Make Renewals Part of Your Cloud Marketplace Strategy
The cost of acquiring a new customer in B2B SaaS is higher than ever, with some ISVs spending as much as $5,000-$10,000+ to close just one major enterprise account. Acquiring a new customer costs 4-5x than renewing an existing account, which means successful renewals are key to your business’s bottom line. One of the leading strategies for ensuring renewals go through and lead to contracts with higher ACV? Renewing through cloud marketplaces.
When it comes to the strength of your renewals business, ensuring you keep profitable customers with good margins is key. You’ll also cut down on onboarding costs by avoiding churn. By renewing through a cloud marketplace like AWS, Azure, or Google Cloud Marketplace, you have at your disposal additional incentives that save time and drive the renewal over the finish line faster and with less friction, like autorenewals and access to committed spend, as well as streamlined billing and legal processes.
The result? Faster and more streamlined business processes. Allowing ISVs and customers can focus on what matters most: providing value and running their business.
Here’s everything you need to know about hyperscaler cloud marketplace renewals.
Renewal features on cloud marketplaces
Cloud marketplaces aren’t just part of a renewal strategy. They have been designed and developed with features that drive renewals as well as net new co-sell opportunities.
Some common features to help ISVs push renewals include:
- Procurement through committed spend
- Centralized billing and legal through the CSP – no need to go through the process again
- Tools to update contract forms and implement version upgrades
- Automatic renewals
- SaaS contracts with consumption that are agnostic to year minimums (e.g., contracts are month-to-month or go month-to-month after 1-year)
- New Private Offer that allows you to upgrade your renewal agreement with modified terms, pricing, and duration. This cancels the old offer.
- Agreement-based offer (ABO) which is a renewal or upgrade action taken by the seller on an existing buyer agreement. This terminology is AWS-specific.
- Future dated agreements (FDAs), which allows customers to activate entitlements on a future date. This is also AWS-specific.
Below, we’ll further break down some of these concepts.
Committed Spend
Committed spend is money CSP customers have agreed to spend by a certain date on compute costs and third-party marketplace software.
Very few companies run out of committed spend budgets before their annual or multi-year contracts expire. For ISVs, this is a huge advantage. If a customer is renewing, remind them they purchase your solution with committed spend credits that will go to waste if not used by a specific date.
Auto-Renewals
Though all three major hyperscalers support auto-renewals, this is a feature that has to be accepted by both parties at the time of the initial offer and can be turned on or off anytime from the buyer’s side. Auto-renewals can also be used for Private Offers. It is helpful to think through renewals at the time of initial sale to take advantage of auto-renewals.
As a default, all Azure Marketplace subscriptions renew automatically, for example. While ISVs and customers can disable this feature, having this set as a default can streamline the renewal and payment process, especially if a customer is a sticky deposit – e.g., the solution is crucial to their business and the cost is not prohibitive.
Centralized place for all deals
Each cloud marketplace offers a dashboard that allows you to monitor your customers and deals, including ones with contracts that are up for renewal. You can keep track of when your marketplace customers are due for a renewal, as well as expiration dates for contracts, software licenses, and renewals.
Streamlined billing
When you renew, billing doesn’t change. Everything is still processed through the marketplace’s financial rails.
Renewal documents in one place
Keeping track of user agreements, invoices, contracts, licenses, and other legal documents can be a pain. With cloud marketplaces, all of this information is located in one place. This means your legal, accounting, and finance departments won’t have to waste time chasing papers.
Customizable Private Offers
Businesses are always changing and growing, as are their needs. What does this mean for ISVs? Completing the renewal might require customizing terms, including cross sells, upsells, and discounts.
With Private Offers, a key feature on cloud marketplaces, you can easily customize deal terms, including for metering. The good news is that most Private Offers transactions can also be completed using committed spend.
Future Dated Agreements (FDA)
AWS Marketplace has recently announced “Future-dated agreements” (FDA), which allows buyers to receive the product licenses or entitlements on a predetermined future date.
Businesses looking to invest in software but are waiting for other resources (e.g., onboarding a new team or third-party resource), FDAs can help ISVs close the deals and ensure no time is wasted on a contract or subscription. For example, let’s say you close the deal in May, but your new specialized developer who will be using the solution starts in June. That means you could begin the contract automatically in July to optimize value. This helps remove the “not right now” from the sales equation.
Future of cloud marketplace renewals
AWS Marketplace recently announced a series of new features for renewals in their blog (read here). Don’t be surprised if Azure and Google Cloud Marketplace follow suit and work to improve their cloud marketplace renewal experience in the near future as well.
Need help fine-tuning your cloud marketplace renewal strategy? Invisory helps ISVs of all shapes and sizes drive success across their cloud marketplace journey. Reach out today.
