I recently wrote a post about the coming Revenue Sharing model for Microsoft Business Applications ISV’s. As expected, there is some screaming going on about forking over some of your revenue to Microsoft. But there is another side of that story… what Microsoft will be doing in return.
Starting soon Microsoft will be moving to a pay-to-play model for ISVs. The first reaction I am hearing from many ISVs are various “avoidance” schemes. Remember, this only applies to SaaS products. Since all of these SaaS products are hosted by Microsoft, and they have all the telemetry they want, you really will be challenged to find a way to avoid Revenue Sharing. It is not an “Optional” program. Though for the time being, you can still “side-load” your solutions, Microsoft will easily discover them. When they do, if you are not part of the program, according to Guggs, “If your solution is not on Appsource, we will tell customers not to use it — we will get very “pointy” with this message over time”. I can’t think of any intelligent customer who would not heed this warning, so I suggest you drop your “avoidance” plans. Instead, focus on the promised benefits, and maximizing those.
Depending on where you fall, you have several “levels” of benefits across three buckets: Technical, Marketplace and Sales. I’ll share the slide first, and then we can unpack these. Understand that these are subject to change, it is a lever Microsoft can use to increase engagement.
Let’s start at left most column, which is the minimum required “non-optional” option. When you publish a Bizapp solution to AppSource, and you commit to 10% as part of that process, this is what you will get, even without selling anything yet:
- Architectural Consultation. This is a one-on-one consultation with Microsoft. Unfortunately, you don’t get this benefit until after you have published, and it probably would have been handy to have beforehand, but I can also see how Microsoft does not want to waste time with tire-kickers either.
- Training Vouchers. It is not clear how many of these you get, but without a specific ISV Competency anymore, they don’t seem like a related benefit, but… they’re not worthless.
- Customer Surfaced Certification. Seems all solutions will have that by default, in order to even be published.
- Access to ISV Studio. Ok, now we are getting somewhere.. potentially. We are in the Pilot group to help MS figure out what this can/will be. MS mentions Insights and diagnostics, which are important, and we have been missing that, but I think there is more that can be done behind a name like “ISV Studio”. Time will tell, but I would keep an eye on this one.
The above are all listed as “Technical Benefits”, and you may notice that they are the same across all levels. This is where I expect whatever they are planning to do around IUR will probably be differentiated. Today, the differentiations between levels are really around Marketing, (Sales does not kick in until later), so let’s take a look at the minimum Marketing Benefits
- Marketplace Listing Optimization. This is not “prioritization”, it is “optimization”, but it is important to understand how solutions are surfaced in AppSource so that your wonderful app is not sitting on page 26. This will include a quick consult with the MS Enablement Team, and will become more programmatic down the road. Think, built-in recommendations against what you have done, surfacing Best Practices suggestions.
- Marketplace Blog/Newsletter/Social. This should not be your entire “Marketing Program”. It is a one-time “blast”, but can be quite valuable if you time it right, and amplify it yourself through your own social channels.
The $50K Club
Once your app has generated $50K USD of revenue sharing fees, which is actually $500K of ISV revenue, in a rolling 12 months, you move up the the $50K Club. This is no small feat, if your solution sells for $10/Month/User, you would need to have sold about 4,200 seats. Again the technical benefits, for the moment, are the same. But you do get additional Marketing Benefits, in addition the the entry level benefits, including:
- Customer Story. This is a basic customer success story that you can create from Microsoft Templates, and submit for publication here. Again, you will want to amplify this with your social channels, but it is a nice “credibility” builder.
- Sales Enablement. This is a one-on-one workshop with one of the Microsoft vendors who specialize in helping partners build a sales engine. This goes beyond just AppSource and into your entire potential customers’ lifecycle. It seems pretty extensive.
- P2P Consultation. If you are thinking about selling via other partners, this is a roughly 90 minute consultation on how to approach building a channel.
- Marketplace Category Promo. At the top of each category in AppSource is a rotating gallery of featured apps. Once you join the $50K Club you will be added to this rotation. I would not expect you to show up more than once, and probably for no more than a week. So again, an opportunity to socialize it and direct customers to it, during the time you are sitting at the top of the category page.
- Social Selling Coaching Program. I have mentioned socializing several of these things so far, to amplify their value. This benefit is a specific, significant one-on-one workshop to show you exactly how to do this whole “socializing” thing.
The $250K Club
Once your app has generated $250K USD of revenue sharing fees, you have the option to “opt-in” to the 20% revenue sharing model, but you don’t have to. Understand that this means you will have sold $1.25 million USD of ISV revenue, which for your $10 solution, means about 10,500 seats. The air is starting to get thinner here, and the numbers of ISVs in this category will be smaller. But if you do get there, you will not only get additional Marketing Benefits, but you will activate the Sales Benefits. The additional Marketing Benefits include:
- Co-Sell Ready Content. As part of the Co-Sell on-boarding process, you will have the opportunity to add to your seller catalog listing, Seller-Facing content, including one-pagers on your company and application, as well as a Customer Story. These are useful for MS Sellers to better understand what you are solving for, and when and where to position your solution with one of their customers.
- Mini-Commercial. This is a 30 video in this format. You can add this video to your AppSource listing, and of course. promote it through your social channels.
- PR Support. This would be a Microsoft distributed press release, that could include a quote from a key Microsoft person who would be relevant to your application. Here is an example. Again, you would be advised to amplify this release with your own social channels.
- P2P Readiness Workshop. For those ISVs planning on building a reseller channel, this is a much deeper dive than the previous P2P Consultation. It is an extended one-on one virtual workshop, and includes not only readiness, but also introductions to potential resellers.
- Marketplace Home Page Promo. As a member of the $250K Club, you will also get a spot in the rotation in the gallery for the entire marketplace, versus just your category at the $50K level. You will want to double-down on the social amplification of this as again, you will only sit there for a limited time. However, if you are blowing the doors off with your solution, you may find yourself regularly appearing here.
In addition, this level kicks in the Sales Benefits, which are the same as at the top level, so I will cover those below.
The $750K Club
Let’s say you somehow sold $3.75 Million dollars of ISV revenue, which for a $10 app, would mean that you miraculously sold about 31,250 seats. I think it is clear that there are only a handful of these ISVs, and maybe not even a whole hand. But you three will also get some additional Marketing Benefits, that include:
- P2P Workshop – in person. At this stage you will have already had a couple of consults and workshops on channel building. This takes that up yet a notch further as an in-person workshop at your office. This is going to get very pointy on your specific goals and requirements.
- Secret Shopper. A Microsoft vendor, who specializes in sales motions, will anonymously go through your entire sales process, including any sales doorways. They will come back with frank suggestions on where your sales process is either failing, or could be improved.
- Tele-sales campaign(s). Most of us are familiar with N3, they are one of Microsoft’s key vendors for a lot of things. Working with your team, N3 will craft and execute a telesales campaign for your solution. You can target end customers or resellers depending on where you want to create new traction. Telesales campaigns are notoriously hit or miss. It is probably the most overt form of marketing that there is. N3 has been around the block on this, and will no doubt know better than you how to get the most from it.
- Global Expansion. If you are kicking ass in your region, Microsoft will be eager, possibly even more eager than you are, to spread your ass kicking solution around the globe. Globalization is more than just flipping a switch in AppSource. You will need to deal with the technical side, like localization, but also the introduction to the regional teams in these new geos that may not have any idea what an ass-kicker you are. Microsoft will facilitate this for you.
- P2P Lead Gen Webinar. Webinars are another tool for building a channel, and Microsoft will facilitate and promote a webinar for you, under their brand targeted at relevant resellers. You will want to drive additional attendance with your social channels.
- Seller Webinar. These are fun, I have done a couple of them, including one a few weeks ago. This is an Internal-facing webinar that MS Sellers are invited to. This is an excellent opportunity to talk directly to the MS sellers about how your solution will make them more successful. This is less about customer benefits and more about helping the sellers solve their own challenges. So angle it accordingly. These are recorded and added to a library that the sellers can access for on-demand replays.
Once you cross the $250K mark, and you opt-in to the 20% program, you activate the Microsoft Sales Benefits that include:
- Prioritized Listing. You can be listed of course without being in the $250K Club. But on the MS Internal Sellers view of the catalog, those that opt into the 20% program will be listed at the top. But it’s actually more relevant that the sellers will be keenly aware, that if they sell one of these solutions, they will get paid. This is the primary the reason for the additional 10%… to create the incentives to motivate the Sellers to move your product. Think about something like CPQ where there are a few ISV solutions. While the Seller will be able to see all of them, the ones in the 20% category will have a golden glow around them. Obviously, Sellers are going to move forward with one of those first.
- Co-Selling Support from MS Field Teams. The field teams consist of AEs (Account Executives), SSPs (Solution Sales Professionals) and TSPs (Technical Sales Professionals). An enterprise level customer may have several SSPs assigned to them for different products, like for example, a specific SSP for Business Applications. Tethered to an SSP is a TSP, and together they are the primary force looking to sell Business Applications into their enterprise customer accounts. It is these SSP/TSP combos that you will want to engage with to bring you into these big deals. This is of course assuming that your solution is designed for enterprise customers. Up until now, they received quota reduction for the value of your ISV solution when they brought you in. That was nice, but it’s not the same as money in their hands, which they will get from selling the 20% solutions. This is not a guarantee that your solution will be sold in huge numbers… or at all. For many solutions, this path will not actually do anything. In that case you would have to look to the Marketing Benefits to justify your 20%, or maybe you opt back into the 10% tier. Or maybe you did not see enough value, and never opted into the 20% tier in the first place.
- Regional Account planning with MS field teams. This one is a two-edged sword. You can work directly with the teams to plan how you are going to pursue targeted Enterprise customers together, which is great. But my experience with Account Planning has been that it also creates a reporting burden on your side. Not an issue if it works.
A final point on Co-Selling. Microsoft is aligned strategically to industry verticals. SSP/TSP teams are not only targeting particular horizontal solutions like “Business Applications”, but they are also segregated vertically along industry lines. For Example, “Business Applications in Healthcare Sector” would be a specific charge of an SSP/TSP team. In addition, depending on the size of the industry, the teams may be geographically bound also, ie. “Business Applications in Healthcare Sector for US East”. Basically, there are a lot of people you would ultimately want/need to engage with.
Needless to say, horizontal Solutions and “widget” solutions are probably not a good fit for Co-Selling, as should be obvious from what I wrote above.
So this was a long post and I am sorry for that. To add to that, everything I wrote above is subject to change as the program rolls out. It may change a little, or it may change a lot, but as I opened with, this side of the program is a lever that Microsoft can easily adjust.
For ISVs that are confused, worried, mad or acronym challenged, I am part of another consulting group called PowerISV with four other MVPs who may be able to help.