Best Cure For 2009: New Revenue Streams
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The presentation was held by Casey Potenzone, VP Sales, Avangate US Office, during the Software Industry Conference, 2009, in Boston, USA.
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Best Cure For 2009: New Revenue Streams
- 1. Best Cure for 2009: New Revenue Streams Presented by: Casey S. Potenzone VP, US Sales - Avangate
- 2. Today’s topics Some traditional methods software companies have used to increase their revenues. Classic responses to the revenue question vs. new opportunities. Five revenue generating opportunities and how to leverage them. Conclusions and Q&A
- 3. Classic revenue sources You need to increase your revenue, but do these traditional methods still work? Expand your sales organization Open new offices in key regions Increase or adopt traditional marketing models Develop a new product, release a rebundled version of an existing product or increase your price. Scour the world for new leads
- 4. The alternative… Instead of: Expanding your sales force or Opening new offices in key regions and facing significant capital costs and HR investments… You can: Unleash the selling power of Affiliates and leverage them as an extension of your existing sales force. Start selling through resellers and set up a Reseller Channel: It is faster and more effective and they will do a better job for you on the local markets
- 5. The alternative… Instead of: Using “Traditional Marketing” with high costs and hard to measure ROI… You can: Leverage the power of “Online Marketing” withefficient and targeted promotions and clear performance goals.
- 6. The alternative… Instead of: Pursuing and developing a new product with obvious cost and resource implications…. OR Increasing your products’ price and risking damage to loyal customers and the rest of your existing base… You can: Increase the average order valueby offering complementary services like backup media, cross & up selling with a consistent revenue upside, no or minimal capital investment and truly differentiating features. Increase conversion rates by using a variety of sales techniques and alternative payment methods
- 7. Best Cure for 2009: New Revenue Streams Five Tried and Tested Methods for Increasing Revenue Improve the quality of your affiliate program Leverage the power of channel partners Optimize your online presence and go global Improve order closure rate & recover abandoned shopping carts Supplement existing products with complementary services
- 8. The Real Challenge Now that we have some GOALS And an understanding of what we want to do… Lets discuss HOWto do it!
- 9. Affiliate Programs Are your affiliates performing to your expectations… Do you wish you could find ones that really sell? Common problems in Affiliate Programs: Poor sales performance and minimal returns. Thousands of affiliate sites and services but only a few legitimate operations. Compete with your existing sales and target the same customer base.
- 10. Affiliate Programs Solutions: Fill in the Gaps: Identify target markets and recruit affiliates with strengths in those areas. The Human Touch: Communicate directly with your affiliates and treat them like true partners. Empower and Train: A little education goes a long way- provide the materials necessary to sell. Incentivize: Offer performance based incentives and be 110% positive your affiliate tracking works. Invite them Inside the Circle: Provide advanced access to new products and beta programs.
- 11. The Reseller Channel Do you have one? And if so, are you doing it right? Common problems from inside the channel: Resellers are under performing or failing to meet sales targets. Increased channel conflict Lack of or little transparency into end customers High operational requirements and resource strain
- 12. Solutions: Set Reasonable Goals: channel development is a long term process; a 6 month turn around is to be expected. Empower your Partners: Back up your partner efforts and provide them with the materials they need. Engage in joint marketing activities and provide an MDF. Train them: Give them the sales & marketing tools and knowledge to sell your products. A partner should be an expert in your product, its differentiators, benefits etc. Reward them: Provide more then a wholesale price. The Reseller Channel
- 13. Solutions Continued: Use your Resources Wisely: Focus on partners that perform and leverage PRM technology to be the vendor partners want to work with. Focus on efficiency. Reduce Channel Conflict: Segment your customer space by the partners that can best serve them and then assign partners to these segments. Focus on Transparency: Know the pipeline, have transparency over when you’ll be paid and know who the end customer is. The Reseller Channel
- 14. The Reseller Channel Tips for finding new partners Segment your customers based on your strengths and weaknesses and target partners where you need reinforcements. Attend local IT events focused on your target space such as conferences, trade shows and vendor expos. Get referrals from your clients or other strategic partners. The Perfect Partner Profile Enthusiastic, SMB focused on the software world. Open and willing to invest in the partnership with you and eager to increase revenues. Know their forecast!
- 16. stronger than you on local markets.Little to no brand awareness Negative or no online reputation
- 18. Focus on product benefits not a feature arms race.
- 19. Show the people behind the business.
- 21. Going Global / Selling Local Solution: Online Reputation Build a Tribe around your product and company: Social Media and Networking Tools drive your market reputation and are the primary mechanisms for peer review. Ask for feedback and reviews: Testimonials from your customers are more valuable than marketing spin.
- 22. Converting Losses into Leads Shopping Cart Abandonments… Future customers or lost forever? Common online sales channel problems: Low conversion rates and high shopping cart abandonment Little to no online lead generation Customers don’t understand the incentives High cost per customer
- 26. Conclusion Crisis … or … no crisis You can increase your revenue without making major capital investments or taking significant risks.
- 27. Conclusion Don’t reinvent the wheel, make smart decisions about your partners and take advantage of what they have to offer. Use smart, effective and measurable marketing and sales tools.
- 28. We sell software online. We've been doing it for the last 17 years. Questions? Casey S. Potenzone VP, US Sales – Avangate Casey@Avangate.com Tel: (949) 468-9636 www.Avangate.com
Notas do Editor
- Fill in the Gaps: Find affiliates that supplement your existing resources/capabilities. Understand your customer patterns and where they are coming from. Chances are you have an emerging market that may be out of your current reach. Identify affiliates that are strong in those areas or niches. These segmentations could be geographical, language based or even based on demographic. You may have a strong grasp on selling to the retail market but are you completely missing opportunities in the SMB space?The Human Touch: Communicate directly with your affiliates with personalized emails and messages. Reach out to them to understand their needs and requirements. Remember that your partners will never invest more resources then you invest in them. If you can establish a personal relationship they are more likely to work to your shared success.Empower and Train: Provide all the marketing collateral and tools necessary to sell your product including access to master files so the affiliates can create custom marketing materials. Train them on your product, its features, differentiation and why it sells. Provide PAD files, banners, graphics and anything else they may need. Treat them like an extension of your sales team.Incentivize: Money talks, period. Provide sales goals that allow your affiliates the ability to make more money, options beyond the straight commission model give the affiliates something to think about. Always be 110% positive that your affiliate tracking scripts and crediting mechanisms work. Affiliate leak = affiliate death.Invite them Inside the Circle: Affiliates often have knowledge across a variety of products and provide you with very valuable feedback as to what the market wants and why your product is or is not selling. By inviting your affiliates into your beta program and to contribute to product development you not only make them feel loved and trusted, but you will get highly valuable market feedback.
- Set Reasonable Goals: Channel development is not an over night process. On average channel development takes 6 months and the on-boarding process can take 1-3 months before a partner starts showing returns. Try and gain an understanding of the partners current revenue or revenue forecasts and see show they have performed in the past and how your product can supplement these revenues in the future. Once you gain an understanding of what the partner is targeting , as well as what they have historically done, you can better establish performance expectations. Empower your Partners: As with the affiliate networks you must educate your partners. However, in the channel world, it is much more important that your partners are experts in your products. Provide them with the best training and understanding of your products they can possibly receive. As with affiliates think of them as a sales arm and provide them full access to your marketing collateral and support materials. With partners you should also engage in joint marketing activities. Together you can showcase your product and their capabilities. You should also offer an MDF (Market Development Fund). An MDF is typically a small percentage of sales (say 5%) from a partner that is allocated for marketing activities such as trade shows and other events.Train Them: This isn’t just about providing them the feature spec sheet. Partners are often VARs or other service providers who combine their resources with your product. As a reseller is determining specifications for a customer project or debating what to put on their shelf, the more they know about your product the more likely you are to be sold. This knowledge exchange will also provide the most amount of insight in the smallest amount of time as to what the capabilities of the sales teams are. Ensure you offer a partner portal with access to all the latest and greatest material and collateral.Reward Them: Channel development is much more complicated then the affiliate programs, but many of the same thing principles apply. The reseller must see the money and understand that there are real revenue opportunities available to them. Offer revenue/sales milestones with incentive bonuses. Provide extra benefits such as pre-paid cards for the sale of a specific product, percentage bonuses over certain levels, or simply the MDF.
- Use your Resources Wisely: What’s your partner ROI? Invest your time and resources with the partners that actually perform. If possible, establish a PRM prior to launching your channel, otherwise, adopt one now. PRMs allow you to automate the day-to-day tasks of channel management so your resources can focus on growth instead of operations. When your partner wants to place an order at 2am, in Germany with the Euro and get licenses NOW, how are you going to do it?Reduce Channel Conflict: Define proper boundaries so partners don’t venture into each others space. Segment your customers by the partners that can best serve them by looking at key factors such as geography, demographic, industry / space, company size and expertise. Feed warm leads back to the channel on a regular basis to keep them motivated. Focus on Transparency: This isn’t always possible as larger, more established resellers will often dictate these terms. However, the majority of resellers that you partner with will not object to these processes. Learn your partner pipeline by offering opportunity registration incentives. In exchange for the deal information and the prospect data give them an additional 5%. Leverage eCommerce tools or terms to force resellers to pay-as-they-go. This is especially effective with smaller resellers, GSAs or for products that require minimal services to deploy. You should also leverage PRM tools or user registration so you always know who the end customer is, regardless of whether they bought through the channel or directly from you.
- Conversion rates are almost always a factor of your website. Your online presence is the foundation to your sales success and prospects must be comfortable with your site and easily able to access your product and all your information. *Focus on having a clean and easy to understand website with a simple, functional search feature. *Don’t get into a feature/function arms race with your competitors. Demonstrate your product benefits with easy to understand tools and tutorials.*Show the people behind your business with a company blog, message boards and other communications forums. Content is still king and take advantage of the tools available to release press announcement and other events. Communicate what makes not only your product special but your company special. In the end its about the customer needs and if they feel comfortable doing business with you.*Last but probably most important for this audience, MAKE THE PRODUCT AVAILABLE. Create a trial that is easy to use, easy to understand and shows me the customer why I want to give you money. 99% of the time my first experiences with a piece of software are the trial. If the trial isn’t perfect and easy to get my hands on chances are I’m not going to try it. Is it working: Measure, measure and then measure again. Focus on sales conversion rates, download rates, cost per unique visitor, bounce rate, etc, etc. And finally test everything- Run A/B testing campaigns to see what works. Software publishers are often amazed at how much impact a small page change can have on conversion rates.Get creative, run usability experiments and see what does and does not work. Leverage tools such as Google Optimizer or other testing utilities.
- Deciding to run a localized campaign should start with an understanding of your customer base. As we reviewed in the affiliate section, having insight into your customer patterns, geographies, demographics, etc. allows you to determine where to focus your energies. Subsequent to customer/prospect behavior is the local market irrespective to your presence. Emerging economies exist all over the world, and as key locations such as the BRIC countries (Brazil, Russia, India, China) gain a consumer class their importance on the world market is going to drastically expand. However, in today’s economy China’s 1.2 Billion people mostly don’t have credit cards, nor would they pay the equivalent of $49.99 for software to place music. Make decisions to localize your efforts based upon sales revenues and 1-2 year forecasts, not 10 year forecasts. Initially focus on established economies based upon your product localization capabilities. Take steps and make logical decisions before investing in localized activities. 3 steps to developing a localized product economy.: 1. Accept the preferred payment mechanism and local currency for a region.2. Localize your marketing and focus on specific SEO geographies (www.google.de, etc.)3. Localize your product Notice you only invest as you start to see return. You don’t simply throw $100k into building your product in Mandarin if there is simply no market for it.
- Your online reputation not only provides peer reviews but can also drives search engine placement. Seth Godin constantly speaks of building a triiiibe, a group of people that co-exist around a common objective, interest, mission, etc. The tribe does not have to be about your product, it could potentially be about the problems your product solves or the space your product lives in. Offer a communication forum for people with shared interests across your customer foundations. If you sell DJ software offering expert advise on mixing tracks or the legalities behind sampling music will attract customers. Become more then a source to sell software, leverage the tribe to become the place to be to talk about your space or find more information.
- Lead Management: Centralizing the lead management database with all the parameters you know allows you to run proper campaigns. Getting timely incentives to a prospect is an absolute requirements if there is any hope of converting them. Capturing parameters such as date / time / product / referrer / time on site / click patterns / etc. allows you to tailor an offer to the prospect based upon their behavior. By tracking the trial download information coupled with data from the trial itself (installed, activated, etc) you are able to message the prospect timely information based on what they are doing. Correlating all the available information into a user behaviour database has drastic results on sales conversions.The online sales channel can often feed the partner channel. When prospects come asking for services in conjunction with the product, and you don’t offer these services, immediately get them to a partner. Distribute your incoming leads and abandoned leads based upon the follow-up capabilities of the channels.Offer alternative payment options: Such as TrialPay or the enhanced “Bill Me Later” services from Chase. Your trial software should have the ability to report back on its behaviour allowing you to capture an uninstall and message the user with the opportunity to buy before removing.Recent data: Alternate payment methods and incentives increase the uninstall conversion rates to 5-15 % while shopping cart conversion rates increase to 15%
- Depending on your target customer base, the recommendations in this slide may or may not all apply. Cross sells and up sells are all quite effective, regardless of whether your are selling product into the retail channel or SMB space. Enterprise software sales often benefit from cross sell promotions, but this is a more fickle space and requires a higher level of qualification. TIP: From our experience with our vendors cross selling 3 or 4 products increases conversion rates with up-to 20% compared to cross – selling 1 or 2 productsIn the retail space back-up CDs and Download Insurance often create annual revenue increases that range from 5-8% (on average), and sometimes even greater. In the SMB and Enterprise space Software Assurance, or Software Maintenance agreements range from 10-20% of product cost and are a very common revenue generating program. In the retail side it is becoming more and more common to offer support agreements in conjunction with your software license. Upselling software support agreements from basic to silver gold can be a significant revenue generator for software publishers.