The Hitchhiker’s Guide to Enterprise Ecosystems
Plenty has been written about bringing products or services to market. Practices have been developed to manage both direct and indirect sales channels. Literature has been written about product development models versus customer development models. And, the traditional process of creating demand is now very well known.
However, the exponential growth of products, solutions, and applications in the B2B space have created a new type of a sales channel—one that resembles, something we’re all familiar with, an appstore. In fact, leading platforms, like Marketo, have taken notice and built ecosystems and programs to facilitate the discovery of complementary independent software vendors (ISVs) for their customers.
These ecosystems require a fundamental change in how ISVs think about managing sales opportunities. Specifically, some questions an ISV should be able to answer include: How to quantify the opportunity? Do you need a dedicated person to manage the engagement and who should that person be? And, which ecosystems make sense to participate in? But unfortunately, the reality is that many organizations struggle to successfully evaluate and manage the opportunity. This blog will take a look at how you can successfully navigate the galaxy of enterprise ecosystems and choose a partner and an ecosystem that will work for your business.
Find The Right Partner
The growing number of opportunities—in the form of an appstore, a program or an ecosystem—means that you’re more likely than ever to find one that offers the right product-market fit and therefore helps you promote your product.
As you look for the right partner, it’s important to consider the benefits a program offers and how the platform’s program drives success for its participants. As you evaluate, you’ll find that some programs are backed by a solid plan to help you drive business, while others merely provide affiliate options. Make sure the program you choose has offerings that make sense for your business in its current phase, and as you look toward the future. For example, an early-stage startup may not need the same acceleration options that a later stage startup needs.
After carefully considering those criteria, you’re likely to end up with only a handful of programs to choose from. Ask yourself how many “merchants” are already promoting their merchandise in that ecosystem and its respective program; will you be able to stand out? Or, is this market saturated? Consider the distribution and the growth of the platform’s customer base. Ask yourself if the ecosystem is a known and established place to promote solutions like yours, or if you will standout—either as a refreshing outlier or an odd one. Then, prioritize your options and register for the program where you’d like to publish your solution/product/app listing. You should be able to quickly identify and validate if the right customers are there and will react positively to your product.
Assess The Opportunity
Many marketers and business development (BD) folks I have met underestimate the opportunity they have in aligning their go-to-market strategy with a large enterprise ecosystem. Most of them will size the opportunity by multiplying the number of customers the enterprise ecosystem is exposed to, with a wishful penetration rate, and their average sales price (ASP). While this calculation can offer a good estimate, it hides some components of revenue that are directly influenced by the ecosystem. By using Little’s Law, you can demonstrate that the revenue contribution of the business is a factor of four elements:
- The number of sales opportunities at any given time
- The average contract value
- The win rate
- The length of the sales cycle
Let’s look at an example using these four elements: If you typically work on 20 opportunities at a time and you think that participating in an enterprise ecosystem’s program can change it to 25, and if you estimate that your close rate will grow from 20% to 30%, and that the tighter alignment with the platform vendor will help you shave 10 days off your 100 day sales cycle, bringing it down to 90 days, you have just forecasted your business to double.
So, when marketing or BD plans their business, it makes sense for them to identify which of these parameters their participation in an ecosystem program is going to impact and evaluate if the platform vendor has a plan to help them achieve those goals.
The highly focused ecosystems also make a great foundation for your ABM strategy. Enrolling in an app/solution ecosystem should dramatically affect your teams’ ability to focus on a segment of accounts.
Manage The Channel Opportunity
Managing the opportunity an ecosystem provides requires commitment on your end as well as from the enterprise. Don’t just sit back and wait for your business to grow.
On your end, hire a person who can be the general manager of your ecosystem business, and who will ensure that the program gets the right marketing and product support from both sides. Hiring someone who can simply manage the relationship won’t suffice.
From the enterprise ecosystem that you choose, you should expect a solid infrastructure of partner folks, not only in the ecosystem business but also under sales and marketing. Without this infrastructure you will mostly likely interact with partner managers who have good intentions but can’t translate that into making a difference in the field.
Navigate The Partner Galaxy Fearlessly
Undoubtedly, it makes sense for ISVs to take advantage of the programmatic opportunities platform vendors offer to connect and promote complementary solutions to their customer base. While these programs vary by structure, distribution, maturity, and saturation of the ecosystem it’s important to choose one that most benefits the type and phase of your business.
At Marketo, we’re always working to make our Launchpoint ecosystem an optimal experience for not only our customers who are coming to look for technology that offers seamless data integration and platform augmentation, but also for our partners who we are now offering the opportunity to grow their business via a combination of new platform technologies and a growth acceleration program.
Lastly, don’t forget, a towel is the most important item a Hitchhiker can carry. 🙂