Software Executive Magazine

August/September 2017

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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Page 38 of 43

▶ Do your solutions truly complement each other, and is that value easily apparent to the merchant? I can't stress the importance of this point enough — if you are simply looking for one software to sell another software, you more closely resemble the marketplace model. There's nothing wrong with that, but understand what you're working with. For example, if a web-hosting company agrees to sell an accounting software to a com- mon merchant, that's fine — but what's the true value of the combined solution? In this case, very little except perhaps a discount or single point of access. The true value to the merchant is if data powers greater solutions. Think POS software powering accounting software — like data that creates a better end state. ▶ Are your merchant bases, or future addressable markets, common? If not, you may be reaching. If so, you may be on to a successful strategy. Un- derstand your place among your merchants — are you vertically specific and, therefore, need to be aligned with vertical solutions, or are you more vertically agnostic and can apply to a market at large? ▶ The revenue opportunity for both companies in this scenario tends to be a mutual revenue share, which works well when the offering is similarly priced. It's important to consider the total value that your solution offers to the merchant and en- sure that your revenue percentage of that offering is in line with the value that you provide. The key to a successful channel strategy is deter- mining which of the above fits your offering. If you are an enterprise-like platform that requires significant configuration and onboarding, a self-serve market- place is probably not the right fit. You'd most likely be better served with a VAR network. Conversely, if you have an inexpensive SaaS solution aimed at the middle of the market, marketplace and complementa- ry software offerings will give you a better chance at go-to-market success. There are many components to executing a successful channel strategy, but the first step is determining the right model for your software offering. When chosen and executed effectively, the above methods can deliver a successful return on your channel investment. S software (and like solutions) for enough revenue share that it can add value. Therefore, if your total SaaS fee to the end user is $50 per month, chances are that a VAR isn't going to be able to add value and recover enough revenue for it to make sense to sell. Conversely, if your offering starts at $499 a month because of its complexity, there's probably enough SaaS fee to go around. MARKETPLACE Markets react, and the SaaS software market reaction to high-priced software and VARs is the evolution of software marketplaces. The base concept is that one primary service provider has the mindshare of the end user and, therefore, can offer, through a consumable software platform, many complementary offerings to its core offering. This has been one of greatest areas of growth in the SMB software space. Primary offerings (think website builders, accounting software, POS pro- viders) offer a suite of ancillary products through a self- serve, single sign-on (SSO) environment. While logical, again, there a few things to consider: ▶ Who is the marketplace owner, and what is the role they play with the merchant? If I'm a mer- chant, why would I look to that solution provider as an authority of other solutions I need to run or grow my business? As a point of comparison, the Apple App Store works because consumers trust Apple as the source for what apps work best on their OS. Why would merchants trust XYZ solu- tions provider to complete the suite of solutions they use to run and grow their business? ▶ Do merchants provision business management solutions? I believe that this space is yet to be ful- ly defined, but it remains as an open question. In evaluating your strategy, you have to weigh your belief in the fact that merchants self-provision. If you believe they do, or will based on your adjacen- cy to the core offering, marketplaces can be a low- cost, high-value delivery of your solution. COMPLEMENTARY SOFTWARE OFFERING The greatest development in the current SaaS land- scape is the ability for distinct software offerings to partner together to offer a combined solution that is greater than the individual parts. The single most im- portant part of this option is that the two software solutions complement each other in such a way that 1+1 does not equal 2, but 3. In other words, the sum of the two solutions must create a unique value proposi- tion that neither solution can offer independently. Most commonly, this is achieved through the sharing of nec- essary data that powers the complementary solution. As above, a few things to consider: D A N C H A N D R E is the SVP of Strategic Partnerships at Booker Software. The cloud-based business management software for spas and salons is in 11,100 locations in 70 countries and processed $2.6 billion in transactions in 2015. Chandre is a Software Executive editorial board member. 39 SOFTWAREEXECUTIVEMAG.COM AUGUST/SEPTEMBER 2017

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