The biggest difference between Breadth-stage partners and Build-stage partners is their level of commitment to cloud. While Build-stage partners are reactive and opportunistic in their approach, Breadth-stage partners are becoming proactive in their sales approach. Much of their proactivity takes the form of what I call xSELL. What is xSELL and how is it fueling Breadth partners’ cloud businesses?
xSELL levers of success
In any monthly recurring revenue (MRR) business, successful selling boils down to science driven by three key levers: reach, frequency and yield. When incorporated into an integrated sales approach, xSELL delivers the power of acceleration. Let’s drill down into each lever to discover how it works:
1. Reach is all about getting more customers to buy a single cloud offering—it’s repeatSELL. Breadth partners launch new cloud offerings and set goals for their sales managers to sell the offerings to existing customers, plus goals for their biz dev and marketing teams to sell to net new customers.
Selling the same solution multiple times—which often adds up to hundreds or even thousands of times—ultimately lowers the cost of sale because as salespeople gain confidence and technical expertise, they can close deals more quickly.
Breadth partners have begun to amp up their digital marketing efforts to promote their solutions and attract new customers. This is the way Breadth partners increase their customer base, grow their MRR and establish themselves as cloud services leaders.
2. Frequency refers to encouraging existing customers to buy more from you—it’s crossSELL. Breadth partners are expanding their cloud portfolios, looking for logically related solutions and setting goals for their sales teams to sell these new solutions to existing customers.
CrossSELL boils down to average revenue per unit (ARPU). A good example of this is your relationship with your telecommunications company (telco). Typically, telcos consider your household as a single unit with most households needing only one phone line.
So how do they make more ARPU? They find other products and services—such as cable TV and internet—to sell you. Breadth-stage partners recognize their ARPU is limited by the number of cloud solutions in their portfolio, which is why they’re adding more solutions to the mix. Today, the typical Breadth-stage partner sells four to 10 cloud solutions.
By selling complementary products, such as pairing an email solution with endpoint protection, file-sharing and backup solutions, Breadth partners are boosting profitability. Studies have shown that existing customers are 50% more likely to try new products, and they spend 31% more than new customers.
Ultimately, selling more solutions to existing customers grows the partner’s recurring revenue base, reduces the cost of sale for each new cloud solution sold and minimizes churn rates.
3. Yield is about promoting the purchase of more expensive packages or solutions—it’s upSELL. UpSELL encourages customers to purchase an upgraded, higher-value version of the same product or service the customer is considering. It can also include persuading the customer to buy added features along with the purchase.
Companies that pursue upSELL opportunities grow their accounts at an annual rate 2.5 times greater than those who do not. It increases annual contract value (ACV) as well as overall revenue. Keep in mind product recommendations can drive between 10-30% of incremental revenue.
Increasingly, the upSELL involves some of the partner’s own intellectual property (IP). In fact, a recent IDC partner survey showed more than 65% of partner revenue comes from their own IP built with or on vendor technology.
Measure your targets
xSELL is such a vital component in partner profitability that we strongly encourage all partners to put sales targets in place, measure their progress against those targets and offer incentives to promote them.
I would argue that 30% of revenue should be expansion revenue. For example, Amazon generates 35% of its revenue from cross-selling. The beauty of xSELL is its ability to increase the long-term value (LTV) of customers—minimizing the cost of sale, and maximizing ARPU and MRR.
If you’re already a member of Ingram Micro Cloud Marketplace, log in and navigate from your dashboard to the Go-to-Market Hub to start xSELLing your way to success. You can explore free features such as the Cross-sell Advisor, product playbooks, automated marketing campaigns, white papers and other tools to find smarter ways to sell to your customers.
If you’re new to Cloud Marketplace, sign up to become an Ingram Micro Cloud partner and see how xSELLing can elevate your success.