Way back in 1994 — ancient history in the tech world — Amazon.com got its start selling books on the internet, a revolutionary idea at the time. Since then, the company has grown to become an ecommerce giant, selling almost anything you can imagine, from cat toys to canoes.
Today, Amazon is pushing boundaries once again by selling an increasing number of digital subscriptions. There’s its well-known $99-per-year Prime service, which gets you free shipping and other perks, but they also offer Amazon Music Storage, Amazon Drive and Kindle Unlimited, among others. In fact, if you added up the costs for using all of Amazon’s personal subscription services, you’d be paying almost $850 per year.
Given Amazon’s ongoing shift to the subscription model, it’s clear that one of the most valuable companies in the world thinks that developing long-term relationships with customers is a winning strategy (and they’re not the only ones). The subscription model is a proven revenue-driver, but how do you get customers to sign up and make purchases in the first place?
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Most SaaS companies start off in the same spot: Selling software directly to customers on their websites, but from there the way forward can look like a worn treasure map, with lots of faint paths winding through faded landmarks, many leading to nowhere. Every company is unique, and you need to plot your own best course for driving sales. Fortunately, there are some familiar trails you can take to help you find your way faster:
1. List in app directories and online marketplaces.
This is similar to the app store model you can find on just about every smartphone. Just as users can browse for apps in, say, the Google Play store, they can look on hundreds of directories and online marketplaces for cloud-based software. At sites like GetApp and Capterra, for example, listings drive traffic to software vendor websites where customers purchase the software. There are also add-on marketplaces for particular SaaS platforms, like the Salesforce AppExchange and the Atlassian Marketplace. Atlassian’s store has more than 1,700 add-ons and has processed more than $30 million in transaction volume in 2014 alone.
2. Create affiliate and referral programs.
Affiliate and referral programs are almost as old as the web itself — the first Internet-based program was launched on the Prodigy Network back in 1989. Since then, SaaS vendors have seen success using the model, which can work in a few different ways. In one, customers refer other customers to a product for an incentive. In another, vendors set up formal relationships with partners who send qualified leads back to the vendor, often for a portion of revenue or a one-time payment.
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Dropbox offers a good example of a successful referral program. The cloud storage company will give users 500MB of free storage when they invite a friend to sign up. Dropbox’s program helped the company skyrocket from 100,000 to 4 million registered users in just over a year, an amazing 1,950 percent year-over-year growth rate.
3. Launch a reseller program.
Reseller programs can enable companies to grow very fast at very low margins. Even better, when resellers are doing the bulk of the work marketing and selling products, developers can focus on what they do best: creating better, more innovative software.
Xero, a SaaS-based accounting tool, provides an excellent examples of a successful reseller program. Early in its company history, Xero relied on direct and self-service sales to land 12,000 customers. After working with 2,000 accounting firms to resell its software, Xero has grown to more than 135,000 customers, 60 percent of which were brought on through its reseller program.
4. Set up a full-service marketplace.
For developers with extensible solutions, setting up your own marketplace with your own ecosystem of add-ons — becoming like an Atlassian or Salesforce — can be a smart move, since other developers can help give your product more functionality and draw in more customers at almost no cost to you. In another example, last year ADP, the world’s largest payroll company, launched a full-service marketplace that extends its platform through third-party plug-ins and services.
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One important thing to keep in mind: There’s no one-size-fits all strategy that’s guaranteed to work for your business, so you may end up needing to try all of these shortcuts to discover the right ones. To get there faster and as inexpensively as possible, you should find partners and technology tools that offer maximum flexibility to implement quickly, change revenue shares, add and remove partners, and make other tweaks as you go along.
If you invest the time and resources to figure out the winning mix up front, it can pay big dividends in the end. When you tap into effective sales models, you can increase your sales force, reduce your cost of customer acquisition and drive revenue for a sustainable business.
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