Your organization is already familiar with direct sales. But when you’re working in a cloud partnership, things look a bit different. Here, the sales strategy pivots from direct to indirect, hinging on a robust ecosystem of relationships to drive revenue. While this approach demands initial investment and effort, cloud sales emerges as a powerful, scalable channel for sustainable growth. In this blog post, we explore the differences between direct and cloud sales, demonstrating why the latter is the preferred pathway to unlocking substantial growth opportunities.
The Direct Sales Process
In the direct sales process, the journey starts with identifying a prospect and ideally concludes with a closed-won deal. However, at any stage of the sales funnel, the process may also result in a closed-lost outcome.
Our focus lies within the middle phase of this process, particularly in customer meetings. In direct sales, these meetings occur relatively early in the process. Initially, a Sales Development representative retrieves the customer’s information, initiates contact, schedules a meeting, and progresses accordingly. Then, the customer transitions to the Account Executive, who may assess the lead’s viability as a Sales Qualified Lead (SQL) or allocate it to another stage of the funnel, such as nurturing or closed-lost.
The Cloud Sales Process
Like the direct sales process, cloud sales also begins with identifying prospects and aims for closed-won outcomes. However, there are notable distinctions between cloud sales and direct sales. First of all, prior to reaching out to prospects, cloud sales involves addressing cloud channel prerequisites, which can be time-consuming.
Furthermore, instead of directly approaching end customers, the cloud sales process targets cloud representatives who already have relationships with the customers. Therefore, your initial interaction shifts from a customer meeting to a meeting with a cloud rep. Essentially, the same targeting that direct sales employs for customers, cloud sales applies to cloud reps.
Once you establish contact with the cloud rep, you’ll persuade them to introduce you to customers, share your marketing materials, and engage in ongoing communication until you secure a customer meeting.
It’s important to note that although the customer meeting signifies a highly qualified lead, they are not yet considered an SQL. First, the Cloud Alliance passes on the lead to the Account Executive, who then progresses it towards closed-won status.
Key Differences Between Direct Sales and Cloud Sales
Let’s look at the main differences between direct sales and clouds sales processes and outcomes.
Pre-Requisites
The prerequisites for direct sales are minimal, primarily focusing on understanding your Ideal Customer Profile and the value proposition of your product. In contrast, cloud sales necessitates addressing these fundamentals and more.
Establishing a successful sales channel in the cloud involves a series of strategic steps and considerations. It begins with a discovery phase involving the development of a Better Together story. The Better Together story is a multi-layered incentive framework designed to encourage collaboration between cloud stakeholders and ISVs. It encompasses various incentives such as monetary rewards (like quotas and SPIFFs), increased cloud consumption, enablement of additional cloud services, and added value to the customer. Once the Better Together story is drafted, it undergoes validation with cloud representatives to ensure its viability and relevance. This process verifies that the collaboration framework is tangible and aligns with the objectives of both parties.
Other pre-requisites include partnership enblement; compensation program eligibility, marketplace onboarding, and internal sales enablement to ensure that the sales team is equipped with the necessary tools and resources to drive success. Additionally, building a robust marketing kit arms the team with materials to effectively communicate value propositions and engage potential customers in the cloud ecosystem.
The final prerequisite involves crafting a comprehensive Go-to-Market (GTM) plan, outlining the approach to penetrate the market and effectively reach target audiences. Identifying key accounts is crucial, requiring the creation of an initial hitlist of target accounts and mapping them with cloud stakeholders. Engaging with these stakeholders fosters alignment of objectives and strategies, while mapping them to support business goals ensures focused and coordinated efforts. Finally, the direct GTM targets are converted into a cloud context, shaping the GTM plan across all partnership pillars to ensure comprehensive coverage and strategic alignment.
On average, it will take a typical company from six months to one year to fulfill these prerequisites. Working with the right cloud partnership experts can shorten this process significantly.
Roles and Responsibilities
In direct sales, the individual responsible for managing the funnel from prospect to customer meeting stages is the SDR. In cloud sales, this responsibility falls upon the Cloud Alliance team. Establishing this mechanism requires addressing numerous prerequisites that encompass and integrate four key pillars: sales, business development, partnership enablement, and marketing.
In direct sales, the SDR typically initiates customer introductions. In cloud sales, it’s the cloud representative affiliated with the cloud provider who facilitates these introductions. This distinction underscores the indirect nature of the cloud sales process.
In both direct sales and cloud sales, the Executive of the ISV owns the process of taking prospects from customer meeting to closed-won.
Sales Process
There are some significant differences between the processes of direct sales and cloud sales. First, the time it takes to secure a customer introduction differs. Direct sales often yield quick introductions, albeit potentially resulting in numerous low-quality leads. But as an indirect sales process, cloud sales is more gradual, beginning with conveniencing the cloud rep. However, this process gets faster with time.
Similarly, while direct sales may generate a high volume of customer meetings, the quality can vary significantly, influenced by factors such as the proficiency of SDRs and available data. In contrast, cloud sales typically ensure consistently higher meeting quality, as account qualification is conducted by cloud representatives who possess a strong rapport with customers. For this reason, the level of prior qualification is relatively low in direct sales, whereas in cloud sales, it significantly increases.
In direct sales, the individuals you encounter can vary widely, whereas, in cloud sales, you’ll typically have meetings with decision-makers who drive purchasing decisions and partnership directions. And cloud sales offer immense scalability facilitated by thousands of cloud representatives advocating for products, contrasting with the less scalable nature of direct sales.
Results
All of these differences lead to significantly superior results for cloud sales in a number of important KPIs. Conversion rates to SQL are typically higher in cloud sales compared to direct sales. AWS reports a 27% higher conversion rate to closed-won deals in cloud sales, with deal sizes also being 80% larger, attributed to direct meetings with decision-makers endorsed by cloud representatives. Moreover, the sales cycle is 40% shorter in cloud sales compared to direct sales, highlighting the efficiency of cloud sales processes.
Maximizing Your Cloud Sales Potential
As we conclude our exploration of the differences between direct and cloud sales, it becomes evident that embracing cloud partnerships offers unparalleled opportunities for growth and scalability. By transitioning from direct to indirect sales channels, organizations can tap into a robust ecosystem of relationships and leverage the networks of cloud representatives to convert leads and generate revenue.