As an infrastructure provider, web hoster, domainer, hardware seller, software developer, web designer, software distributor, system integrator or ISP, you must be definitely growing your revenue.
But, are you registering enough profit and will this be the same in future?
The demand for cloud based services is constantly on rise. To meet this demand, there exists an opportunity for web hosting, development and designing companies, ISPs providers, etc. to come aboard and grow with cloud. But to get your share from the cloud market, you need to get first-hand experience in it. To know how, listen and discuss with the cloud industry veterans through a webinar on SELLING CLOUD – WHERE IS MY PROFIT?
Once you become a cloud provider, you can determine the profitability of your business in the cloud on a regular basis by setting some key performance indicators (KPIs). These KPIs will help you become knowledgeable about the changes you need to make to keep your business momentum going.
By inspecting two equally important parts: growth and profit of your business, you’ll be able to decide about the adjustments that you’ll need to make in your strategies to remain competitive in the cloud market.
KPIs for Business Growth
For setting KPIs for business growth, ensure that you’re consistently acquiring – new customers, your baseline for business growth. Here’s what you should look into:
Your customer acquisition rate
Always have a look on rate of client acquisition if you don’t want to stop the growth. If there is decline in acquisition, inspection is simple: measure the performance of your sales reps month on month, look if they are getting enough lead volume from marketing etc. and then look for the reasons.
Average Revenue per User (ARPU)
The next killer metric for partners to focus on, is a measure used principally by consumer communications and networking companies – ARPU, which is defined as the total revenue divided by the total number of subscribers or in more basic terms it is the measurement of profit in terms of partners. The industry is moving to long-term relationships, so it’s important to maximize average revenue per user. It can be done by maximizing engagement levels with customers for upselling and cross-selling though dedicated cloud sales/marketing experts.
With cut-throat marketing strategies in industry today, cloud partners need to become very clever and continuously provide reasons to customers to re-subscribe. Although renewal rate is not the sole factor for driving growth, it can surely suppress it. Customers take a purchase decision each and every month. So it’s very important to build up a strong rhythm of communication to value add that you care and also to serve as a reminder that a contract is coming due.
Added secondary offering(s)
Most customers now-a-days look for solutions with which they can scale as per their business needs. But most partners need to know how to add secondary offerings to the first basic sale they make and not just let the buck stop there. This concept is widely used as a means of getting desirable sales outcomes in the technology-related marketing.
For example, when a partner sells office 365, a tool that help customers get work done by collaboration, planning, analyzing, and communication on virtually any device, anywhere, there’s always a hidden opportunity or one that surfaces with time for Microsoft Azure cloud that can help the customer run his business in the cloud and simplify his IT infrastructure, reduce risk, and save money.
KPIs for Business Profit
Your profit and loss statement depends on how disciplined you are in managing services. Partners who have the greatest control in this line of business keep their eyes open to determine what next steps in their business should be.
Recurring Revenue Rate
It’s an important KPI as the services model is based on recurring revenue. It is the amount of money taken for services on a recurring basis – quarterly, monthly, annual and so on basis. This model not only helps increase your growth but adds to the gross margin too. The cloud partners (>50% cloud revenue) are gaining because of this concept.
“IDC research has shown that Cloud partners have 1.8X the recurring revenue that promotes higher company valuations, which can bring about benefits such as improved borrowing terms and higher value for investors”.
Gross margin by offering(s)
Whatever service you’re offering, it’s important to keep an eye on the gross margin to determine its profitability. The gross margin signifies the percentage of total sales revenue after incurring the direct costs related with producing the goods and services sold by a company. That’s why the higher the percentage, the more the company retains to service its other costs and obligations.
In addition to above KPIs, you can also go for joint ventures and partnerships to maximize the profitability of your business in the cloud.
Cloud helps in opening new doors, upsell software and services, and usually grow revenue. Learn how you can kick start this journey and make it unforgettable through this webinar by the successful cloud sellers – the cloud industry veterans.
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