Cloud vendors could go a long way toward building trust with their customers and differentiating themselves in the market with two key changes in their approach.
While many enterprise customers like their cloud products, there are often some general rumblings of frustration with their vendors. Regardless of how long they have been doing business together, the size of the organization or the size of their cloud investment, cloud vendors seem to commit the same mistakes over and over that are ultimately fracturing their customer’s trust in them and are creating vulnerabilities. By harming this valuable trust and creating frustrations, cloud vendors are often unnecessarily extending sales cycles or even losing out on potential new product adoption and the resulting revenue that comes with it.
Here are two key ways cloud vendors can ease the tension and even help differentiate them as vendors that enterprises want to work with.
Focus on Delivering Expected Value
When enterprise customers take a close look at their actual use of subscription cloud products with a feature-level granularity, they too often realize that they are not using all of the features they signed up for (and have already paid for in subscription fees) — often as much as half the features. There have even been cases where there has been no use of the service a year or more into the subscription term.
Yet at the same time, the cloud vendor wants to discuss the new, more robust edition as an upgrade or the next product they should add to their portfolio. It leaves customers wondering, “Are they really trying to help us be successful or do they just want to get more money out of us?”
Now, most companies acknowledge that some of the blame for their underutilization falls on them. But they are also annoyed to realize that their trusted cloud partner didn’t provide much proactive guidance around what features they could be using and how they could get more value out of their products. Frustration mounts when the cloud products that are not being fully utilized turn out to be products that the cloud vendor aggressively pushed for adoption with stories of immediate and long-term value.
Helping enterprise customers get more out of their investment will be incredibly beneficial to cloud vendors. Not only does it increase the stickiness of the cloud product, but it will also result in customers being much more open to adopting more products in the future. Spending more time and effort working with customers after pen goes to paper, and proactively guiding them on how to unlock more value from what they are already paying for, is always going to be beneficial. And it will be much easier to sell more product, features, services and upgrades down the road if vendors shift their focus to helping customers get more out of the products they already bought.
Provide More Long-term Commitments
Offering a “special” upfront discount simply is not enough to win net-new customers or convince longstanding customers to adopt more products. Most enterprise customers are savvy enough to take these one-time offers with a grain of salt as they believe that vendors only providing these shiny, special, one-time discounts to motivate adoption and get them locked in.
Vendors can easily change that perception by leading with long-term commitments that the up-front special discount will still be available at their next renewal (i.e., a true price lock and guarantee). At the very least, there should be a commitment that there will only be a nominal increase in price. Extending these commitments beyond the next renewal also goes a long way. If cloud vendors offer support, they should let enterprise customers know that the support fee (the % of the net subscription fees) will also be locked long-term. Get it all on the table out of the gate.
What definitely does not work is taking an approach where vendors flat out reject a request to make a long-term commitment or respond that they’ll be willing to discuss future pricing when the time comes (e.g., 3 years down the road when it comes time to renew). By responding in this way, they’re only making the perception worse.
With that being said, everyone knows that cloud vendors are running a business and that revenue growth is a key focus. Many cloud vendors are publicly traded companies that have shareholders they are ultimately accountable to, and the analyst community is very much paying attention. So, it’s understandable that making commitments around future pricing may be problematic. Vendors want to retain the opportunity to accelerate revenue growth through price increases at renewal if the other ways (such as adding products) aren’t working the way they hoped.
Giving customers long-term price protections up front goes a long way, especially if vendors lead with the commitment rather than providing it after being asked. They’ll not only improve their chances of closing the deal and shortening the sales cycle, but they’ll set a framework that provides the customer future cost certainty. This makes it easier for customers to find room in their budget and get funding for that next new project and product adoption.
By forgoing a tactical way to increase revenue in the future, vendors will ease things at the outset and ultimately make it easier to grow revenue since customers will have the ability to add more product and volume. This could also be a differentiator since, unfortunately, enterprises are so used to having to fight for these kinds of commitments.
Happy customers make better customers who are more willing to stay customers and add more products. With an assumption that vendors will continue to innovate and create great cloud solutions, changing their approach even a little bit can help them achieve more adoption, more use, and more revenue.
Reprinted with permission. © IDG Communications, Inc., 2020. All rights reserved.
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