The Magic Market: Selling SaaS via the global marketplace

 |   Hayley Horan, ANZ SaaS/ISV Partner Lead, Microsoft

Software marketplaces have become a key sales channel for SaaS companies in recent years. Leveraging the power of partnership in the global marketplace is a hugely valuable approach for Australian and Kiwi SaaS businesses hungry to scale to the world.

This September, some of Aotearoa’s top SaaS companies attended SaaStr Annual in California’s Bay Area, connecting with thousands of leaders in the sector to discuss the future of the software industry.

The New Zealand market may be relatively small, but SaaS is a sector that provides unique opportunities for huge growth, and we’ve already seen local successes like Cin7 and LawVu go global thanks to savvy partnerships and the borderless nature of the cloud.

However, of the hundreds of innovative businesses in the kiwiSaaS community, only 6% currently take in more than $10m in annual revenue. That means that the vast majority of businesses have plenty of room for rapid growth. Businesses around the world are looking for solutions that can help address skills shortages and boost customer satisfaction or productivity through automation or simplified workflows, and SaaS products do just that.

Increasingly, successful SaaS innovators are turning to marketplaces to help them reach those customers – at scale.

Five years ago, a SaaS company looking to build scale would have been focused on building out their in-house sales capabilities, but the picture has shifted dramatically in the intervening years, to the point that marketplaces are becoming the key channel for B2B sales.

Marketplaces are a key part of the strategy for our Scaling SaaS Exports Initiative. We have a goal, shared by the like-minded people at NZTE and kiwiSaaS, of unlocking global scale for Aotearoa’s tech companies. We all agree that savvy use of B2B digital sales channels and marketplaces has helped some of our biggest successes, with more sure to follow.

Marketplaces provide a great opportunity for new and established SaaS businesses to grow and compete in the new world of technology. A recent McKinsey report on B2B sales growth shows that e-commerce is surpassing in-person sales as the single most effective channel.

Marketplaces were even identified as a more trusted channel for customers than a regular supplier website. Anecdotally, tech businesses are seeing even greater benefits, by leveraging the expertise, networks and scale of partners in a diverse and growing market.

From the street-stall to the supermarket

The popularity of marketplaces for enterprise customers is no surprise. We’re coming up on 15 years of being able to download all of our personal software in one place, at the tap of a button, so it makes sense that customers would be looking for the same frictionless experience when shopping for a new software tool.

“SaaS products are meant to make it easier to do business,” says Bruce Jarvis from kiwiSaaS. “It makes sense that the purchasing process should reduce friction as well.”

For a SaaS start-up, marketplaces provide an easier route to scale. While there’s a limit to the number of sales a business could make with a single salesperson in a single country, listing on a marketplace puts their service in front of customers around the world, exponentially increasing the size of the potential market.

Bruce compares it to going from selling lemonade at a stall to being stocked in the supermarket. Both can be effective sales channels, but the supermarket puts your product alongside other solutions, right at the place customers are doing their shopping.

But it’s not just about being on the shelf – it’s about making it easy to buy your product. One of the biggest hurdles when selling globally is jumping through the hoops that procurement processes require. Getting verified by gatekeepers in finance, legal and procurement, having a new account set up and so forth, can often be a barrier to businesses buying your products. Selling via a marketplace is the easy way around that, leveraging the existing relationships a global leader like Microsoft already has with your customers and letting them take the strain of dealing with dozens of different markets with different requirements. Less time stressing about billing, currency exchange, tax or international regulations means more time building an awesome product and taking it to the world.

For businesses from markets like New Zealand, where the local audience might be relatively small for a niche product, access to a global audience is the key to growth. LawVu is a case in point.

LawVu’s product is aimed at a specific market: in-house legal teams. While there’s a limited number of New Zealand businesses with the scale to support in-house legal counsel, globally, the market is huge. One of the first Kiwi SaaS companies on Microsoft’s global marketplace, it’s now going gangbusters, showing other homegrown SaaS businesses how it’s done.

Like many local SaaS companies, the Holy Grail for LawVu is making it big in the US.

Ruth Macleod, New Zealand’s Trade Commissioner in San Francisco, says marketplaces are a key part of the future of SaaS sales, particularly for businesses looking for scale in the US.

“We’ve seen marketplaces rapidly accelerate as a key sales channel in the past five years, so businesses looking to establish a US presence should certainly be considering it as part of their strategy,” she says.

Partnering for success

One of the selling points for customers purchasing software through a marketplace like Microsoft’s is that the product will work out of the box with their existing solutions like Office or Microsoft 365. That gives customers peace of mind that their new software will be easy to integrate into their existing workflows, and be a useful addition, rather than creating more work.

Likewise, for SaaS businesses, we always recommend sharing and leveraging expertise rather than trying to do everything off your own back. Just as it makes more sense for SaaS businesses to use existing cloud infrastructure rather than building server farms, there’s a benefit in utilising the marketplace infrastructure as an addition to your own sales arms. Collaboration is key to the success of our highest achieving businesses, and the marketplace is yet another way to leverage great partnerships.

As our partners saw at SaaStr, the global SaaS market is filled with potential, and the past few years have accelerated uptake of innovative solutions by businesses around the globe. However, it’s also a very competitive market.

The next generation of SaaS successes from our shores will grow because they put their best foot forward, partner with experts, and get their products in front of customers where they already shop. The opportunity is there, and when the whole sector works together, we’ll see more businesses in the right position to take it.

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