Five strategies for selling cloud services

The cloud wave is actually far larger than most people think. That is the view of Abhijit Dubey, a Partner with management consultants, McKinsey and Company and one of its core leaders of the Tech, Media and Telecom Practices, and leader of its global cloud computing service.

One of the huge potential markets that form this wave is what is often referred to as the `SMB segment’ and, speaking at the recent Parallels Summit in New Orleans, he addressed the difficult subject of how to get these businesses moving into the cloud. That, he suggested, is very much a job for the hosting and CSP community to address – any business that can deliver solutions to these businesses rather than just technology.

“The SMB segment actually consists of thousands of micro-segments that have different buying strategies,” he said. “It is certainly an area where one size does not fit all, so vendors need to be aware that no company will be able to build a direct sales capability to cover it. This alone is the most important reason why the channel is now so important to the development of cloud services overall.”

But getting to those micro-segments means that the channel has to make some significant adjustments to their approaches and practices. He outlined for the Summit audience the McKinsey solution to this problem: a five stage strategy to conquer the cloud wave and get the SMBs on-board. These he identified as: segmentation, aggregation, consumerisation of the go-to-market strategy, rethinking the channel model, and turbo charging the services capability.

“The goal on segmentation is to target customer need and types of buyer,” he said.”There are four types of buyer; the no frills buyer, who usually buys on a price – which is 26 percent of the market, the safety seeker, who goes for reliability over performance – which is 17 percent, the connected feature seeker, who goes for the latest feature additions – which is just 3 percent, and the IT sophisticate, who values service and support . They are 27 percent of the SMB buyers.”

There is a need for aggregation because, as Dubey observed, customers need it. Having a channel that can aggregate together complementary applications and services will make life much easier for them.

Consumerisation of the go-to-market piece is needed in order to map onto buying practice changes.

“Users are moving from researching and identifying possible new services or applications face-to-face with company representatives, and moving to online research,” he observed. “For example, they will often respond to a freemium or free trial offer - the Internet makes it possible to try a real product with some real data samples.”

The fourth strategy is to rethink partnerships. The problem here is that the cost of customer acquisition is high and that takes time to recoup. Partnerships can have the effect of spreading the costs, while at the same time increasing the sales opportunities. His suggestion is for all vendors selling cloud services into the SMB sector to actively foster an ecosystem of partnerships.

The fifth strategy is to turbo charge services, and in particular post sales services and support.

“This is about being able to provide a `white gloves’ service to customers - as this can often be the key to a customer's next buying decision, and helps to make them sticky,” he said.

Technology companies still seem overly keen on wanting to sell technology, rather than what it can provide for the end users, especially when it comes to selling to any in the business community. As the cloud moves into the mainstream, however, so it becomes important that vendors learn that selling is now about using white gloves and selling services and solutions to customers.