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Why Should Software Vendors Create and Monetize Their Marketplaces

Apple has beyond any shadow of doubt proved that a monetized marketplace delivers great returns for them, an awesome go-to-market opportunity for their developer community and passionate customers.

B2B software vendors, however, are slow to take advantage of this phenomenon. There are numerous reasons for this but that is another topic. Here are some reasons why software vendors SHOULD be looking very seriously at building their marketplace … even if it is only a small one.

The Most Important Reason - Generate More Deals

Ultimately it boils down to two facts above all as to why software vendors should have a marketplace included in their multi-channel sales and marketing mix …

  • It generates more core sales; and
  • It builds a great echo-system!

How is this achieved … see the list below!

Customer Expectations

The user experience expectations of customers is shifting and being driven by their consumer experiences at marketplaces such as the Apple AppStore, Android Markt as well as their purchases from on-line stores such as Amazon and Zappos.

This is increasingly adding demands on software vendors to provide a similar user experience to their customers when they are looking for, evaluating and purchasing business software.

Functionality Critical to Closing Deals

No single product can provide all the functionality needed to deliver the complex systems required by the modern business. Independent Software Vendors (“ISVs") form a vital part of the solution chain by adding those features and functions needed to close deals.

Further, on average salespeople spend 25% of their time seeking out information to build customer solutions. This time is expensive and could be better spent on lead and deal generation activities.

A marketplace that promotes both core and add-on software makes products and related information easier to find and evaluate thus making it quicker and easier to build solutions while also making the software vendor more competitive, customers happier and the ISVs motivated to continue investment into developing vital add-on solutions.

Earnings to Invest Back Into The Channel

Budgets for channel development are always under pressure and yet for the average software vendor their channel is critical to revenue growth. So which comes first – investment into channel or revenue?

A marketplace can and should be a profit centre where the extra earnings generated could be used to top up the lagging budgets for channel development, which in turn would have a positive impact on core revenue generation.

Increased Internet Marketing – For Free

Gaining high rankings in search engines together with the demands on software vendors to use social networks to promote themselves on the web is a time consuming and costly exercise.

A well constructed marketplace that provides an environment for the vendor’s echo-system to congregate, communicate and transact would result in large volumes of traffic, links and in-bound content being created for the marketplace.

As opposed to paid search, on-line advertising and paid staff to create blogs, tweets and other social network updates, this can be achieved at zero cost through the marketplace and the echo-system.

Enhanced Service Delivery

The web is a low cost and efficient way to deliver new or enhanced services to a software vendor’s echo-system. These services can include skills sourcing, project resourcing, training and support.

This service delivery can improve the effectiveness of the channel and provide a convenient way for customers to consume products and services.

The marketplace is a great way to deliver these services and as a by-product the traffic also creates the opportunity to on-sell additional products and services.

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Apple has proved it works for consumers. Now it is strategic for business.

Before SaaS, Social Business or any of the myriad of buzzwords currently common to our business day came Apple and to put it quite simply Apple has changed the buying and consumption habits of millions of people around the world and in turn, has impacted heavily on our business models.

While Apple’s focus is on the consumer and the model does not directly translate to the business space, the influences they have brought to the business world include:

There is an App for everything: If there is anything you want to do on your mobile device, the chances are that there is an App for it. These Apps are also easy to find, evaluate and purchase.

Simplified decision-making: Because the Apps are easy to find and compare and the information provided about the products is comprehensive, the decision making process is made much easier for the consumer and the time to make the decision is substantially less.

Money can be made by helping others to be successful: Creating an extensive developer ecosystem and then helping them to reach consumers has made millionaires of some of the most unlikely people. It has also delivered an invaluable service to the consumer at really good prices. And yet, as is easy to see, Apple has made billions out of it!

Growing a passionate and loyal ecosystem: If we all had customers and suppliers as passionate as those that Apple has … well I guess we could all be an “Apple”. By delivering quality products at acceptable prices in a way that is easy, safe and reliable, Apple has endeared their ecosystem and been envied by their competitors.

If your brand is used to help others – take a share: Apple has created a brand that is highly valuable and enriches the ecosystem. The building of the brand and maintaining its stature is not cheap. While the ecosystem is synergistic to Apple’s success, Apple has provided the framework within which the ecosystem can thrive and make substantial returns. It is only fair that apple take a share of this success.

Can you strategically afford to ignore this phenomenon and not look at creating your own ecosystem driven marketplace.

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A Software or SaaS Marketplace is NOT just an AppStore

A Software or SaaS Marketplace is NOT just an AppStore


The common perception is that an AppStore is the start and end of a software marketplace. While an AppStore certainly forms a part of a B2B Software Marketplace, it is by no means the only important element of the marketplace. As defined by Collins, a marketplace is ...

marketplace (ˈmɑːkɪt,pleɪs) — n,

1. a place where a public market is held
2. any centre where ideas, opinions, etc, are exchanged
3. the commercial world of buying and selling

With this in mind, while a B2B Marketplace could exist with only an AppStore it really should include each of the elements in the definition to deliver a comprehensive service to a software vendor's ecosystem.

Lets take a look at a few of the different components that could make up a marketplace and how each impacts on the software vendor.

AppStore (or eCommerce driven product catalog)

No single product can provide all the functionality needed to deliver the complex systems required by the modern business.

Independent Software Vendors ("ISVs") form a vital part of the solution chain by adding those features and functions needed to close deals.

Further, on average, salespeople spend 25% of their time seeking out information to build customer solutions. This time is expensive and could be better spent on lead and deal generation activities.

If you consider that 65% of a buy decision for business software is based on information delivery, a marketplace that promotes both core and add-on software makes products and related information easier to find and evaluate thus making it quicker and easier to build solutions while also making the software vendor more competitive, customers happier and the ISVs motivated to continue investment into developing vital add-on solutions.

Skills Market

The people and businesses with a diverse set of skills that makes up the software vendor's ecosystem or supply chain is critical to the successful sale, implementation and support of systems for end users.

Having visibility of these skills on a global basis provides an invaluable tool for ensuring that the vendor remains competitive by knowing where skills can be deployed or where training and recruitment may be required.

Further, the ecosystem can advertise their projects, resources and skills and then share this information to better execute sales and project opportunities. This together with a comprehensive collection of information on the projects and skills available, makes it possible to quickly and easily find relevant information and to then review them in-depth. This will ensure that projects are efficiently resourced and that channel partners, with the appropriate skills, can be found and contracted.

A vendor can also monetize this skills market and utilise these funds to reinvest back into the ecosystem.

Self Help

How many calls a day does the average vendor get from their ecosystem requesting information about invoices raised, licences sold, activation codes lost and account detail updates to name just a few.

Providing a set of self help portals to each of the members of the ecosystem saves vendors the time and cost of dealing with these issues while delivering an added service to their ecosystem by making this information easily accessible.

To have access to a portal would also require the community member to register for an account. This account can be designed to require the accountholder to enter various types of profile information and to subscribe to a marketing "opt-in". The profile information and opt-in provides a substantial benefit for executing marketing and promotional activities.

Traffic Analysis and Lead Generation

Providing a range of touch points to attract the ecosystem and new potential customers and partners to the marketplace brings with it new sales opportunities.

Effective measurement of the source of the traffic and profiling their activity in the marketplace would bring about intelligence that can be used to understand areas of interest, product demand, referring sources, marketing an promotional activity effectiveness and ultimately generate new sales.

Given the clear and important benefits of having a professional marketplace, vendors that do not have a marketplace must realise the strategic importance of having one and for those that have started the process but still only provide an online catalog, it is time to properly construct and monetize the marketplace.

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Marketplace + Traffic + Monetization = Increased Sales and Earnings

A practical guide on how to use your marketplace (including your Enterprise AppStore) to grow traffic and generate new revenue opportunities

For business software vendors, generating repeat traffic to their sites is challenging but if it is achieved can be very lucrative.

“It is far more profitable to provide products and services to existing trading partners than to find new ones.”

Trading partners in this context should be considered to include end-users, resellers (partners, system integrators), ISVs, distributors and current/ex-employees of these organizations.

Of course, no traffic generation should exclude new trading partners so a broad approach to traffic generation, which envelopes both old and new will drive increased traffic and will leverage new revenue opportunities.

So how do you increase return traffic to your website and how do you then monetize that traffic?


“Having a great looking website or product catalog is not enough anymore!”

Step 1: Create a Marketplace

The first step is to create an environment … an “enterprise software marketplace” … that provides multiple reasons to encourage your partners to return. Some of these reasons could include, but not limited to:

  • Efficiently finding and purchasing add-on products to compliment their implemented solutions
  • Rich content (not just web pages) to help buyers with the evaluation of add-on products and services
  • Finding resources and skills to assist with projects, training and support
  • Connecting with the broad ecosystem to share information and experiences
  • Tracking and managing the licenses for the products they have purchased or on-sold
  • Managing the range of subscription, on-premise and mobile solutions being deployed


The marketplace should also provide your partners with an experience that matches that of their consumer web experiences (e.g. the Apple AppStore) by providing a broad set of functions to simplify the finding, decision-making and buying process.

Choosing the correct marketplace platform with the appropriate functionality is critical to being able to achieve this. View this post for more information in this regard: A Software Marketplace is NOT just an AppStore !


Step 2: Build Your Traffic

So now you have a marketplace and a functional platform on which it runs. Now for the real challenge, using that marketplace to attract the traffic. Here are a few ideas …

Simple use of your existing marketing activities:

  • Create Blog, Twitter and LinkedIn posts that point back to your marketplace
  • Add your marketplace URL to email signatures and all outbound marketing collateral
  • Put a link to the marketplace on your homepage
  • Get your partners to put links to the marketplace on their websites
  • Include the marketplace in your next newsletter

Add “Rich” content to the marketplace:

  • Have your ISVs and complimentary product developers add their products and services to the marketplace and include videos, brochures, technical info, screenshots, downloads and more.
  • List your resellers, distributors, system integrators and service providers with comprehensive information about them – not just a list with a link to their website!

Use your marketplace platform:

Your marketplace should provide the functionality to make traffic building an integrated part of the day-to-day activities of your ecosystem. The more effective this is, the more it will reduce the need and cost of having separate resources to execute these functions while still seeing an increase in marketing activity for your brand.

Some examples of this as follows:

Promotions: Motivate your ISVs to create special offers and promotions for products and services held in the AppStore.
   
Outbound marketing: Push outbound marketing with links back to the marketplace for promotions, job offers, resource requests, new products, whitepapers …
   
Social Networks: When the outbound marketing is created and sent to your community, update the social networks with these items as well.
   
Downloads: Make bug fixes, demo software, new releases and software updates available through the marketplace. When these are uploaded to the marketplace, promote them through notifications to your ecosystem.
   


The more your ecosystem does in your marketplace, the more FREE marketing and promotion you will get.”


Note: There is substantial merit in mandating your ecosystem to register an account in your marketplace so that an opt-in can be secured for marketing and promotional activities that will be used to drive traffic back to the marketplace.

 

Step 3: Monetize your marketplace

It is a common reaction to be circumspect about monetizing your ecosystem outside of the provision of your products and services, however this should be considered in the context of an improved service to the ecosystem as opposed to a “money-grab”.

There are many reasons why this makes sense but that is not the topic of this post so please take a look here for more information about why you should monetize your ecosystem beyond your products and services: Why Should Software Vendors Create and Monetize Their Marketplaces

Some of the ways in which you can monetize your marketplace include:

Memberships: The provision of the marketplace adds substantial value to the ecosystem. Providing this service for a small monthly fee results in the community member actually using the service as well as that it adds deemed value. Something for nothing is normally just that … Nothing !
   
Share of Sales: For your ISVs to implement a solution of their own to manage their sales, installed customer base, marketing, subscription billing, payment collection, etc. would be a substantial cost in time and money and would require a steep learning curve in an area that is not core to their business. For providing this together with the fact that you are driving new sales opportunities to them through the marketplace justifies a sharing of the margin on a sale.
   
Skills Transactions: When your ecosystem is looking for resources, no matter whether it is end-users, ISVs, resale partners, etc., providing a closed community resource pool with known skills will always deliver a more targeted result for the potential employer/contractor and keeps the skilled employee/organization in the ecosystem. By providing the ability for people and organizations to advertise and find appropriate resources efficiently at reasonable rates can add substantial earnings to your business.
   
Advertising: A corporate website should never be a place where advertising clutters up your brand. However, in a marketplace this advertising, if done with proper relevance based targeting, can provide a great service to showcase products or services that are currently in the users area of interest. By example, a user searches for an add-on product for business intelligence and a range of appropriate ISVs can promote their products to this user through targeted advertising.
   

These, together with a range of other leveraged revenue opportunities can deliver substantial earnings to your organization. Based on studies we have completed, increased earnings of 3% and more can be achieved through the monetization of a marketplace.

These earnings can both add substantial value to the business or if reinvested into the ecosystem, can make them more effective in the market and continue to build your brand.

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Differences between AppStores, WebStores, Catalogs and Ecosystem Marketplaces

Ecosystem MarketplaceFor Business Software Vendors, the need to implement a more encompassing ecommerce solution is becoming more prevalent every day.

This is being driven by a changing landscape in which the industry is seeing new sales channels, new deployment methods, new revenue drivers and new business models which in turn are affecting the rest of the business operations including marketing, channel management and accounting.

Once the vendor has recognized their need for an ecommerce solution to manage their changing business, they then face the challenge of figuring out which of the myriad of options out there best suites their business.

This is especially difficult for vendors that have an established and complex ecosystem of resellers, ISVs, end-users, distributors and skilled resources as the ecommerce solution selected needs to keep these entities involved in the transactions.

The following chart shows the types of ecommerce features needed by a channel focused vendor and the ability of different types of systems to deliver them.

 

Function Marketplace Webstore Catalog App Store
         
Self Help Portals supporting the whole ecosystem including partners, distributors, ISVs, end-users, branches, “crowd”
Multi-Channel Sales model support including Web, Mobile, In-App, Channel
Multi Party Transactions to include multiple trading partners in a single transaction
Limited


Limited

Multiple Product Types including Mobile, On-Premise, SaaS, Hosted, etc.
Automated Notifications
Traffic Analytics
Payment Processing


Limited


Limited
Inbound Marketing
Limited

Limited

Limited
Outbound Marketing


Limited


Limited


Limited
Complete product collateral including video, PDF, HTML, presentations, spreadsheets, etc
Limited
Fully integrated across all components i.e. each of the features listed in this table should be integrated with each other to provide a single cohesive solution
Skills Market
Ecosystem Profiling
Limited
Ecosystem monetization e.g. membership fees, product placement fees, skills search, advertising etc.
Ecosystem activity integrated to social networks
Drives traffic back to the vendor
Vendor shares in revenue
         

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Increase Sales, Drive New Sales Models, Deliver Multiple Deployment Methods and Manage The Business

Ecommerce, Operational and Marketplace SolutionsSoftware businesses are being affected by the growing demand for:

  • Subscription billing
  • Multi-channel sales models including In-App, Web and Channel
  • Multiple product deployment types such as SaaS, Mobile and On-Premise
  • Web merchandising, marketing and promotion
  • Delivering a better customer web experience

To achieve this, software vendors need an integrated ecommerce, marketplace and operational platform that would provide the relevant functionality to:

  • Support multiple sales channels including on-line, direct, through partners and In-App
  • Sell, track, manage and deploy on-premise, SaaS and mobile products
  • Increase Sales through turning traffic to your website into customers by delivering a rich environment where prospects can find, review, test and purchase products
  • Create new sales opportunities by using "big data" to identify trends, user interest and merchandising effectiveness
  • Process subscription billing and payment collection for your SaaS and Hosted solutions together with billing your legacy Annual Maintenance Fees
  • Create a Marketplace ("App Store") of both your products and those of your ISVs to assist your channel and customers in building comprehensive solutions quickly and easily
  • Provide a rich Resource Library of technical, marketing and downloadable content
  • Automate Notifications for support, marketing and merchandising events delivered directly to your ecosystem as well as to social networks
  • Give your ecosystem the tools they need to make transacting with you simple yet comprehensive through highly functional self-help portals
  • Keep your partners engaged by ensuring they are involved in relevant sales transactions no matter which sales channel drives the deal and automate multiparty splits on these transactions
  • Make it easy for your customers to find suitably qualified systems integrators, consultants and staff while creating new business opportunities for your channel through a Skills Market

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