Turn your marketplace into revenue

October 13, 2023
Turn your marketplace into revenue

Leverage an ecosystem marketplace that will multiply your revenue.


Ecosystem marketplaces are a relatively new phenomenon and, up until recently, only companies with deep pockets could actually execute a marketplace strategy successfully. Companies like Salesforce, HubSpot, Shopify, AWS, and Microsoft have cracked the code and successfully scaled their businesses through their marketplaces. But outside of these name-brand enterprises, the playbook to drive revenue from ecosystem marketplaces is still a mystery. 

Our aim with this blog is to expose these plays so you can leverage an ecosystem marketplace that will multiply your revenue. 

Why is the timing right for a marketplace play?

The companies listed above spent millions to build their ecosystem marketplace infrastructure. For most companies, whether startups, mid-market, or enterprise, this is a big bet that could easily go sideways. 

Doing it right requires a top-down directive that enables many teams within a company to prioritize this project. It’s simply too distracting for businesses that already have their hands full with their core product and day jobs. This is why 50% of resilient companies are not pursuing ecosystem strategies; the other 50% are mostly floundering with one foot in, trying to build their infrastructure in house.

However, this no longer needs to be the reality. There are now purpose-built ecosystem marketplace platforms that provide the infrastructure – out of the box – that companies need to execute an ecosystem strategy. You can now launch an AppExchange equivalent for a tiny fraction of what Salesforce spent to build it originally. 

The ecosystem marketplace strategy is accessible to a much broader range of companies than it was 5 or even 2 years ago, but the masses have yet to figure this out. Thus, we’re still in the “early adopter” era of ecosystem marketplaces, so the potential to gain competitive advantage by running this playbook is massive, while the barriers to entry have never been lower. 

Understanding the impact of a marketplace

The ROI equation of a sales engagement tool is pretty clear – it’s going to impact sales productivity and conversion rates, leading to more Closed-Won deals. 

Calculating marketplace ROI is murkier. 

Assessing the revenue potential of a marketplace doesn’t come easy; they reach into every area of the business and touch every part of the customer journey. 

This complexity can be frustrating and hard to get right, but it’s also why marketplaces are inherently valuable. They don’t just impact sales KPIs, they also impact marketing, product/engineering, and customer success metrics. 

Each of these areas of impact require an individual revenue potential calculation, which ultimately sum to an aggregate impact which can be transformative for companies. 

How to monetize your marketplace: A playbook

Here we’ll cover the different ways you can monetize your marketplace. Some of these are direct monetization, but others are indirect impacts. In my experience, it’s easy to get enticed by the direct monetization opportunities, but the indirect revenue channels can be far more lucrative. Attribution of indirect revenue can be challenging, but try not to let this dissuade you from investing in these channels as they can be the true game changers for your company. 

Increasing new logo sales 

Freemium conversions

If you have a “try before you buy” model, integrations are one of the logical conversion opportunities. Users’ ability to get value from your platform will often be limited without having access to integrations, so once they’ve validated that your platform does what they need in their free experience, the next step is likely to sign up for a paid plan so they can access your integrations. 

A marketplace gives your free users access to discover all the integrations you offer, giving you an opportunity to convert them to paid subscriptions on every marketplace listing page they click on. 

To drive these conversions, it’s best to embed your marketplace within your SaaS application where your users spend most of their time, as they’ll be more likely to explore it there and be compelled to upgrade their account. 

Generate marketplace qualified leads (MpQLs)

Ecosystem marketplaces are heavily trafficked by prospective customers who are looking to validate that your solution plays nicely with their existing tech stack. Often, it’s a top 3 web asset in terms of traffic, and many times it’s the final step before a prospect decides to connect with your sales reps, or sign up. 

Therefore, prospects will convert to leads from your marketplace and marketplace listings. They’ll either click the CTA button in your website header, or on the listing itself. 

One of our mid-market customers (900 employees) sees 3 MQLs per day from website visitors who convert on the marketplace, which is over 1,000 per year. If 10% of these convert to customers, that’s 100 new customers in a year. Multiply that by your ACV to see how much new logo ARR you could influence with your marketplace per year.

Increase sales close rates

The sales enablement capability of your marketplace should not be overlooked. 

When you offer integrations into the tools that your prospect uses, the likelihood that they will buy increases drastically. Additionally, many products require complex implementations, so when a prospect sees that you have a vast network of Solutions Partners who can help with implementations, they’re set at ease when making a purchase. 

Account Executives use the marketplaces to find solutions to their customers’ problems, which they can include in their proposals or deal rooms, helping them win more deals.

A modest 1% improvement in close rate due to the marketplace can yield millions in incremental ARR for the company. 

See what our Account Executive - Chris Sheehan - has to say about how he used the Salesloft Marketplace for sales enablement when he was at Salesloft.

Upsells and cross-sells with product-led growth

Drive subscription upgrades/upsells

Many companies have created subscription pricing tiers which include different levels of access to integrations. In this case, integration adoption is directly tied to revenue. Promoting integrations to customers and giving them a self-serve workflow to upgrade their subscription and access integrations is a core GTM initiative. 

For this strategy to work, it’s key that the marketplace is embedded within your software application rather than solely on your website. This allows customers to discover integrations they’re interested in from the interface in which they spend most of their time, as they are unlikely to click back out to your website once they’re using your product. 

Your in-app marketplace must have compelling listing pages and calls-to-action tailored to each individual user, such as “Install Now” for users who have access to an integration, or “Upgrade your Plan” for users who don’t have access. 

These CTAs should tie to the appropriate workflow of either installing an integration, upgrading their plan, and submitting their interest to a team member at your company to follow up. 

A great example that many of you may be familiar with is Crossbeam. Their subscription tiers are largely driven by integration access, so they’re running a Marketplace-Led Growth strategy for upgrades.  

Sell platform add-ons

You can also position integrations, developer apps, and digital items as add-ons to your core product, and put a price tag on each of them. This is a true platform strategy where third parties can build on top of your platform, and monetize what they’ve built, while benefiting your user community. Third parties may build plugins, unique configurations, or content that populates into your platform. These items will add value for the user or eliminate work they would otherwise have to do themselves, and they’re willing to pay for it.

To bring this vision to fruition, your marketplace must be compelling, with rich listing pages that showcase each add-on, and a clear path to purchase.

You can set up the marketplace CTAs to direct to purchase pages for each add-on. Ideally, you would also incorporate split-funding so that a portion of the revenue flows to your partners and the rest comes to you, eliminating the administrative headache of reconciling revenue shares. Stripe is a good option for this.

Monetize partners directly

Make money from revenue shares

One of the brilliant aspects of an ecosystem marketplace is that it allows you to double dip by driving demand for your partners and your own solution simultaneously. You’re bolstering your own pipeline, and when you drive business for your partners, you can share in the value you’re creating for them. 

By building a revenue share structure into your marketplace program, you can create a new revenue stream for your business. In this approach, when a lead is generated for a partner on the marketplace and it converts into a sale, your partner will pay you a percentage of the revenue generated as a thank you for drumming up additional business for them. It’s a classic win-win, where third-parties receive net new demand passively through your marketplace, and you tap into a new revenue stream without the exhaustive creation of new products.

For example, let's say you’re a CRM software provider that integrates a valuable email marketing tool and promotes it through your marketplace. Every time a user submits their interest through your marketplace and ultimately makes a purchase, a percentage of that subscription fee could be reaped. The going rate is between 10-20% of their first year subscription revenue. 

This not only incentivizes businesses to build more integrations into your platform and promote within your marketplace, but also fosters a collaborative environment where both primary and third-party providers are driven toward mutual success.

Charge program fees

While reciprocity can be a major asset, some programs will want a more direct tie to revenue. Incorporating a structured program fee can be a viable method to make your marketplace a lucrative asset. This involves charging partners a fee for access to build on your platform and/or featuring their solution on your marketplace, thereby turning your marketplace into a revenue-generating channel, beyond just an extension of your product.

Program fees could manifest in various forms – it might be a flat fee for marketplace listing, a tiered subscription model providing differential benefits based on subscription levels, or a pay-per-click model charging partners based on the traffic directed towards their listing. Your marketplace morphs into a promotional platform for third-party solutions, providing them with visibility and access to your user base, while simultaneously becoming a self-sustaining entity that fuels its own growth and development.

This strategy, while straightforward, must be navigated with precision. Establishing a pricing model that is mutually beneficial, ensuring it is lucrative for you while providing palpable value to your partners, will be pivotal in maintaining a healthy, thriving ecosystem.

Pay-Per-Click, Pay-Per-Lead, Pay-Per-Install, Pay-Per-API-Call

This section will look familiar to marketers and people who utilize tools that consume data. 

Your marketplace promotes your partners to their ideal customers, which is immensely valuable for them. While many companies choose to do this for free as a benefit to their partners (see next section on reciprocity), others may be more interested in charging for the value they’re creating. 

Typically, this approach is viable for big companies that are driving lots of highly qualified buyers to their marketplace. Third parties existing in their ecosystem orbit are scratching and clawing to get a slice of that action and are happy to pay for the opportunity. 

In those cases, your marketplace can be positioned as a marketing channel, and the same outcome or usage-based pricing models can be applied, as follows:

  • Someone viewed my listing
  • Someone submitted their interest on my listing
  • Someone installed my app or integration
  • My app has called the API X times

Admittedly, this category isn’t the easiest to administer and it does require solid analytics, reporting, and billing capabilities. That said, it can be well worth the effort for the right business.

It’s also worth noting that, while this approach is generally best for more established marketplaces, it is a play that can be phased in as a marketplace matures - another lever to pull down the line. 

Retention

Boosting retention through integration installations

While technically not a strategy for monetization, the pivotal role of integrations in enhancing your product’s “stickiness” warrants recognition. Engaging customers with strategic integrations not only binds them more closely to your product but also mitigates the likelihood of churn. In fact, Crossbeam’s 2023 State of the Partner Ecosystem Report shows that integration users are 58% less likely to churn on average.

Your public and in-app marketplaces allow for customers to discover, research, and have integrations implemented where they may have hastily churned without such easy discovery.

By tracking integration usage before and after implementation or an upgrade, you can directly attribute retained revenue to your marketplace. Consider any notable uplift in revenue stemming from an enhanced customer lifetime value into your monetization calculations. 

Reciprocity

Building stronger bridges with complementary partners

Reciprocity is the little known golden nugget of a partner ecosystem. In my opinion, it may be the strongest economic driver because it’s the foundation for all other collaborative activities, and dictates how much a partner is willing to lean in. 

Reciprocity is the practice of exchanging things with others for mutual benefit. It can be seen as ‘quid pro quo,’ but it stems from a much more altruistic place - one that’s built on goodwill, loyalty and a sense of duty to return the favor. 

When you stand up an ecosystem marketplace, you are promoting these vendors for free. You’re probably doing it because it will elevate your brand, increase customer satisfaction, or one of the million other benefits, but regardless of the motivation, the outcome for your partners is free exposure and net new leads. 

This is a nice gesture for your partners, and it instills a feeling that you’re investing in them, which in turn encourages them to return the favor. 

A partner in your marketplace may be more likely to engage in collaborative marketing, co-selling, lead referrals, and additional development that drives value to both parties – and customers.

Conclusion

There’s never been a better time to pursue an ecosystem marketplace strategy. Purpose-built platforms have democratized access  to marketplace infrastructure so that any company with a marketplace vision can bring it to fruition without reorganizing and reprioritizing the whole company to pull it off. 

With marketplace infrastructure readily available, there are numerous ways to turn the marketplace into a revenue engine, from direct monetization to reciprocity flywheels and network effects, to increased customer stickiness. 

Unlock this potent potential with Partner Fleet's Ecosystem Marketplace Platform, adeptly crafted to seamlessly manage, monetize, and enhance your ecosystem, ensuring every integration and partnership is a stride towards mutual growth and enriched user journeys. Discover the future of ecosystem marketplaces with Partner Fleet, where your marketplace doesn’t just connect but enriches every stakeholder in the symphony.

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