NexGen Kicks Off With Panel Discussion On Winning Cloud Sales And Marketing Strategies

The Channel Company's NexGen Cloud Conference & Expo kicked off Wednesday in San Diego with a series of smaller business-to-business sessions preceding the main keynotes, and exhibitions that will take place Thursday and Friday.

Robert DeMarzo, senior vice president of strategic content at The Channel Company, told attendees, "Today's kind of the B-to-B intimate portion of the conference" before introducing a panel comprised of the leaders of five companies that have broken away from the traditional solution provider model to build successful cloud businesses.

The panel focused discussion on winning strategies for IT solution providers implementing cloud sales and cloud marketing strategies.

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[Related Video: Cloud Vendor Executive Panel]

Moderating the discussion, DeMarzo noted a previous conversation with Alex Brown, CEO of Chicago-based solution provider 10th Magnitude, in which they observed many solution providers would be out of business by 2017 because of their unwillingness to change their business models.

Brown told attendees that belief was even stronger in his mind now than it was a couple months back.

While overall IT spending is rising, Brown said, if you break down the numbers, it’s the cloud portion that's really driving the growth. The core, traditional on-premises model looks like it's on the verge of a recession, he said.

But he increasingly sees a dynamic that makes it hard for many legacy solution providers to change.

"I think a lot of people are victims of their own success," Brown said, adding that as the core legacy business recedes, it will push those solution providers harder to transform.

David Powell, vice president of managed and cloud services at TekLinks, said if those companies don't change, they could die by a thousand paper cuts. The decline in business will be slow, and they probably won't see one year of precipitous drop-off that motivates action.

Sam Coyl, president and CEO of Netrepid, an infrastructure hosting provider, added the rapidly shifting market conditions also present challenges to vendors, who need to figure out how to shift a hardware licensing model to a recurring model and subscription base. Many don't know how to compensate their sales staff, do forecasting, and make sure analysts understand what they're doing, Coyl said.

It was a tough process for Netrepid when the company went all-in on cloud.

"It is painful, it is expensive, and there were a couple months we weren't sure we were going to make it," Coyl told attendees.

It helps to make the conscious decision at some point to just cut off the old model, he said, adding that's a tough thing to do when new business is still rolling in.

Ryan Trimberger, director of sales and business development at Nimbo, said many of the New York-headquartered solution provider's clients come from the health-care industry, and they are averse to having to deal with IT departments.

"We're having conversations outside of IT," adding, "It's the providers that can offer those types of services."

Trimberger noted that price cuts in the cloud that are announced seemingly every other week as major cloud providers try to undercut each other should be celebrated by the channel.

"Ultimately, the people that win are the people in the audience, 'cause they're really going to get more business out of that," he told attendees.

Trimberger also noted, "Salespeople are no different than the owners of the company. Change is difficult."

NEXT: A Shifting Sales Strategy

Brown spoke to that point, telling attendees, "We've basically avoided hiring long-tenured, experienced IT professionals" for sales. Instead of traditional sales agents, he finds "IT consultant types" are more successful at winning business.

That was an unusually informative point for Pete Zarras, CEO of Morristown, N.J.-based solution provider CloudStrategies.

Zarras asked the panel a question about effective sales strategy, but first recounted for the audience an interesting anecdote: After he unexpectedly lost his last sales pro, his business accelerated. Comments from the panel, he later told CRN, helped crystalize in his mind why that happened.

Zarras told CRN after the session that he believes that question gets to the crux of the transformational issue.

"Probably our biggest problem as born-in-the-cloud is we were trying to use a traditional sales model, and failed at it with persistence," Zarras said.

None of his senior sellers were doing particularly well. Then his last sales agent left without warning, "and yet our sales have been better than they have been in three years."

That development led him to think about how CloudStrategies really was closing business, and to realize it wasn't through the sales staff.

"What really worked was most of our inbound business comes from referrals and reputation and partners," Zarras told CRN.

He had started investing more heavily in marketing a year earlier, and eventually it was clear to him that "it's the marketing engine that's fueling the inbound stuff."

In those cases where business originated outside of the sales unit, it was Zarras' technical and business staff that ended up closing the deals, and they were surprisingly well-suited to do so.

"We can have and complete that transformation conversation about where are you and where do you want to be," he told CRN.

Brown of 10th Magnitude told CRN that Zarras' story about how he stumbled into a more productive sales model is illustrative of larger changes in the industry, and has put CloudStrategies ahead of the curve.

As for 10th Magnitude, the biggest challenge to growing the business at the moment is recruiting talented employees who know how to engage the customer.

"Demand is not a challenge right now," Brown told the audience.

PUBLISHED DEC. 3, 2014