How cloud GTM offers an efficient route to market for SaaS in 2024
Since the 2022 ‘SaaSacre’ – appropriately named after a ‘>40% slide’ in public cloud index performance – businesses have steadily moved away from a model that incentivized growth at all costs (leading to high burn rates) to deploying a bird’s eye focus on “profitability.”
Soon, most revenue organizations in SaaS businesses went back to the drawing board, trying to rein in rising acquisition costs (CAC) or drive higher conversions (or both), especially as traditional sales channels started dragging their feet.
Over the past couple of years, as buyer behavior mutates sales cycles, SaaS leaders are innovating both ‘how they sell’ - hence, assess their traditional routes to market, and ‘where they sell’ - hence, look for intent-dense procurement channels to sell into.
This is reflected in the fact that by 2022, more than 30% of B2B buyers were “already using digital and self-serve channels for each stage of the buying journey.”
If you’re a GTM leader looking to discover:
- Key trends influencing and transforming SaaS go-to-market efficiency in 2024
- Strategies to reach high-intent buyers faster than direct channels, and
- Optimizations to drive higher conversions and return on effort
… you’re in the right place.
Key trends influencing SaaS GTMs in 2024
Modern SaaS GTMs have always been reactive to changes in – customer preferences, competitive landscape, and industrial momentum. This is why a GTM leader handling multiple motions – from sales-led to product-led to even inbound-led – can often feel like juggling too many balls together.
As the market heats up for 2024, here are the most pressing factors influencing SaaS GTMs:
1. Buyers are increasingly bypassing direct selling in favor of self-evaluations
According to G2, buyers increasingly favor other channels over directly buying from vendors.
This is especially true for mid-to-large businesses, who, according to G2, experience “a lack of trust in sales” and value the ability to pre-qualify buyers before engaging a rep. In fact, 75% of buyers told Gartner they prefer rep-free buying experiences.
As access to information is further democratized, either through greater adoption of digital marketplaces or through AI-facilitated evaluation processes, no-touch evaluations will take precedence over vendor-initiated conversations. And the more that sales reps are isolated from impacting the evaluation process, the more buyers are likely to trust third-party sources of information.
This is also why …
2. Partnerships will play a heightened role in GTM success
Today, 92.9% of sales leaders report that their reps are collaborating with partners to close deals.
Even more importantly, this modicum of leveraging existing relationships to warm up to a potential customer also drives higher conversions than not engaging a partner in the sales process. Most revenue leaders believe that partner-attached deals are at least 26-50% more likely to be won than average.
Since they are generally high ticket purchases, buying decisions, even post-evaluation, entail multiple back-and-forth negotiations. Hence, the idea behind partner-led deals closing at a higher rate is implicit in the dynamics of B2B sales.
This is also why building relationships is a part of the charter for sales representatives in SaaS businesses.
3. Procurement choices will be influenced by platform-compatibility
Rising competition and rate of innovation in SaaS are now offering diminishing returns on feature-based differentiation. Since it is relatively less expensive now to maintain, iterate, and improve software, additional capabilities are no longer as wide a moat as they were before.
Instead, the next frontier of differentiation is being built by how effectively software is able to integrate into the native tech ecosystem of the buyer without the need for additional legwork.
This is reflected in the fact that a significant proportion of modern buyers would prefer purchasing software that could readily be integrated into their existing tech ecosystem.
The simple reason is that managing disparate tools often leads to a lack of visibility, resulting in poor decision-making, idle resources, and even inefficient resource utilization.
Instead, SaaS buyers would prefer building a stronger ecosystem of compatible tools with the ability to communicate with one another and the capability to unify resource management.
4. The market is still primed for expense conservation
In 2023, 62% of sales pros said their organization was taking fewer risks than in 2022. In the same period, 70% of sales leaders believed budgets were more scrutinized than the year prior.
On the other hand – businesses, on average, use over 200 apps and tools today, and only 45% of these tools find regular usage, leading to risks of being deemed shelfware in performance and financial audits in times like these.
The business disposable wallet, hence, is only shrinking further, forcing vendors to either find new avenues to capture buyer wallet-share (through cloud commits, freemium/free trials, improved pricing/discounting, and even outbound campaigns) or double-click on their highest-intent customers.
But how can GTM and sales leaders challenge the status quo without having to compound effort? What can offer them the simplest gateway to outperform traditional sales channels, and how do they close more revenue while still building credibility and bypassing the common objections they are so familiar with?
The answer lies in a cloud GTM!
What makes cloud GTM a modern, efficient way to grow in 2024 and beyond?
To understand how a cloud GTM functions, we have first fully to understand what it is:
A cloud GTM is a re-imagination of traditional selling mechanisms wherein vendors drive discovery, deals, and revenue through cloud marketplaces through marketplace listings and/or co-selling with partners on marketplace platforms.
Cloud marketplaces unify the convenience of digital and self-serve selling routes with the familiarity of traditional negotiations or partnerships to bring GTM leaders access to high-intent buyers while slashing deal timelines in half!
There are many reasons why a cloud marketplace listing is the need of the hour in 2024, but beyond that, here’s how a cloud GTM will fuel a new wave of SaaS sales:
1. Hyperscalers pre-qualify vendors to reduce procurement evaluation
According to a forecast by Canalys, cloud marketplaces are expected to drive $45B in software sales by the end of 2024, with many believing that such a milestone could actually be hit by mid-2024!
This is partly aided by how simple discovery becomes for buyers, who can now access and shop for all their required vendors under one umbrella. But, it is also assisted by the fact that hyperscaler platforms take critical care to pre-vet and qualify vendors listing on their marketplaces.
2. Strategic Co-Sell opportunities offer mutual growth for vendors and hyperscalers
Instead, the next frontier of differentiation is being built by how effectively software is able to integrate into the native tech ecosystem of the buyer without the need for additional legwork.
At the same time, the rise of partnerships directly contributed to the growth of GCP as a marketplace –
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This helped GCP scale billing on the platform by >10X in just three years between 2019 and 2022.
3. Out-of-the-box transaction enablement enhances deal agility
In an environment of heightened financial scrutiny, procurement cycles get lengthier and tend to involve multiple stakeholders. This leads to internal friction between business functions looking to simplify operations with vendors and finance teams looking to cap operational costs.
Also, direct sales channels force lengthier and more operationally intensive deal cycles by involving procurement, IT, and legal stakeholders across both buying and selling organizations.
This is massively inefficient in an era where 28% of representatives peg long sales processes as the primary reason for deal loss.
Unlike traditional sales routes, cloud marketplaces offer composite licensing capabilities out of the box. This includes:
- Consolidated invoice management
- Standard contract and condition templates,
- Product usage telemetry and even
- A single roof for competitive evaluation of software
According to Forrester’s impact analysis of AWS, these efficiency gains can result in material business impact:
- Reducing time spent on invoicing tasks by 50%
- Reducing invoice processing time by 66%, and
- Reduction in licensing costs by 10%
4. Reduce objection handling by ensuring platform compatibility and deployability
Cloud marketplaces are not a standalone capability. Hyperscalers offer marketplaces as a secondary source for their customers to burn through commits that would otherwise be reserved for computing costs. This means buyers who procure through marketplaces and vendors who sell on them are always cloud infrastructure compatible (since they are both reliant on the cloud provider),
Additionally, all three hyperscaler marketplaces also offer vendors the ability to offer one-click deployments in most usual environments, making self-service implementations even faster.
As platform integrability becomes a key differentiator for SaaS, the ability to - be deeply connected to your customers’ native infrastructure and make deployments faster. This flexibility also helps you, as a seller, improve time-to-value for your buyers.
5. Facilitates access to high-intent buyers with locked-in expense budgets
Cloud commits are ‘legally binding,’ ‘non-cancellable’ amounts owed to hyperscalers by customers over a period of time. Not burning through cloud commit, therefore, is a material revenue risk for the latter, where they pay hyperscalers without any benefits to the business.
On the other hand, hyperscalers are also actively incentivizing burning through cloud commits by offering transaction/expense-based discounts, loyalty programs, and other benefits, as we explained in a blog earlier.
Also, marketplaces are already high-intent channels meant solely for businesses with established software tool needs. This means that most visitors to your marketplace listing have already moved significantly ahead in their buyer journey and are evaluating persistent, present, or future use cases.
This makes cloud marketplaces a fertile channel, especially since they combine high buying intent with a strong propensity to burn through their ‘cloud commit.’
Moreover, hyperscaler earnings releases for Q4, 2023 have made it evident that cloud commits had inflated by $37 billion in a span of just 3 months, opening sellers up to a >$340 billion targetable market.
In 2024, SaaS GTMs will prioritize market and channel efficiency
Even with the SaaS free-fall of 2022 behind us, 54% of sales leaders told HubSpot that selling in 2023 was harder than the year prior.
This is deeply concerning, especially since most reports continue to project buying optimism for the software industry. Only 9% of B2B software buyers told G2 they planned to slow down software purchases in 2023, while Gartner suggests that global IT spending will increase by 8% to $5.1 trillion in 2024.
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All this while, GTM and sales leaders are left scratching their heads, trying to figure out where this disconnect stems from.
As buying behavior matures, SaaS GTM will not only have to reinvent the wheel in how to reach their stakeholders, but they will also need to recalibrate their channel strategy and focus on ‘meeting customers where they are.’
With 10% of all B2B sales expected to move to cloud marketplaces by 2026, cloud GTM is turning mainstream. Cloud providers, software vendors, and service providers are building marketplaces as a bustling community to enable commerce and grow together.
If that intrigues you, here are more lessons on:
- Why businesses should list on cloud marketplaces in 2024
- Comprehensive cloud marketplace fundamentals, and
- A quick guide on getting started with cloud marketplaces
And if you’re wondering whether a cloud GTM is purpose-fit to move the revenue needle for your business, speak with an expert or write to our cloud marketplace experts at - hello@clazar.io.
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