Part one of this article series discussed the financial considerations that could positively impact a solution provider's business when moving to a cloud model. Part two of the series will address the strategies needed to sell a "cloud first" model.
IDC predicts that 70 percent of CIOs will embrace a "cloud first" strategy in 2016. It is more important now than ever to align the sales organization with cloud at the core.
The advantages of cloud solutions, namely, reduced capital expenses, increased responsiveness, and subscription-based pricing are definitely compelling for many organizations. Solution providers should be seeing something too – the opportunity to upgrade the organization's offerings and bring new solutions to existing customers, as well as customers that couldn't previously be reached.
As reported by IDC, each year, providers with cloud offerings generate 43.1 percent of revenue from new clients (and receive 56.9 percent of revenue from existing customers) while traditional providers only bring in 33.1 percent from new clients (66.9 percent of revenue from existing).
Yet, despite the many benefits, and growing popularity of cloud solutions, providers shouldn't think that the cloud is an "easy sell." To deliver cloud services, the sales and revenue planning is fundamentally different. Organizations may only need to make a few business changes, or they may need to consider completely revamping their previous models to include cloud-specific selling skills.
There is a simple but very important difference between the two sales models. Traditional sales would take you to the actual moment of the sale, close, and then move on to the next deal. However, the actual moment of a cloud sale is only the beginning of the relationship. Solution providers should think of cloud and managed services deals as long term in nature.
Keep in mind that despite the huge growth that cloud solutions have seen, and will continue to see, many customers will want to take it a bit slow at first. Find out how cloud savvy the prospect is and match the sales approach to the level of their understanding.
High-performance with cloud at the core
A cloud-first sales approach requires a different way of thinking and the proper incentives, training and ongoing performance management is critical to the success of the sales organization. This approach isn't always easy as sales executives who are successful at the "old" way of selling, may not easily translate their methods to the "new" way.
Typically there is an initial drop in sales revenue in the first year and the solution provider will need to take a close look at its commission model. Compensate too little and the best producers will leave, on the other hand, compensate too much and blow the budget. Revenue from cloud sales will typically iron out in three to five years. The right mix of base pay, stock, bonus and special incentives make financial sense and will motivate sales people.
Top organizations place the emphasis on team-based compensation as well as individual incentive compensation, driving behaviors that motivate over the long term.
"It is important to put a compensation plan together that incentivizes growth in the areas you want to grow,” says Pierce. “We advise our channel partners to create compensation models that are specific to their cloud growth objectives, cross-selling of new solutions, and build a team component to that as well.”
Trusted advisors generate ongoing revenue
Renewals in a cloud environment are key to long-term success. Solution providers must also focus on the internal sales team or customer liaison that is tasked with building long-term relationships with the customers and ensuring renewal income. It is important to make sure compensation is incentivizing for this team and encourages continued cross-selling.
Training and enablement of the sales team is essential for generating ongoing revenue and maintaining a culture of excellence that positions the organization as a trusted advisor. Training has been proven to increase the overall value of the company, creating many long-term impacts on the bottom line, including, a reduced reliance on internal resources, fewer costly mistakes and better use of applications.
A properly-compensated and highly trained sales team will become a customer's trusted advisor, which opens opportunities for up-selling other cloud offerings, deeper customer engagement, and continued renewals.
"To sell cloud solutions, our partners need to take a services-based approach – a strategy that requires a more consultative relationship with the customers' problems first and then suggest the appropriate solutions that solve those specific challenges," said Pierce.
Read the rest of the posts in this series: