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Demystifying Marketplace

Hello ISVs! I hope you are having a great week 🤩


Lately, I've been having a lot of conversations with some of you about marketplaces and the process of publishing and selling your app through them. I heard many different reasons for which companies choose to have their solution on a marketplace, as well as many different arguments on why this channel is not a good choice for them. As I want everyone to make an informed decision when integrating a platform as such in their sales strategy, I sat down with our topic expert, Mark Wiertsema, and we demystified Marketplace and some popular opinions and convictions about it.


"I published my solution on Marketplace, so now I am waiting for new leads to flow through my CRM" or "Now that my solution is on Marketplace, Microsoft will help out in the sales process" - curious to learn if these statements are true or false? Keep reading, you are in the right place.


What is THE marketplace?

First things first, a marketplace for software is a digital store where multiple vendors can list their product or service. For Microsoft, Appstore and Azure Marketplace are considered to be the future of selling and buying software as they meet the customer where they are - closer to the cloud and further away from sales representatives.


Let's put things into perspective: looking back at your business model, you determined your customer segment, and you designed the value proposition which essentially is the bundle of products and services that create value for the customer. The next step is to find out how you can best reach this customer segment - or commonly known as channels. Channels allow a business to create awareness and deliver a value proposition, as well as purchase certain products and services and provide post-purchase support.

a Marketplace's position within the Business Model Canvasa Marketplace's position within the Business Model Canvas


A marketplace is a channel for bringing your bundle of products and services to your customers. So, one of the common misconceptions that are out there about the Marketplace is that once a software solution lives on a platform as such, leads will gather around it. The pitfall here is that we cannot look at channels and their impact on sales performance through black and white glasses. There are two types of channels, direct or owned - like your sales force, web sales or own stores; these would normally register higher margins but are rather costly and they require a lot of effort to build and operate. The second type is partner or indirect channels - such as the Marketplace; a partner channel will indeed generate lower margins, but it offers other type of benefits like reach expansion and ease of procurement. The trick is to find the right mix of channels that you can integrate in such a way that it meets your business' needs.


How do we then integrate the Marketplace in the overall sales strategy?

The more important question is "why do I want to be on Marketplace?" or " what business need will the Marketplace meet?"


Once a piece of software is identified to be complementary or prone to improve a business process, the procurement team give it a go and the budget allocation journey starts. In the new world, everyone wants agility, so bringing the functionality to the users in a fast, safe, and compliant way, is the goal. Therefore, Marketplace and its benefits are designed for buying software rather than selling software. The fundamental promise of a marketplace is: Safely to find, try, and buy!


However, if you are wondering whether Marketplace is a suitable channel for your business you can start with these three main pointers:

  • Seeking new growth through targeting a new customer segment
  • Aiming at expanding to new geographies
  • Reducing the cost of sales


As the first two are self-explanatory, I would like to clarify the last point. In a traditional scenario, the sales representative would have to go from selling the value of the solution, all the way to the process of securing budget, getting vetted as a supplier and invoicing. When a Microsoft customer purchases an eligible software solution on Azure Marketplace, the cost of the solution gets decremented from the customer's Azure commitment to consume - note that the number of Microsoft customers that have an Azure commitment to consume agreement in place is growing.

So, in other words, Marketplace shortens the sales cycle by allowing the sales representative to only sell the value of the solution, while saving hassle and time on the more tedious procurement related activities such as securing budget, and getting vetted and set-up as a supplier.


Is Microsoft going to help an ISV sell a solution through Marketplace?

Once the software solution becomes transactable on Marketplace, the next step is to make sure that you are generating the necessary traffic for it. If you are curious to learn more about how you can do this, one of my colleagues wrote an entire article dedicated to this topic. Go check it out!


Not having to make a sale is not a benefit of the Marketplace. If you are an ISV that aims at selling their solution on Marketplace, you still must ensure your marketing engines are working, that your channels are integrated properly and that you are ready to have a conversation with potential customers on the value of your offering. Do you already have a customer/a few customers that are interested in transacting your solution through Marketplace? Fantastic! Share these opportunities in Partner Center - this is how you notify Microsoft sellers of your success.


Imagine you are targeting a customer segment in a particular industry (let's say "Manufacturing"); Microsoft sellers are happy to connect you to new opportunities, though they will always ask the same questions: "Is this solution transactable on Marketplace?" and "Has it been validated already?" aka. "How many times have other customers purchased this solution through Marketplace?". So, having your first customers transacting through Marketplace is an important milestone to achieve on your journey as it will unlock a new level of benefits and it will strengthen the overall co-sell collaboration with Microsoft.


Do you sell your cloud-based software solution in a B2B way, and you are still not sure whether Marketplace is for your business? Or do you want to get started with Marketplace "yesterday"? Feel free to reach out to me and we can have a chat about it.