Avangate Blog - Software Sales Tips | Software Business Blog

3 Custom Optimization Tips for Your Shopping Cart

Claudiu Murariu — Mon, 14 May 2012 14:33:53 +0000

Shopping cart optimization can result in easily measurable, lucrative results, mainly because:

there is clear buying intent for the users that get to the shopping cart;
the goal of the optimization is very clear and straightforward: increase revenue.

I always say that if you are not continuously optimizing your eCommerce shopping cart, you are leaving money on the table. Lots of money, most of the time!

So, if you are new to the ecommerce game and you want to start optimizing right away, here is where you should start from: Shopping cart best practices whitepaper.

If you are not new to the game and want to go a few steps further, here are 3 of the methods of optimization that will do you a great deal of good.

Custom language optimization

Let me tell you an insider tip from Avangate: languages can generate large conversion rate differences when compared. Translations of the cart are regularly checked and improved and payment methods are added to make sure all user needs are covered. However that is not enough to get the most out of each language.

But maybe I am not saying anything new to you. You already know that just translating your website in different languages won’t get you the same performance for each language. If you want better results you need to think of each language as being more than just just a translation.

The same goes for the shopping cart. Each language should be treated as a standalone optimization target. This way you optimize independently for each language, because the optimizations for English won’t produce the same conversion rate results for other languages as well.

If you use Avangate, treating each language independently is easy. You can have radical designs based on the user behavior of any of the 30 languages we offer our cart in.

Customize the cart flow

For some website, the purchase funnel starts on their website while for others the purchase funnel is included in the 3rd party shopping cart. In both scenarios you need to treat the whole funnel as a whole.

If after clicking the Buy now or Upgrade buttons on your website, people are redirected to another page (e.g. to select options or versions of the product they’re buying, to create an account, etc.) you need to make sure that when they get to the 3rd party cart they won’t have to go through a large number of steps.

For this we launched inside Avangate the “One step cart without review” purchase flow. In other words, people get to the 3rd party cart, fill in billing and credit card data and they are done.

If they already have an account on your website and you know part or all of their billing data, make sure they don’t need to fill it again inside your 3rd party cart. If you want to do this with Avangate, just write to your account manager.

Switch to custom domain

If your website is an established one in the market and you own a brand that your visitors trust, make sure that your 3rd party shopping cart loads on a secure subdomain of your choice. Make sure to get in touch with your account manager and ask for it.

I’m a big advocate of custom domains. They offer a flawless experience to your visitors: from their point of view, since they never leave your website. That adds to the trust and feeling of security, which are crucial when it comes to buying online.

Custom domains make the tracking of visitors behavior in Google Analytics much easier and more accurate. And you know, without accurate data, you’ll just be optimizing blindfolded.

As the saying goes: Keep optimizing, my friends!

6 Tips to Activate Stagnant Affiliates

Cristi Miculi — Fri, 11 May 2012 11:42:33 +0000

There isn’t a single merchant on this world selling through affiliate programs that hasn’t got idle affiliates. These are affiliates that are not active, meaning that they don’t generate any sales or, worst case, they don’t even refer traffic for the merchant (no exposure for the merchant’s products). When labeling an affiliate as “inactive” from the time’s point of view, you should take into consideration his sales history (if any) – the frequency / amount of sales he was generating at one point – and also the type of product / services you sell through them. In the software vertical, for example, an affiliate promoting consumer software get inactive quicker than an affiliate promoting enterprise products.

Why do some affiliates become inactive?

In order to activate an inactive software affiliate it’s best to address the issues they’re having. From what we’ve seen so far, the most frequent reasons why some affiliates have periods of time in which they don’t perform are:

missing the tools to promote your products – e.g. for coupon affiliates you must provide them with a coupon;
affiliate joins the merchant’s program but it takes a while until he actually starts promoting the products online;
search engine algorithm updates impact their traffic / SEO efforts – Google Panda is most popular;
affiliate finds another product to promote with better conditions – higher commission, special promotions, easier to sell product;
lack of targeted traffic on the affiliate’s website.

How can I activate affiliates?

Here are 6 ideas to activate idle affiliates:

Proactive approach: keep your affiliates close to you from the beginning – even if it could mean a lot of time spent for speaking with them, it’s worth it. You will be able to know what happened directly from them and help them better engage their traffic with your products. Send them a personal welcome message once they join your affiliate program and keep the communication open with them periodically. The newsletters are a good option for the mass of affiliates, but for your top affiliate a constant personal email approach is recommended.
Incentivize affiliates for each little step taken into promoting your products – you may offer a flat commission percentage to begin with to which you can add increments of 5% to the commission for: sending an email back to you with an URL where they promote your product on your website, giving you feedback about your products after they test them, featuring your products on the page that gets the most relevant traffic, recommending your products on the homepage, etc. A good example for this is how VSO Software does it.
Run sales contests within your affiliate programs but set realistic goals – the idea is to get those latent affiliates to start selling, so you might just want to address them. You have a flying pig’s chance to get things moving for inactive affiliates by setting a goal of “10,000 sales to reach within a week”. The way we’ve seen it work is to take a look at your sales numbers distribution among affiliates and set the goal to reach somewhere in the middle for inactive affiliates. Don’t forget to send at least a reminder for the contest to your latent affiliates.
Cash bonuses and special affiliate conditions work best – a recent survey we’ve been running inside our affiliate network shows that 45% of affiliates think that the most appealing prizes in a contest is money. And we can extend that even further if we’re talking about inactive affiliates – they need the cash to keep things rolling, further invest in PPC for example, etc. The second most appealing prize would be getting special conditions from the merchant: increased commissions, exclusive products, etc. This applies to the more experienced affiliates.
Generate exclusive discount coupons for them to use – coupons are a great way to accelerate sales, especially in the software vertical, where there’s no physical or delivery cost involved. Some latent affiliates can be motivated by sending them time limited discount coupons. Try to also include the affiliate’s website / name in the coupon / coupon description – vanity coupons; affiliates really like those.
Offer affiliates the chance to test your products themselves – there are lots of content affiliate websites nowadays which use reviews as their primary way of promoting products to their audiences. Sending them a fully functional version of your product can help accelerate the reviewing process, thus the listing on their websites. This is especially useful when you notice that potentially good affiliates are still inactive.

I’ve also seen some merchants using negative motivation to try and activate affiliates – sending “ultimatum-type” emails, getting the affiliate commission lower than the default one and so on. I don’t recommend that mainly because in 99% of the cases it didn’t work – I think mostly because there are always alternatives to your products / services on the market which they can pick up and get better conditions. Here are more mistakes you should avoid when dealing with affiliates.

Did you try activating your latent affiliates? What else did you do?

5 Ideas for Productive Affiliate Campaigns (part 2)

Cristi Miculi — Wed, 02 May 2012 09:04:40 +0000

In the first part of this series we spoke then about promoting software to your customers on a try-before-you-buy model, converting the customers from your website and sending newsletters to your audience to grow your sales.

Here are 2 more ideas other affiliates have found productive while promoting software products online:

Use discounts to get traffic and increase conversions

Coupons have an important role in the online purchase flow – potential buyers will always try to get a lower price for the product. They don’t even have to search explicitly for coupons – lots of coupon websites show up among the first results when you search for a product.

Hence, if you don’t have a dedicated coupon website and want to boost up your least performing product, you could try offering your visitors exclusive coupon for those products. You can get them from the merchants or you can even generate them yourself and the discount amount will be deducted from your commission – some affiliate networks (including Avangate) offer this possibility.

If you have significant traffic on your website and a good relationship with the merchant, you can even ask for a discount coupon of greater value which you would use to run a deal-of-the-day campaign – e.g. 70% off Product X – today only. A good example of such software niche website is BitsDuJour.

Engage the community

Engage the community in adding value to your website. The main thing you would be interested in is original content – in the form of product reviews, comments or even self-made videos related to the products you’re promoting.

Take one small step at a time: start building an online community around your website (if you don’t already have one) and engage them to create content for you (watch out for mistakes). User generated content is at great value now.

Once you have a stable nucleus of people around your website, you can run various loyalty campaigns to further consolidate and motivate them in generating original content for you.

These are just a few of the ideas we’ve seen at work successfully. What did you do to run a successful affiliate campaign?

Business of Software: How Vendors Can Leverage the Change in Software Distribution

Delia Ene — Wed, 25 Apr 2012 15:46:28 +0000

Indirect channels are clearly changing

While over 50% of software sales still sold through channels, traditional channel partners are diminishing and alternative e-channels are proliferating. This means on the one hand increased pressure on the traditional sales channels, putting more emphasis on results and partner loyalty and channel control – this translated into increasing pressure upon channel sales professionals.

Transformation is also at the customer level

Ramping end-customer expectations, both consumer and business, place greater emphasis on control and consistency of the user experience across touch points and distribution channels.

So as marketing, sales or channel professional, you want and need to be aware of the following:

What changes are happening in software distribution & delivery
What implications these changes have for what resellers and partners need from software vendors
Key drivers to enabling channels to manage customers across the entire software lifecycle
How other peers from software companies manage the channel

Attend the Avangate webinar to get answers

You can learn the above and get insight into software distribution from Tim Harmon, Principal Analyst at Forrester Research, Inc. and Calin Udrea, Marketing Director at Lavasoft, makers of Ad-Aware, by attending a webinar organized by Avangate:

When: Thursday, May 10, 2012 - 10:00 am – 11:00 am PDT

Who should attend: Executives from Marketing and Sales, eCommerce, Channel Managers

REGISTER NOW

If you want to ask questions for the Q&A session in advance, feel free to do that in the comments below.

3 Reasons why Shopping Cart Custom Domains Will Mean the End of Your Web Analytics Problems

Claudiu Murariu — Tue, 24 Apr 2012 09:54:12 +0000

After reviewing hundreds of Google Analytics implementations on ecommerce websites one thing caught my eye: more than 90% of Google Analytics tracking of third party shopping carts end up with errors. That’s a fact.

Why is it so hard to track flawlessly third party shopping carts? Mainly, because of the technology. Google Analytics uses cookies to track visitors and those cookies can only be accessed by the domain on which Google Analytics is installed, i.e. your website.

When a visitor goes from your website to a third party cart, the visitor essentially gets to a new domain which can not read the cookies from your website domain. This means that Google sets up a totally new set of cookies and will consider the visitor as referred by your website.

Having all your sales “ referred” by your website clearly doesn’t help you in your marketing efforts. That’s where Avangate Analytics MiniBible V3.0 comes in to help you understand the real analytics behind your online sales.

Aimed at software selling websites, the Avangate Analytics MiniBible V3.0 is a step-by-step guide showing you how to be in control of Google Analytics for high performance analysis of your users.

Why Custom Domains?

Shopping cart Custom Domains mean that the third party cart platform, in our case Avangate, will load from a subdomain of your website, something like store.yourwebsite.com. As subdomains can read the cookies of their mother domains, Google Analytics will be able to track a visitor from your website to the cart and know that is the same one.

Still not convinced you need a custom domain? Here are 3 reasons why (plus the 4th of making your marketing life much easier):

Reason 1: Accurate sales referrers

Using custom domains for your shopping cart will make the eCommerce tracking feature in Google Analytics work flawlessly. That means that you will get the following report for sales and you can be sure the data will be accurate:

The best part is that when you use a Custom Domain, no hacks need to be in place for the above report to work. It just works out of the box.

Reason 2: You get to build conversion funnels that start on your website

Conversion funnels offer you a great image about what happens on your website when it comes to converting visitors.

You get the following answer: Where do my visitors drop off? Knowing this, you can start and research the why factor. Getting the Why answer and acting on it will mean more revenue for you at the end of the month.

If Google Analytics will not see the same visitor as being 2 different ones, that means it can build accurate conversion funnels that start on your website and finish on the shopping cart, just like this one:

Reason 3: Know how many days pass from first visit to purchase

Based on this intel, you’ll be able to fine-tune not only your marketing campaign messages but also the timing – when to display them – in order to convert as many visitors into buyers.

Again, with Custom Domain implemented for your cart, you will have access to the following report with accurate data, out of the box:

Selling software and looking to boost online sales? There is more in the bag

Having the right Google Analytics implementation will allow you to improve your business based on data you can trust. That’s why we have launched the Analytics miniBible for Software Vendors.

The Custom Domain implementation is just a small fraction of what you will find in the ebook which is now at its 3rd edition. Tracking unfinished payments, shopping cart errors, behavior of trial visitors, conversions and so on are all covered in the ebook.

If you sell software and you want to improve your business, tracking your website performance is a must. Goes without saying that you need to constantly test your cart conversion and monitor your data to enhance your performance with Analytics. But no worries, the Analytics miniBible for Software Vendors is free and is here to help.

Affiliates – Start Your Engines

Cristi Miculi — Fri, 20 Apr 2012 11:23:05 +0000

Avangate is proud to launch its 2012 line of contests for affiliates that generate sales.

Software is a great niche to promote as an affiliate, no doubt about that: big commissions, instant gratification for customers, easy to test & promote. But here’s another reason you may want to grow your sales through the Avangate Affiliate Network: we’re offering $8,000 worth of prizes for both our existing affiliates and the new affiliates that will join us into promoting software online.

Here’s what you can win:

VIP Pass to Affiliate Summit East 2012 in New York, US – August 12-14, 2012 plus a cash prize of $1,500
Cash prize of $1,000
iPad3 4G 64GB worth of $829
5 x iPad3 4G 16 GB worth of $629 each

We left aside the “luck” factor – there will be no raffle for this contests, since affiliate marketing is all about generating sales. However, we arranged so that all affiliates have a chance of winning the prizes, splitting them into several categories.

Here’s where you can find out more details about the contests and join them:

We recommend staying close to our Twitter and Facebook accounts since throughout the contests duration (until May 31st, 2012) we will announce several affiliate promotions from our merchant partners.

Get ready… get set… GO! :)

Major DON’Ts in the Search Engine Optimization Process

Irina Mihaila — Wed, 11 Apr 2012 08:29:03 +0000

SEO may have only become a mainstream subject in the last few years, but the practice has been around since 1995 when Yahoo! was still the search-engine.

Originally, SEO meant submitting websites to search engines to begin the process of having a bot crawl a page, extract links and index all the carefully written content. The concept of “Search Engine Optimization” as we know it today came into play once website owners began acknowledging the rising influence of search engines on consumer awareness and the value of having their site prominently listed in the results.

Nowadays, there are over 555 million websites on the internet, and the number continues growing, so SEO is no longer an option, but rather a necessity; and it shoud be considered an investment into the future of everybody’s online presence.

As a business-owner or a marketer, you probably have encountered more articles and differing opinions on the “MUST DO’S” of the SEO process than you’ll ever remember, but you probably haven’t found enough about the most common mistakes a site can do when optimizing for search engines.

With so many interpretations for on-site and off-site optimization, now’s a perfect time to revisit some core SEO mistakes and how to avoid them for a fresh start to your latest search engine optimization campaigns.

Ignoring Non-Google Search Engines

One of the worst mistakes marketers commit is limiting their optimization efforts to just Google’s algorithms. Needless to say, they’re the market leaders, but that doesn’t mean you shouldn’t take advantage of the other 20% of search traffic that comes from Yahoo!, Bing and Ask among others. The first step you should take to avoid this is register and send your sitemap to Bing Webmaster Tools to ensure that your websites continue to get high traffic from Bing and Yahoo!.

No proper keyword strategy

Keyword choices must be determined with regard to the audience, not whether the keyword is solely valuable from a search volume metrics standpoint; take into consideration whether your keywords match your business goals and the company’s message, then correlate them with target personas. Build content that matches their interests and always remember to optimize for people first and search engines second. From my experience, few actually conduct proper keyword research and targeting, and many leave this to a copywriter or PR to determine page content and meta tags.

Don’t target overly general keywords

Avoid using keywords that are too general like “house” or “lawyer,” for example. You should always optimize for relevant, specific keywords that will bring targeted traffic. There a few cool keyword research tools on the market to help you boost your desired list:

Spyfu They provide a Keyword Smart Search keyword ideas based on the competition’s actions
Google AdWords Keyword Tool: probably the most popular, and I’m sure you’re very familiar with how it works
Wordtracker a more complex paid version is also available
Keyword Discovery Beside keyword research, it also includes features like seasonal search trends, keyword density analysis, and spelling mistake research
Market Samurai: in addition to keyword research, it provides tools like a rank tracker, finding content, and analyzing the competition.

You can find a complete list of keyword tools here, including keyword suggestion tools, topical/categorical, engine suggestion tools, synonyms, keyword density, keyword monitors and other interesting stuff for online marketers.

Flash and Image-Based Content

Probably the biggest “DON’T” in modern web design, do not use flash and image-based content when building your website. Flash technology isn’t a good choice for most eCommerce websites because it breaks the majority of web standards and conventions. Flash websites may mean beautiful design and splash pages, but they fail to meet a number of minimum criteria for business-oriented websites. Despite the promises that search engines would eventually be able to crawl Flash content, it seems we still have to wait for these changes to happen while the development industry moves past Flash to HTML5.

Don’t ignore usability

Things like an appropriate site structure, intuitive website navigation, effective calls-to-action and more are important for both users and search engine spiders. Learn how to best build your website by following these important usability tips to maximize B2B website conversion.

Don’t ignore the “ALT” attribute

Images should always be given alternate text with the help of the ALT attribute. This is great for accessibility problems and it provides search engines further background about a page because it is displayed when the browser can’t load an image.

This is important for SEO because it allows search engines to “see” what the image is and how it relates to your site. At the same time, you can use your high-value, targeted keywords in the descriptive line of the images, increasing the relevancy of the page in the eyes of search engines. You can and should do the same with videos, logos and taglines!

Don’t give up on creating great content

No matter what type of business you’re in, you should create great content to please your audience. Search engines are designed to think like us, so when they see that your unique viewpoint comes through your content, they reward you for adding-value to the internet.

Publish content frequently, get active in external communities you are passionate about and connect with your business, communicate and connect to your customers and visitors, and keep being smart about what you do. There are many ways to generate rich content on your website don’t limit yourself. Make a how-to-article, create engaging product manuals, draft intelligent whitepapers, and use glossaries – a great way to create keyword-rich content.

These are the major DON’Ts you need to consider when starting the search engine optimization process for your online business. All of the above are deeply intertwined, so you should always remember that in SEO there is not one single factor that guarantees you top rankings.

Do you have any lessons you have learned after making some striking mistakes in SEO? If so, please share your comments with us. We’d love to hear about your experiences.

5 Ideas for Productive Affiliate Campaigns (part 1)

Cristi Miculi — Mon, 09 Apr 2012 08:06:40 +0000

Every now and then we get questions from affiliates seeking our advice on successful affiliate campaigns for software titles. This is a subject that has no universal conclusions, since what may work very well for one can fail for others. However, in this post I will share some of the ideas that were successfully put to work by some of our affiliates, hoping they will serve as inspiration.

First of all: there’s no recipe for success! But there are some things that you could try as an affiliate promoting software in order to make it count for your pocket at the end of the month :)

Promote software with try-before-you-buy model

Most of the successful affiliates already do this partially – promoting free trials on their website. It’s a great way to increase your traffic and increase the sales, since some of the users using free trials will eventually buy them. This figure depends on the merchant, application type and popularity of product/service.

Freemium can also increase the number of sales for an affiliate. This model assumes that the merchant gives away a free basic version of his product without any time limitation. For advanced features, the user has to purchase the Pro version or the product. So, you can promote these free versions on your affiliate website and make sure you set a cookie when the file is downloaded or even get a custom build from the merchant for that.

As an example of a merchant doing freemium, IObit offers one of the best selling products in the Avangate Affiliate Network and in the utilities niche overall – Advanced SystemCare – which has a freemium version also alongside the paid pro version. They also offer affiliates the possibility of getting custom builds directly on their website.

Convert the customer on your website

This means that you should go the extra mile to convince the customer to purchase a specific product from your website. Don’t just list the product description and send the visitors on the merchant website via an affiliate link – this should be just a complementary action.

This works for all types of affiliate online promotion methods: download portals, content websites, discount websites (since most visitor entries are likely to be specific product pages) and email marketing campaigns. Remember – content is still king; anything you can include that will ease up the purchase decision process for the potential client will increase the conversion rates for your affiliate business.

Here are some examples:

product / service reviews – test the product yourself, write about it and incentivize your visitors to add their own reviews;
product walkthrough – from installation to illustrated how to’s about the product, tips on how to get the best from the product;
comparison of similar products – let the potential buyer view the advantages and disadvantages of similar products and let him decide about the best; you may, of course, give recommendations for certain products;
discounts, promotional campaigns related to offered products / services.

Use the power of email marketing

If you have an affiliate website, you should also try to gather targeted email addresses from your visitors – be sure they give their consent into sharing their email with you, otherwise the spam reports / regulations will make it worse for you. Content websites are more likely to gather a higher opt-in rate, since they offer the added value in the purchase flow that customers find useful. There are some interesting tools to help you with this - PadiAct is one of them, being integrated with all the major email marketing service providers. Plus they have a content-rich blog to go along with that.

For best results, I recommend using email marketing especially when offering special deals to your user database – discounts for products / services, launch campaigns, sales campaigns, etc.

This was part 1 of the series; stay tuned for 2 more ideas we’ve seen that are yielding great results in affiliate marketing.

Blooming Customer Experiences with Avangate 2012 Spring Release

Adriana Iordan — Wed, 04 Apr 2012 14:53:51 +0000

This spring brings blooming customer experiences, thanks to the latest major release update in the Avangate platform. Allow me to introduce you to the Avangate Spring Release, featuring an extended ordering API, deeper self-service configurability of the ordering process and enhanced shopper support through an upgraded myAccount area (end-user portals) and localization capabilities.

Ordering API

Avangate opens up the eCommerce platform with an API that brings software and SaaS vendors new monetization opportunities “at every customer touch point”. This is done by embedding merchandising, ordering and subscriptions management within the customer’s specific context, while maintaining a consistent customer experience. Here are some of the API capabilities:

Retrieving and displaying rich product information and pricing directly on your website, in your desktop product, web application or in your Facebook app ;)
Payments handling – depending on your company’s level of PCI DSS compliance/certification, you can use the “New Purchase” API to handle all details your customers fill in, including sensitive cardholder data.
License details accessing and management
Customer data updating
Subscriptions renewals and upgrades handling

API use cases are limitless. Think advanced custom shopping carts, any-platform-any-device-commerce, including mobile and social, branded app stores , single-click in-application acquisitions, cross-selling, upgrades and branded, embeddable shopping experiences.

Shopping cart interface spring look

Three more templates have been added to the Interface Template Gallery for the ordering process, optimized for SaaS selling and for more interactivity in the cart. Use the new templates together with the updated purchase flows, to get a fresh new look this spring!

But don’t trust only the new templates to freshen up your sales – make sure to constantly test your cart conversions as well. I recommend taking a look at the updated version of the “Analytics miniBible for Software Vendors” eBook for the latest analytics tips and hacks tailored to your needs.

myAccount 2.0 with a spring look - customizable by you

The shopper area used to track orders, manage product downloads / subscriptions and customer details can now be branded to match your vendors’ website look and feel. Choose the best color palette directly from your Control Panel “Interface Templates” area and instantly change your myAccount today.

myAccount 2.0 enables software vendors to offer self-service order and acount management capabilities to their customers. This means that buyers can self-manage their purchases: download the latest version of a product, renew or upgrade their subscription, change the credit card details used during the ordering process and view their account and payment history.

Get closer to your shoppers

Because from now on your shoppers can get phone and email support in Dutch as well. And your shoppers have even more local payment methods available: Direct Debit in Austria, Dankort for Denmark, Ukash for anonymous cash supporters everywhere and CashU for in Middle East and North Africa.

Stay tuned for Slovenian and Hindi ordering languages, as well as for a plethora of Chinese debit cards available soon in an Avangate shopping cart near you :).

Salesforce integration with Avangate

This spring also brings the standard Salesforce Integration add-on, bridging your Avangate and Salesforce accounts. You can take advantage of this to manage Avangate orders information directly into Salesforce, as well as shopper and license info.

This particular choice of developments could not be made without your constant feedback and feature requests, that guide and help us shape the Avangate solution. Big thanks to all of you who kept in touch! Keep the feedback going and let us know what’s next on your agenda.

Business of Software: What Heads of Sales and Marketing Need to Think About To Grow? … Hint: Keep Your Channels Close

Mike Ni — Fri, 23 Mar 2012 13:15:07 +0000

Knee-Jerk Reaction: Online Commerce Leads to Software Channel Disintermediation

The popular press has been filled with articles about the ongoing disintermediation of channels coupled with the rise of direct vendor to end-consumer relationships. Examples of disintermediation abound across industries — Dell’s direct to consumers and businesses model, in-store video rental disrupted by Netflix’s home video distribution, Politico.com as an example of the break-up of traditional newspapers and how news is consumed by readers, the rapid rise of Apple’s AppStore, and not to mention the near disappearance of software retail (when is the last time you saw an Egghead Software retail store in the US?).

The Cloud Accelerates Software and SaaS Business Model Changes

The rise of the cloud has ushered in a rapid change of how software is being delivered — shifting from just over 33% in 2010 to over 71% in 2014 being delivered online. Sales are affected more by search and social recommendations rather than the big software publishers who delivered packaged products to the limited retail shelf space. This has opened up opportunities for publishers of all sizes to compete in almost any software category and across virtually any channel.

Online delivery also lowers the barriers to entering new markets, such as international and local niche markets. But being able to address so many new customers around the world also means that companies who are not expanding into new markets are effectively losing market share to other companies who are entering those markets. This reality has further impact on horizontal software categories, such as PC Utilities and Security, as they feel increased worldwide competition on product, price, and business models.

With the flurry of competition, the consumer software industry is being forced to move from “pay up front” to “pay as you go” subscription-type revenue models. Customers are increasingly expecting the ability to buy software on trial, freemium, and subscription basis where they can expose and pay for more functionality over time. Salesforce.com does a nice job of summing why subscriptions / SaaS are a no brainer for businesses, as well.

While Online Adoption Encourages Disintermediation … Low Digital Goods Channel Costs Keep Channels In Place:

Last week, I sat down for a quick chat with Harvard Business School associate professor, Ben Edelman, and talked about channel evolution. He agreed that channel disintermediation was a natural result of digital disruption removing all non-value added players from the value chain, thus enabling greater market visibility and a more efficient system. In the same breadth, he turned around and said that for Digital Goods, channel costs are correspondingly low, potentially resulting in even more intermediaries, not fewer – search, discovery / marketing, logistics, settlement and trust being the obvious functions of the channel.

At the same time, partner order and revenue management platforms further lower the cost of finding, contracting, managing the order taking and fulfillment, financial reconciliation, and most importantly, renewals and providing end-customer visibility and engagement.

Publishers Increasingly Need Channels to Reach New and Fragmented Markets

Even as large eMarketplaces like Amazon and Apple’s AppStore commoditize horizontal software categories, channels are increasingly helping software publishers accelerate their sales.

Reach an increasingly discerning and educated consumer earlier in their decision process – As popularized by Google’s new book, Winning the Zero Moment of Truth (ZMOT), publishers need to engage prospective buyers earlier and in context. This is especially true for technology purchases where a shopper will view over 14 sources of information before making a decision. To reach the rapidly fragmenting consumers, publishers must consider leveraging Affiliates and Resellers to increasingly reach end customers, provide potential buyers sources of information and validation, and convert customers within the context of their buying process.
Enter new geographic markets – Above the 30%+ increase in conversion publishers can see by localizing their eCommerce customer experience (see AVS4YOU as a case study), resellers and affiliates localize the product marketing to reach out through regional comparison sites, events, and tweaks to the product offering (e.g., SiliconAction in Brazil).
Enter disperse / new markets – Andreessen said it best in his article, ”Why Software Is Eating the World” – we are in the middle of a broad technological and economic shift where software is becoming critical to large swaths of the economy. Like Microsoft with Columbus IT, and other publishers who are entering multiple micro-vertical markets, publishers will rely on channel partners to enter, create solutions for, and support increasingly niche software verticals.
Engage, sell, and support end-customers as software moves to subscriptions that are actively managed and renewed by the channel over time – Tim Harmon, Principal Analyst at Forrester, points out that leading tech companies are investing in programs targeted to helping channel partners more effectively span the entire customer technology adoption and renewal life cycle. “The successful channel today is more than a sales channel; it’s an engagement channel: a fully fleshed-out marketing, development, sales, delivery, and support resource. Cisco Systems, IBM, Juniper Networks, and Microsoft are examples of tech companies that resource their channel as an engagement channel.”

The Bottom Line: Channels Will Be A Source of Competitive Advantage – Keep Them Close

A recent Revenue Architect whitepaper, The Software Distribution Channel: The Reports of Its Death Are Greatly Exaggerated, seems to agree. Their surveyed software publishers stated (i) they are investing in deeper channel integration and enablement this year, even as (ii) they see next year’s challenges focused on enabling their channel partners to better handle new customer touch points, new revenue models and new markets on their behalf.

With channels playing a key role to grow sales and reach new markets, publishers need to consider how to expand their multi-channel initiatives, as well as establish barriers to other publishers getting distribution through their channels by being the easiest and most profitable with whom to do business. Marketing and Sales leaders need to look strategically at their channel network – what value does it need to provide, how to secure and expand it, as well as the systems needed to enable it.

Your Thoughts?

Rethinking your reseller channel? Considering whether eMarketplaces, affiliates, or re-publishers are right for your business? Have you tested balancing your sales across multiple markets, expanding your reseller programs, sourcing new partners from a partner marketplace? Add your comments to the blog, or reach out to me at info@avangate.com.