Over its 40-year history, Microsoft has been a software industry pioneer. The company has consistently developed leading solutions, and its Office productivity suite is used by more than 1 billion people worldwide, making it one of the best-selling software products of all time.
As the technology sector shifts to cloud, Microsoft is once again at the forefront, driving rapid adoption of its cloud-based products. In early 2015, the company announced that it had 50 million active monthly business customers for its Office 365 product, a massive number that Microsoft expects to help generate a $20 billion run rate for its commercial cloud products, including Office 365, by 2018.
Microsoft won’t be able to reach that ambitious goal alone. In the past, the company has relied on partners, such as distributors and value added resellers (VARS), to expand its reach. In the era of cloud, Microsoft has been following a similar playbook; its Syndication program has helped Office 365 become the company’s fastest growing business ever.
Despite its success, Microsoft’s Syndication program is very technically complex, a factor that has limited participation to large, resource-rich partners. This is one reason why Microsoft has introduced a new initiative—the Cloud Solution Provider (CSP) program—that is built on powerful new CREST and GRAPH APIs. With its revamped program in place, Microsoft is ready to rapidly scale its partner efforts.
The opportunity to reach even more eager customers with Microsoft cloud products, however, comes with a new set of challenges. With streamlined technology that lowers barriers to entry, how can Microsoft CSPs compete in an increasingly crowded market? How do they create a compelling value proposition that sets them apart?
This is the first in a series of blog posts that detail strategies that Microsoft CSPs can use to improve their go-to-market game plans, including how to compel customers to buy and how to create value by becoming an expert advisor. Later on, we’ll take a closer look at the importance of customer support as well as testing and optimization to improve the user experience.
Focusing on CSP Go-To-Market Strategies
In general, cloud-based software providers have been slow to adopt partner programs and other channel sales strategies. In fact, less than a quarter of business Software-as-a-Service (SaaS) vendors have channel programs. When customers can simply go to the vendor to buy a solution, it can be difficult to convince them to go to a third party.
The same dilemma exists for Microsoft cloud products: If a customer can go directly to Microsoft to get Office 365, why should they buy from a CSP?
As a CSP, how you answer that question is critical, since it will define the value proposition for your Microsoft business. If you do not have a compelling reason why customers should buy from you, it will be extremely difficult to succeed in the fast-growing, CSP-enabled market for Microsoft cloud solutions.
Three Questions to Help Build a Compelling Value Proposition
You can build a compelling value proposition by answering three basic questions:
- Why should customers buy Microsoft cloud products?
- Why should they buy them from you, as opposed to another CSP or directly from Microsoft?
- Why should customers trust you?
The questions are straightforward, but for some CSPs it can still be difficult to develop clear answers for each of them. To spark your thinking and organize your thoughts, consider these areas:
Research shows that businesses prefer buying from trusted providers, and your market can be defined in a variety of ways, whether by location, vertical, or some other factor. Ask: Is there an opportunity for me in my geography or a particular sector?
Your competitive landscape
It is critical to know if other CSPs serve the markets you just defined, as well as how they sell themselves to the customer base that you are also trying to reach. Ask: Who are my top competitors? How do they position themselves?
Digging deeper into your market, you should have a clear understanding of who your customers are today, and which customers you would like to reach in the future. Understanding their concerns and challenges will enable you to reach them more effectively. Ask: What customer segments am I addressing today? Which would I like to address in the future? What do they care about?
Your current strengths
Every company has core strengths, and defining them will help you focus on what you have to offer customers and prospects. Integration expertise, personalized customer service—whatever it may be, these are essential to defining your value proposition. Ask: What am I really good at? What differentiates me from other CSPs?
Without a strong value proposition, prospects will become skeptical bargain hunters who are simply looking for the cheapest price. In contrast, a well-articulated value proposition can give you leverage to charge premium pricing while generating more leads and customer loyalty.
If you’re interested in learning how AppDirect can help Microsoft Cloud Solution Providers, please click here or feel to email me anytime. Be sure to check the AppDirect blog next week for another post in this series.
Christophe Girault is Director of Global Customer Success at AppDirect