2 min read

Bruce Stuart: Marketing the transition to the cloud

Cloud

At present, 60 to 70 per cent of resellers do not have any dedicated resources focused on marketing.

High volume, low cost customer acquisition is crucial to the economics of the cloud/SaaS business model. It is therefore imperative to have a structured, high productivity client acquisition marketing functionality in place. When your business planning begins to focus on client retention and measurement of the long-term impact of client loss rate (or churn) on the long-term value of your business, the marketing need becomes even more critical.

How much more “client acquisition fire power” does a cloud or SaaS focused business require in comparison to an on premise reseller of the same size?   Assume an on premise reseller generates five million dollars per year of net new business generated by 100 transactions of average size $50,000.  Further assume the close rate on proposals is 25 per cent and proposals are requested by 50 per cent of the leads generated.  The simple math would tell you that this business requires enough “client acquisition firepower” to generate 800 leads per year or about fifteen leads per week.

Now assume a cloud or SaaS reseller generates five million dollars per year of net new business generated by 400 transactions of average size $12,500.  Further assume the close rate is 25 per cent and proposals are requested by 50 per cent of the prospects generated.  The simple math in this case will tell you that this business needs to generate 3,200 leads per year or about 60 qualified leads per week.

The cloud or SaaS based business needs to generate 4-6 times the number of leads that the on premise business needs to generate to support the same sales volume.  From a marketing cost perspective the cloud or SaaS business needs to generate leads at 15-25 per cent of the cost per lead generated by the on premise business in this simple example.

In order to feed the sales force of a cloud or SaaS focused business your business plan will need to include a set of marketing capabilities that can generate large quantities of high quality leads with relative ease in a cost-effective manner.  The key marketing question for your business will be “can we do this”?

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About Channelcorp

Margaret and Bruce Stuart founded Channelcorp in 1989.  The firm is a global leader in the assistance of reseller, distributor and vendor clients. Channelcorp specializes in the business model transformation that is required in the face of the structural changes to recurring revenue driven business models in the worldwide IT business (www.channelcorp.com/services.php).  Channelcorp publishes and sells four industry- leading books and 12 white papers (www.channelcorp.com/publications.php).  This independent firm has delivered consulting and executive education to vendor, reseller and distribution clients in more then 40 emerging, developing and mature markets around the world. (www.channelcorp.com/workshops.php).  More than 25,000 channel professionals from around the world subscribe to the newsletter Channelcorp intelligence (www.channelcorp.com/newsletter.php).