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How to Survive In the Cloud

HOW TO SURVIVE IN IN THE CLOUD IDC forecasts that the Software as a Service (SaaS) market will grow to $40.5 billion by 2014, and traditional business application sales will no longer sustain the average Value Added Reseller. Times are changing...don't be left behind. DRAMATIC CHANGE IN SERVICES With monthly cloud software expenditures, value is perceived on a subscription basis. This leads to a lower demand for professional services. Application Setup & Configuration User and Super User Training Reporting Data Conversion TRADITIONAL CLOUD Server Configuration Workstation Setup Executive Training 0.3 Vertical IP Services to License Ratio 2.0 SALES CYCLE LENGTH To successfully sell in the cloud, the sales cycle and number of customer interactions should be reduced from 9 MONTHS to 45 DAYS. TRADITIONAL SALES CYCLE CLOUD SALES CYCLE JANUARY FEBRUARY MARCH JANUARY FEBRUARY APRIL MAY JUNE JULY AUGUST SEPTEMBER COST OF SALE: Average Deal Selling in the Cloud requires reducing customer acquisition costs (sales & marketing) to less than 20% of revenue. Traditionally, an $18.5k minimum cost of sale was required; this is reduced to $6k in the Cloud. $18.5K* Executing a "traditional" solution selling process requires a minimum $18,500 investment. $12.5K + $6K Marketing Executing a SaaS sales process requires a reduced cost of sales to approx. $6,000; which supports a healthy economic model. $6K* $3K + $3K Marketing * Depending on the market segment REVENUE PER SALESPERSON Revenue per sales person must increase dramatically in a volume based business. Internal role changes, such as transitioning telemarketers to BDRS, will yield improved conversion rates, better close ratios and a lower cost of sale. $1.1M PER SALESPERSON TRADITIONAL SALES TEAM VS. US$5M REVENUE $1.7M PER SALESPERSON Average Sales Team Compensation = $130K (Total: $455K) CLOUD SALES TEAM US$12M REVENUE Average Sales Team Compensation = $118K (Total = $517K) CUSTOMER VOLUME To sustain profitability in the cloud, 10 times the number of customers are required than were needed to sell traditional on-premise. $5M $1.2M $1.2M $1.2M $1.2M $1.2M $1.2M $1.2M $1.2M $1.2M $1.2M TRADITIONAL CLOUD MARKETING MIX Reduce customer acquisition costs and build lead generation by increasing marketing spend. Focus on high-volume/low-cost online activities such as PPC advertising and SEO to drive "organic" search results. TRADITIONAL CLOUD Marketing Marketing VERTICAL INTELLECTUAL PROPERTY To compensate for reduced services cash flow, partners should create resalable vertical specific IP to increase profitability. O Application Setup & Configuration User and Super User Training O Reporting Data Conversion Server Configuration Workstation Setup Executive Training Vertical IP VERTICAL IP REVENUE VERTICAL IP REVENUE P REVENUE VERTICAL CLOUD SERVICES CLOUD SERVICES CLOUD SERVICES Year 1 Year 3 Year 5 Is Your Software Business Cloud Ready? TEST YOUR CLOUD EXPERTISE Check out the Cloud Expertise Quiz to see if your business is prepared to sell in the cloud SOURCES: Salesworks' Partner database and financial modeling Microsoft: IDC:§ionld=null&elementld=null&pageType=SYNOPSIS Copyright © 2012 Salesworks Systems Inc. All rights reserved. Pay-per-Click Campaigns Telemarketing HI, Postcard & Letter Direct Mail Exec Briefings, Webinars & Invites Search Engine Optimization Pay-per-Click Campaigns Exec Briefings, Webinars & Invites Email Marketing Search Engine Optimization

How to Survive In the Cloud

shared by Salesworks on Jul 16
Times are changing and on-premise software solutions are going the way of the Dodo. Companies that sell traditional on-premise software solutions are being forced to reevaluate their business strategy...




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