The Cloud’s Silver Lining: Long-Term Customer Relationships
POSTED : August 23, 2013

Who wins in a cloud-delivered world?  Clearly, and deservedly so, customers stand to benefit the most through choice.  Customers benefit when their software vendor or partner presents them with cloud, on-premise, and hybrid options.  Secondly, cloud innovators and cloud technology providers benefit as well through new market entry and associated new revenue streams.  For many software vendors, cloud computing offerings serve as a genuine engine for customer acquisition and sales growth.

What about channel partners – those companies that deliver revenue to software providers at scale?  According to a recent Forrester study, channel partners have finally begun to adopt cloud solutions into their portfolio of solutions (Cloud Channel Trends, 2013-2014).  Despite this evidence, the threat of losing top-line revenue has prevented many partners from becoming committed cloud resellers.  Forrester surveyed channel partner executives throughout the US and Europe and the single biggest reason for those partners not reselling or planning to resell cloud services was that they were “not interested” in the (cloud reselling) business (Cloud Channel Trends, 2013-2014).  A possible interpretation of that data point: Cloud’s subscription-based pricing model is very disruptive to channel partners and causes great uncertainty.  Channel partners follow the money; if a compelling case on the basis of revenue or margin isn’t so apparent, then where is the benefit in reselling SaaS?

For channel partners to find meaning and value in selling the cloud, partners must focus wholeheartedly on the customer relationship.  In on-premise models, partners sell a solution and/or implement it and move right along to the next customer.  In a subscription-based world, however, channel partners must take a longer-term approach to their customer relationship; specifically, shifting focus from the point-of-sale (or renewal) to being attuned to the entire customer lifecycle.  This includes walking the customer journey, nurturing the relationship with an “always-on” eye on value, understanding customer business drivers, discovering business problems, and identifying those customer moments of truth.  Taking a long view of the customer relationship has the following business benefits:

  1. Customer acquisition: Cloud is very topical for customer decision-makers, and Forrester data suggests that the “buying center” for cloud services includes both IT as well as line-of-business decision-makers (Cloud Channel Trends, 2013-2014).  Recognizing this increases the number of target buyers with existing customers as well as prospects.  As such, leading with a cloud solution is perhaps an effective way to engage with new prospects.  Cloud deals require less customer investment upfront and therefore, one could argue, are easier to close.
  2. Market expansion: Many partners are limited to sell and implement within their operating geography for on-premise deals.  Cloud enables the ability for partners to manage cloud services remotely allowing for business development beyond geographical borders.
  3. Up-Sell Opportunity: Walking the customer journey with customers allows for predictable and natural up-sell conversations with customers.  There are no “triggers” that would force the conversation in a scenario where a channel partner is living and breathing their customer’s journey.

Channel partners that take a longer-term approach to their customer relationships are in the best position to discover significant opportunities in a subscription-based cloud world.

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