Cloud Software Association

Today I’m speaking about the dos and don’ts of partnering with ecommerce platforms. For those of you already partnering with one of the ecommerce platforms like Magento, Bigcommerce or Shopify, you’re hopefully going to learn a little bit, and perhaps you’re going to challenge my assumptions, too.

What is Nosto?

Nosto is a personalization platform which plugs into any ecommerce site. We track behavioral points like your page views, transactions, and your geolocation. Then we personalize the entire customer experience.

I’m sure you’ve seen product recommendations on Amazon. That’s basically what we do, but we also make them available throughout other channels such as Facebook, Instagram and so on. Obviously we partner very closely with ecommerce platforms.

When partnering with ecommerce platforms, look for the big bets

How did we get into the good graces of other big commerce platforms such as Magento or Shopify Plus?

First, those platforms—at least what we see from our work with them—make bigger bets than us. While we focus on just personalization, they make fairly generic bets on the future. They’re looking at things like AI leadership, or how they can excel at user experience. Those bets are broad enough that they usually transcend one technology, or they transcend one channel.

One of our initial goals was to understand what bets companies like Magento are making.  Just looking at the last four or five years that I’ve been with Nosto, I’ve seen omnichannel come alive. I’ve seen social selling. Currently AI is the biggest bet. So, I think you need to be good at that strategic ambiguity. How can you fit your technology into one of those big bets?

How we gained traction by not partnering with the major ecommerce platforms first

We’ve also treated the platforms as an ecosystem, at least initially.  A couple of years ago it was quite difficult to penetrate Magento or Bigcommerce or Shopify Plus. So instead we started looking at the ecosystem and we started partnering with the top three players in each space.

For example, every ecommerce business needs a search provider, a payment provider, and an email service provider. So we started partnering with those service providers for a shallow integration. This was usually a one-click integration—nothing too crazy.  But it did allow us to build a web around an ecommerce platform.

We did the same thing with the system integrators.  We picked the three top SI’s on each side of the coast and started working with them. We started building that mesh around the platform, and that seemed to work pretty well.

Create platform-specific products

One observation about what I’ve seen in the market and, perhaps can neither confirm nor deny, is that it’s not enough to just be listed in the app store anymore. Now you need to have a dedicated product for every platform that you work with—hich is difficult.

Obviously our task as managers is to scale our software and just make it available through any platform. But of course the ecommerce platforms see it the other way around.  They want to have an advantage against their competitors. So they’re asking us to come up with exclusive products specifically for their platform. That’s a shift in the market that we’ve seen. But if you can cater to it, I think it’s a big win.

We see so much tech start scaling early, and then fizzle out. So we made two to three year bets and commitments to those platforms. We’ll do anything for them without looking at the ROI. And then usually after two to three years it starts paying off.

We’ve done that successfully. And I guess that’s kind of their validation towards us. We’re still standing after two or three years without having to raise more and more money. So, if you get into the game with a two to three year commitment, you, too, can win them over.

What marketing tactics we use to ensure ROI from an app store

If you make the decision which platform to work with, and especially if you do a specific partnership with a revenue-share component, no platform is going to guarantee you additional sales or additional license sales. That’s basically a strategic decision you need to make.

What we’ve done instead is mapped out specific exercises that we want to do with each platform.

• Obviously, being in their marketplace or their app listing place is on top.
• We also want to have specific locations in the App Store. We want to get a lot of exposure.
• We want to be hardcoded for certain search terms, and then extend to all channels.
• We want to do specific webinars and see a certain amount of direct introductions.

If you can do that, then you can calculate your own ROI without the platform having to commit to any revenue increases.

One thing to note, app stores are business units that have revenue targets of their own. If you can show incredible growth, there is almost no choice for them but to work with you because they get the rev share component. You’ll become top of mind.

If can get into a Premier Partnerships program, you’ll see the bigger clients. Our MRR went up by 20 to 30 percent just for having that little badge. That’s certainly something you should take into consideration when you build your business case for partnering up with those ecommerce platforms.

Do the heavy lifting for your platform partners

We want to make it as easy as possible to work with us. We’ll do the work, then the ecommerce platform needs to just put their little stamp on. Obviously we expect them to run some paid advertising, as well, but we’ll take care of most of the heavy lifting.

We’ve had great success is offering Best of Breed marketing with a platform.  For example, let’s say we’re working with Magento or Bigcommerce. They get absolutely pounded with requests for co-marketing. So instead of approaching them on our own, we’ll actually take three or four of our partners and then approach them together. We’ll do a content piece or we’ll do a meetup. That makes it much easier for them to work with us, as well.

It’s also important to understand the org structures. We work on relationships with their sales teams, with their customer success team, etc. Whenever we can, we do the mapping exercise. And then we’ll manage those relationships on each and every level.

Focus on internal platform marketing

We also do internal platform marketing. That is, marketing solely aimed at that platform. For example, we’ll do a newsletter that’s purely going to employees of Magento. Or we’ll have an internal newsletter just for Facebook and our connections at Facebook. We’ll do Lunch and Learns. We’ll send them goodies, so we stay top of mind. That seems to resonate pretty nicely.

If you can, get into the good graces of the customer success team. There is a lot of buzz that customer success is the next sales channel. And it’s something that we’ve had great success with, especially for introductions of the technology and for upsells to the platform.

My top advice around strategy and marketing is to leverage as much as you can.

Questions

Q: How did you select the initial two or three platforms to focus your time and attention on?

We started with looking at platforms like Datanyze and BuiltWith to take a look at the install base. Then we qualified the actual margins by looking at how much revenue they’re making on the modern new brands that we feel like we want to work with. From there you usually have two or three platforms come up. For us, we determined that Magento, Shopify Plus, and Salesforce Commerce were the ones we’d like to work with.

Q: How closely do you align targeting the SI communities within each of the platforms? Do you target them jointly or in parallel?

I’d say we do that jointly. We’ll do case studies or partner with them. Currently we do around 60 to 70 percent of our revenue through the SI’s. Those are actually an important channel for us. And again, we’re all about best of breed. That means also working with other technologies and then SI’s especially.

Q: Can you give us an example of making product specific capabilities with each platform?

Take Magento, for example. They have a BI tool which just does business intelligence, and they want to see specific metrics on the performance of personalization. That’s a pretty cool use case where we can use their BI suite and track the performance even better.  We show what personalization is bringing to the table in terms of ROI. The same goes for pretty much all platforms that have some kind of CMS component. We do a page builder that’s also a pretty natural integration where they can just move recommendations around or they can move content around.