Rethinking sales and marketing isn't an option; it's a must for building a successful cloud practice. That's advice...
that traditional VARs and MSPs can take to the bank, according to Terry Hedden, CEO of advisory services firm Cloud Guru, who delivered a session titled "Selling Cloud Services: Cloud Sales Strategies That Deliver Lightning Quick Results" today at ChannelCon 2014 in Phoenix.
Hedden's message isn't new but it's one that VARs and MSPs need to keep hearing as many transition their businesses and sales teams from break/fix and/or project work to a recurring revenue model for cloud.
Terry HeddenCEO, Cloud Guru
Sales and marketing of cloud solutions, in particular, are the areas where most partners fall short. "A lot of VARs and MSPs are great engineers and service providers, but selling, architecting the offering, proposing it and closing the deal, maybe finding opportunity … all that is a mystery," he said.
In his one-hour presentation, Hedden set out to demystify how companies can make a lot of money selling cloud and how to tackle the unique operational challenges that companies face when selling cloud.
For starters, he noted that the basic reason partners' cloud profitability may be lagging is because the level of and skills of the person selling cloud are fundamentally different from those of the person selling on-premises products.
Companies have to revisit the cloud sales team structure and do one of two things. "You can teach an old dog new tricks, or you can get new dogs," Hedden said.
Creating what he called an integrated team -- consisting of cloud staff and on-premises staff -- while challenging, can work, he said.
"If the organization is primarily focused on solution selling, sees business consulting as a core business and views cloud as a viable deployment option, then the integrated sales team approach can work," Hedden said.
On the other hand, creating a brand-new cloud sales team allows companies to start from scratch and select a sales team with a net-new profile, with a higher level of business acumen than technical skill.
Hedden also outlined four sales roles that need to evolve to be successful at selling cloud:
- Consultative sales executives. These people know how to listen to customers.
- Inside salespeople. These staff members need to evolve from being a slinger of transactions to wrapping value-added things around a cloud sale.
- Account managers. These people are responsible for recurring revenue streams.
- Solution engineers. They're the technical complement to sales executives and can help salespeople simplify the complexity of the cloud.
To get their businesses to be self-sustaining, Hedden said, business owners must invest in a separate salesperson or sales team, compensate to motivate and instill confidence, and do demand generation.
For both managed services and cloud, Hedden stressed that sustaining sales is easy but growing sales volume is difficult. To get growth, companies must market -- whether outsourced or insourced.
"You've got to develop a demand generation capability, not just with existing customers for add-on projects, hardware and software, but for net-new customers," he said.
Sales compensation for cloud solutions is a new beast for traditional VARs and MSPs. Helping the sales team make a lot of money is in a partner's long-term best interest.
"The reality is that you've got to motivate your salespeople to do what's in the best interest of the customer and what's in the best interest to your company," he said.
What does that mean to partners? You've got to front-load your commission program, according to the speaker.
So, for example, partners can wrap a lot of value-added services around their cloud offerings, which add up to a lot of revenue for the business and offer the sales team commission based on that type of sale; or partners can offer the sales team a straight commission, meaning no base salary but with roughly double the commission.
All the talk about sales is empty without marketing to achieve sales success.
"Marketing creates leads, leads create sales and sales create clients, then clients market on your behalf to create more opportunity for you," said Hedden.
Channel partners have a difficult time investing in marketing, he said. Why? Because marketing is a repetitive and continuous job.
Dig Deeper on Cloud Business Model Development for Service Providers
Lynn Haber asks:
Does a solution provider need to replace their entire sales staff to transition to a cloud-based business model?
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