It is widely accepted that one of the thorniest transitions any IT solution provider must navigate when taking on a cloud services practice is sales compensation.
The biggest issue to overcome: how sales managers can structure incentives so that the team sells what's best for the customer, which might not always translate into what's best for an individual salesperson's next paycheck.
While the answer for some companies has been to establish completely separate business units that may (or may not) compete with each other, the reality for many legacy solution providers is that they must find a balance with the resources they already have.
ITbestofbreed.com discussed cloud services sales strategies with two executives who live with this challenge every day: Treb Ryan, chief strategist for the cloud unit of Dimension Data, a Top 20 company on the annual CRN Solution Provider 500 list; and Steve Terp, chief sales officer for Tribridge, which was just picked from among 175 solution providers as sales partner for the year by business intelligence software company Solver.
Here are three common philosophies they espouse:
1. Be clear about the strategy from the CEO on down
By having well-defined policies and putting the customer first in structuring compensation, both companies believe they have minimized the opportunity for business units to wind up in competition.
Dimension Data has established cloud specialists in each of its geographies who are encouraged to work both independently and with sales teams that are selling its traditional services. The solution provider represents a full range of cloud-related services – from infrastructure readiness consulting to hybrid cloud services for Microsoft applications and infrastructure to Software-as-a-Service (SaaS) offerings to its own flavor of public cloud.
"There is probably not as much conflict as you think. The reality is that for a good segment of our operations, when we have an opportunity, our client has a very defined objective in terms of what they want to get accomplished," Ryan said.
The lines blur sometimes when it comes to potential private cloud deployments, which could be deployed either in the customer's or in Dimension Data's data center. "When you buy it through the cloud unit, we offer it as a service, whether it's through our facility or their facility," he said.
At Tribridge, cloud services can be sold by any sales person in the firm, regardless of the official role they hold on the sales team. That said, the solution provider also assigned some of its most experienced sales people to drive its new cloud services. "We look to people who are excited about doing something different," Terp said.
A long-standing Microsoft ISV – the only four-time recipient of the company's Worldwide Dynamics Partner of the Year recognition – Tribridge offers both private and public cloud infrastructure services as well as a series of business process management applications for verticals including professional services and health care, branded under the name Concerto Cloud Services.
Tribridge communicates its cloud services agenda – one that is constantly evolving – to every single employee during its onboarding process, even the summer interns. That's because right now, it is a tangible point of differentiation vis-à-vis the company's competition. "It starts with the business plan, and you can't execute unless you know what the business looks like," Terp said.
2. Pay based on the long-term value
Although Dimension Data and Tribridge use different compensation models, they both preach the same mantra: sales teams must be incented to keep customers happy throughout the length of a recurring services contract.
When it comes to new cloud or managed services clients, Dimension Data's representatives are not paid upfront on the total value of the initial contract. Rather, the sales team receives incentives to help businesses realize the value of these services over time.
"When you sell recurring revenue, your anticipation is that 95 to 99 percent of them will remain your client after the end of the term, that if they like the experience, they will renew," Ryan said.