends. Who is going to cross-sell and upsell forever? Who is doing the vital enrichment of the contract? It’s essential to consider these factors when implementing subscription and as-a-service models. 

The Value of a Community Approach

The rise in millennial purchasing power combined with new business models presents a need to shift in the way we market and sell. Ecosystem recruitment relies on a community approach. “Super connectors” are the gateway to prospects. Consider your target buyer. Who influences their buying decisions? Where do they go to learn more before making a purchase? Build resources for the influencers there to push deals.

Too much time is spent in the boardroom trying to nail down efforts. Meanwhile, so much time is wasted where the buyers are. You need to be present in the journals they read, the podcasts they listen to, the Facebook groups they’re in, and anywhere else they may spend time online. Selling effectively in this new model is all about a community-centric play. 

Cloud Marketplace Takeaways

Cloud marketplaces are on the rise, along with subscription models. As millennials are poised to have the majority of purchasing power in the near future, it’s essential your sales models are prepared for the way they make decisions.

With these new models come important considerations. Be prepared for fees associated with marketplaces, ongoing support needed for subscription models, and new marketing approaches targeting millennials.

Allbound is a Partner Relationship Management tool designed to improve your entire partner lifecycle — from training and onboarding to pipeline management and retention. Follow us on LinkedIn to stay up-to-date on the latest industry trends, best practices for partnerships, and resources for expanding your channel.

Ali Spiric