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Industry Buzz – April 2014


Hi sellers!

We’re excited to introduce the Industry Buzz, a monthly roundup of the biggest commerce and digital news from across the web. We’re bringing you the best insights from the best minds in the industry, and we hope you enjoy these 10 thought-provoking commerce and marketing picks.

Thanks for checking out the latest digital buzz. Is there a hot topic we missed? Let us know in the comments and subscribe to our monthly newsletter to stay up-to-date with the hottest industry trends and resources.


Brazil – the Next Great eCommerce Opportunity

Brazil, probably best known for its magnificent beaches, vast rain forests, festivities-fueled cities, football (soccer) prowess and Carnival, is also the host for the upcoming 2014 World Cup and the 2016 Summer Olympics. But did you know that Brazil is actually the Latin American epicenter for eCommerce?

With a population of 202M and the 6th largest world economy, Brazil accounts for 59% of Latin American eCommerce revenues. World class technology combined with a market size bigger than UK, Italy, Russia or India makes Brazil the next great eCommerce opportunity.


Ralf Germer, CEO, of 4M Iberoamérica, shared the following insights into Latin America’s eCommerce presence and why Brazil is leading the charge:

  • Brazil is the 5th most populated country in the world
  • Brazil has the 5th highest number of Internet users worldwide
  • Portuguese is the 5th most used language on the Internet
  • Brazil accounts for 59% of LatAM eCommerce revenues, titled “King of Latin American eCommerce”
  • Brazilians spend more time on the Internet than anyone
  • Brazil’s technology market predicted growth of 9.2% for 2014
  • IT accounts for 6.4% of Brazil’s GDP
  • 2014 IT spending forecast of $175B USD

Consumers buying online in LatAM is growing with more than 105M Internet users, reflecting an eCommerce growth of 24% in 2013 and a predicted 27% growth for 2014. Internet indicators also highlight why Brazil may be the next market you’ll want to enter with: 86M Facebook users, 6+ hours/day spent on the Internet, #5 in time spent on social media, 59% usage of mobile social media apps, and 26% smartphone penetration.

However, breaking into the Brazilian market is not without its challenges.  There are several factors to consider:

  • Geographic extensions
  • Legal and banking formalities
  • Complex and ‘dynamic’ tax legislation
  • Restricted access to domestic payment methods
  • Closed and restricted currency market
  • Finding the right local marketing partners

In order to ramp up online sales in Brazil quickly, Avangate recommends:

  • Selling cross border
  • Focusing on digital distribution only
  • Partnering with a PSP (payment service provider) which supports all important local payment methods and cross border settlement
  • Contracting local marketing services covering: PR, SEM, SEO, and social marketing.

The shift to Brazil has started – don’t get left behind. The good news is that the Brazilian market is still available to become a market leader. Avangate has every thing you need to sell online and be successful in Brazil. Come back next week when we’ll give you 5 Best Practices to becoming an eCommerce Star in Brazil.


“Mobile Is The Next Internet”- The WebAppTool Vision

Micha Willemse WebAppToolWe’ve had the opportunity to chat recently with Micha Willemse, the COO of WebAppTool, a very cool online mobile app toolkit start-up out of The Netherlands. Insightful commentary, a remarkable company vision and a very generous discount coupon code offered to you, the reader. Dive in and enjoy!

Q1. WebAppTool was born out of a great vision – I think it’s worth taking a few moments and talk about it here, as an intro to the company.

Webapptool’s founder, Paul van der Meer, started building this toolkit in 2011 from the vision that “mobile is the next internet”. Everything and everyone is shifting to mobile and he has proven to be right about this. By the end of 2013 the use of internet through mobile devices such as smartphones exceeded desktop and laptop internet use.

From this vision came a number of business needs. First of all, since everyone is mobile, companies and organizations cannot afford to offer their customers a poor web experience when their site is visited from a mobile device. And still, 9 out of 10 websites do just that.

Second, the web design companies who build these websites will be facing increasing demand for high-quality, affordable mobile solutions and will be looking for tools to become more productive and cost efficient. Just like they use WordPress to build great, cost effective websites, they will be looking for tools to build great mobile experiences for their customers that go beyond a basic responsive site.

This is where Webapptool comes in. We offer an online toolkit for the professional service providers to build amazing mobile apps for their clients. With over 100 functionalities pre-programmed, little to no coding skills are needed to build and deliver apps fast.

Q2. Why SaaS – what attracted you in this business model?

We are a 100% online business, meaning that our customers find us online, evaluate our platform online during a 21-day free trial period and buy a license online.

A SaaS business model allows us to be extremely flexible and scalable. The world is our market, not just our own country. We have customers active in Australia, Indonesia, the US and Europe.

A SaaS business model allows our customers to use professional software without high upfront investments in licenses, implementation, etc. It’s a pay-as-you-go model that keeps their costs in line with their revenue.

Q3. Related to how you approach and interact with buyers, what would you say is your biggest challenge today and what are you doing to solve it?

As said, benefits of a SaaS model are flexibility and scalability. The downside of a SaaS business model, and especially a 100% online business model such as ours is that customers are more anonymous. You cannot look your customer in the eye and make a personal deal as you would in the traditional business world. You have to convince them online with your website, trial, demo’s, webinars, etc.

There is less “direct human” influence on the buying process. To ensure that we really know our customers we invest heavily in customer support. Jorg is our Chief Customer Success and he has a team of professionals that interacts with our prospects and customers as much as possible through all possible channels (telephone, chat, email, social media, etc.). We believe that if we can make our customers successful by helping them get to know our platform better, assisting in building their first apps, etc. we create customer loyalty and increase our conversion ratios.

Q4. What pressure is there to keep changing and innovate?

There are few markets out there that change faster than the mobile market. There are constantly new OS updates for all mobile platforms (iOS, Android, Microsoft, Blackberry), every week new smartphone devices are released to the market and HTML5 is continuously adding new possibilities and features.

It is our job and responsibility towards our customers that web apps built with Webapptool always run on the latest operating system versions and the latest smartphone releases. This is our promise.

Furthermore, we are constantly discussing new functionalities with our users. If it helps their business become more successful, we will build it and make it available to all of our users. This is also one of the advantages of SaaS.

Q5. Talking of buyers – name what you think is the coolest App built with WebAppTool.

Thousands of web apps have already been built with Webapptool and we’re proud of all of them. I would say that the Buddha to Buddha app is a great example of how Webapptool can be used. Buddha to Buddha is a large international jewelry brand with hundreds of outlets around the world. Just check on your smartphone. Another cool app that was built with Webapptool is for a private driving company called Baas Chauffeursdiensten. The app is in Dutch but you’ll see how important freedom of design is. Check on your smartphone.

Q6. If you were to give one piece of advice to your fellow software/ SaaS entrepreneurs, what would that be?

Actually I would give 2 pieces of advice. First, make sure that not only the front end of your website looks great but also invest in solid back end processes. You only get one chance with your “anonymous” prospect, so get it right the first time. Second, invest in customer service. The anonymity of the process and the recurring nature of the business mean that you have to earn your customer’s trust and to keep adding value throughout the customer lifecycle. Be ready to not only transact, but also to interact, support and service the customer across channels.
Q7. OK, now give us your elevator pitch for WebAppTool and don’t forget about that coupon you promised our readers:

There are 4 important benefits that make Webapptool indispensible to web professionals:

  • 100% HTML5 web apps that run on every mobile platform and can be linked to the existing desktop website. No app stores needed
  • Complete freedom of design and navigation. No fixed templates. This is where web professionals can prove their added value. Every app is unique.
  • Secure hosting & backup
  • Very competitively priced, And here’s the discount coupon that I promised to make it even more competitive: the first 100 customers will get a 25% discount on the first term of the license they choose. Just enter coupon code WATAV040814 when ordering. This promotion ends August 31st.

3 Steps and 7 Tips to Turn Your Software Products into Subscriptions

I recently read an article on how shifting to subscriptions has affected Adobe products. Basically, the company saw a decrease in revenues in the short term, but current signs lead to a good prognosis on medium and long-term revenues.

This is just an example of the current trend of monetizing products and services via subscriptions, which is happening in many more verticals than just software and digital goods. A pay-per-use business model (subscriptions) has multiple advantages:

  • More customizable for individuals (consumers, small businesses, enterprises) in terms of the packaging and price
  • More predictable source of revenue for owners
  • More attractive to customers given the seamless product upgrades and uninterrupted service they benefit from as subscribers

So how can you take advantage of a subscription revenue model for your company? Here are 3 simple steps that will help you turn your product into a subscription.

1. Run competitive analysis. Don’t head into this endeavor without first finding out if your competitors have experimented with subscription products – and how that shift has worked for them. Try to uncover the complete context of their subscription efforts. How have subscriptions affected their revenues (very easy to discover if they’re public companies)? What effect have subscriptions had on distribution channels, such as affiliates, resellers, and more? Based on your research, you can anticipate how subscriptions might work for your company.

Tip: Don’t stop at your direct competitors – go a little broader with the analysis and make sure you look at merchants that work in your geographical “sweet spot”, as this will tell you a lot about regional payment preferences.

2. Draft subscription plans. Take into account the competitive analysis and, where possible, create a better offer than your competitors in terms of both functionality and price. Based on your research, you will be in a position to do some accurate estimates for your business plan. Experiment with different monthly packages and figure out how long it will take for the subscription model to pay off in the medium to long term.

Tip: Try running subscriptions in parallel with your current lifetime licensing to help your company absorb the immediate revenue shock of shifting to subscriptions.

Be sure to clearly outline the advantages of subscriptions to customers (like always having the products updated without extra cost and being able to use the service when needed most) and constantly monitor the evolution of sales between the lifetime licenses vs. subscriptions. You don’t want your existing options to cannibalize subscriptions, if you plan to fully shift to subscriptions in the future.

3. Ensure your payment processing solution is compatible with subscriptions. Be sure the digital commerce solution you use can help you with everything that’s needed to successfully launch and manage subscriptions for your products and services, including at the channel level – resellers and affiliates. Here are some of the many business needs you must take into account when choosing the right payment processing solution for your shift to subscriptions:

  • Will you be offering a trial before converting the customer to a subscription?

Tip: Most merchants use some type of “hook” to get a pool of potential customers on board and increase their conversion rates.

  • Will this trial be paid (small amount) or free?

Tip: Big brands with high awareness can go with paid trials; small ones should start free. If you start free, you may want to ask for customer payment data when beginning the trial, but only issue charges after the trial period is over.

  • Are you willing to offer discounts for potential customers who don’t buy a subscription?

Tip: Look for lead management solutions. These may be part of the eCommerce platform (as with Avangate), or an affiliate option (such as VeInteractive), and can help you convert uncertain customers who may need a custom offer.

  • If you’re shifting payment providers, import your existing subscriptions to the new platform.

Tip: This will make sure you can create compelling promotions for your existing customer base and offer them the level of service they’ve come to expect in terms of subscription payments or cancellations.

  • Do you want to credit affiliates for the subscription renewals their referred clients generate?

Tip: This is a great incentive for affiliates, especially for subscriptions that recur weekly or monthly. As affiliates are looking for fast money, they will be highly motivated by this incentive policy for short-term subscriptions.

Going from zero to profitable with subscriptions can take anywhere from a couple of weeks to months or even years, but the shift is almost certainly going to be worth it in the long term. Use our tips to evaluate your subscription potential, and you’ll be on your way to subscription success.

Bottom line: anything that’s a digital good (especially access to information) can easily be translated into a subscription. That’s good in the long run, but may affect your revenue in the short term – but you’ll be prepared if you do the right analysis.


Security Update on Heartbleed

The web has been abuzz since the disclosure of CVE-2014-0160 , also known as the “heartbleed” OpenSSL bug. Given its potential impact, we wanted to make sure you all heard and understood its implications to youheartbleed

First, what is it?

For those less technical, it is a vulnerability that could expose what you thought was secure information from your servers. For those a bit more technical, “Heartbleed” is a security vulnerability that exploits a programming bug in the OpenSSL library that makes the remote process (web server, for instance) leak a random block of memory. Through repeating the malformed call, attackers could search for data patterns of sensitive information (passwords, credit cards, even private keys for the SSL certificates). Since this bug has been present in all the OpenSSL releases between March 14th 2012 and April 7th 2014 (versions 1.0.1 to 1.0.1g), a potential attacker that was aware of the bug could have extracted sensitive data during all this time from affected servers.

So what did we do about it for our customers?

As soon as the security bulletin broke, we have re-checked all our external-facing SSL-secured services against this vulnerability. None of the services related to the payment processing were found to be susceptible to this bug, as none of them were setup in a way to be ever vulnerable. This means that neither the private keys nor other sensitive information were leaked at any point of time due to this vulnerability, even to potential attackers that had knowledge of this exploit before its disclosure on April 7th 2014. Rest assured that our security team continues to work hard to keep your data secure.

So what should you do about this?

Changing your login passwords for Avangate Control Panels or API communication is not necessary due to the Heartbleed bug, however our recommendation is to change your passwords regularly to minimize the attack window for similar issues in the future.

We recommend to all our customers, many of whom have web services exposed to the Internet, to review their commerce, as well as other server setups to ensure that all sensitive materials potentially compromised are renewed. If you have SSL-secured services of your own, you should investigate if you had this bug at any point and consider updating keys and passwords.

For more information:

The Avangate Operations Team

The Mac Exclusive Contest is Now Open

affiliate mac contest

Our Exclusive Mac Affiliate Contest is Now Open!

Our Mac lovers’ affiliates have another reason to smile this April! The entire month is dedicated totally to Mac tools and merchants, and we have prepared a very special contest in which affiliates can win $1500 worth of Apple vouchers!

The sole condition to win these prizes is to have a minimum of $5000 total sales during the contest timeframe (April 1 – April 30). This is going to be super easy for you, because top-selling Mac titles are granted by our appraised partners: Absolute Software, Aiseesoft, Bitdefender, Bitex, Cartographica, DEVONtechnologies, Iobit, Markzware, Retrospect, Wondershare and more.

Act now! Join the competition and those Apple vouchers could be yours!

Learn more about the Mac Affiliate Contest!


Leverage Recurring Revenue Alliance to Increase Renewal Sales


In March 2014, Avangate joined the Recurring Revenue Alliance. This is a great initiative by ServiceSource, designed to help business make more money and hold on to more customers by creating best practices for subscription billing and recurring revenues.

What does the #RRAlliance mean for you?   

  • If you’re new to the subscription billing/recurring revenue model, the Recurring Revenue Alliance and its members can provide framework to help you better understand the complexities and necessities of a recurring revenue model with some real world examples of successful integrations and implementations.
  • For those of you already there, you’ll learn how to go beyond subscriptions and build a stronger, more powerful, and more resilient recurring revenue business.

As part of the Alliance, Avangate will partner with other digital companies to help solve key issues related to the recurring revenues and renewals market.

Understanding the Renewals Space

The renewals market falls into 2 categories in general:

  1. High Value, Low Volume and
  2. Low Value, High Volumes.

B2B contracts typically are the former, and B2sB (small business) and B2C contracts are typically the latter.

Increasing renewals by automating low dollar value, high volume contracts while retaining customers, is just one of the key issues that Avangate will look to address as part of the Alliance.

Avangate brings a wealth of subscription billing and recurring revenue knowledge to the table with its complete and powerful digital commerce platform.  The platform offers several automated renewal features to achieve that balance of increasing revenue with automation while reducing churn and retaining customer, such as:

  • Account Updater – automatically updates credit card numbers so you never miss a billing cycle
  • Global Notifications – notify customers of when subscriptions are about to expire, with grace periods, and integrated promotions
  • Custom Retry Logic – determine the best time to improve authorization rates
  • Intelligent Payment Routing – route to the most likely-to-succeed payment gateway with a sophisticated rules engine

Just the tip of the iceberg

The key point here is how to combine these recurring revenue-specific features with advanced marketing tools, smarter payments with worldwide coverage, distribution and fulfillment management, anti-fraud and charge-back/refund management. How do you service customers across all touchpoints? What is the right balance between automatic and personal engagement? How do you test and experiment with new things and how do you do this quickly so you can succeed or even fail fast, back-up and try again. All this while keeping a focus on your core business and your customers.

Customer-Centric Commerce

This is where Avangate really comes in. This post is the first in a series, with more to follow, as well as webinars, whitepapers and other tools you can leverage to dive deep into this topic. We’ll talk about what it means and what it takes to be customer-centric in a recurring business environment, why you need to go beyond just subscriptions or payments to improve retention and how to do it.

Between Avangate, ServiceSource and other members (such as BigMachines, Centrify, GoodData, MuleSoft, Okta, Pactera, Salesforce and Xactly) of the #RRAlliance, I’m confident we’ll share best practices and turn those challenges into recurring revenue opportunities.

Learn more about Avangate joining the Recurring Revenue Alliance.

4 Major Reasons to Sell Digital Goods as an Affiliate

You might already be an active affiliate, but are you making as much money as you could? Here are four big reasons to start selling digital goods to maximize your affiliate revenue.

  • The payouts remain high for software affiliates and can hit as high as 85% CPS. For example, last year the average commission across the Avangate network was 40%, which is far above other verticals. For comparison, here are the average commissions for certain sectors:

Sell digital goods as an aff1

  • Recurring revenues have significant potential. The $30 billion SaaS market represents a huge opportunity for fast-moving affiliates and may also bring a bonus reward, such as a payout structure based on recurrent commissions. The following is a real example of the commission scheme applied by an Avangate vendor that illustrates how, after one year of a non-interrupted automatic renewal cycle, the affiliate gets paid three times the value of the initial commission.

Sell digital goods as an aff2

Unit price = $99
New sale commission (CPS) = 30%
Commission for renewals (CPS) = 10%

  • An evolving array of niche products and services that affiliates can explore, leverage and ultimately dominate. More and more affiliates, both newcomers and veterans, are becoming interested in the less competitive niches on the affiliate marketing battleground. These attractive new sub-verticals can often fall under the category of professional tools, such as project management, graphic design apps, or online marketing tools, just to name a few.

Top Selling Professional Tools in January 2014 (Avangate Affiliate Network)

Sell digital goods as an aff3

Here you can see the top 10 products from January 2014.

  • Geographical expansion opportunities are significant. Right now, the majority of software and online services affiliate programs are open internationally, without territory or language restrictions, and affiliates from home and foreign countries can always launch into less saturated markets or territories they are familiar with from a language and cultural perspective. This creates opportunities for affiliates to easily test and successfully sell worldwide with merchants that already have localized their marketing materials and products. In our network, affiliates outside the US and mature markets of Western Europe (UK, Germany, France) and APAC (Japan) represent 12% of total sales and it’s growing yearly. The top 10 countries are as follows:

Sell digital goods as an aff4

From the affiliate perspective, the digital goods vertical is one of the easiest to scale internationally and this is thanks mainly to the electronic delivery model that can serve several markets with a minimal investment

We’ve given you four major reasons to explore selling digital goods as an affiliate. What are some others you can think of?


Meet Avangate at CeBIT 2014

a4Once again, Avangate will be exhibiting at CeBIT, demonstrating its continued commitment to the global software industry. CeBIT is Germany’s premiere software conference and a highly influential international event, and Avangate will exhibit in Booth K18 in Hall 6 from March 10-14.

This year, Avangate will focus on explaining why there is a need to go beyond just payments and embrace a customer-centric approach to commerce in order to truly focus on the customer . For this, we’ll kick things off with a presentation about “Customer-Centric Commerce – Customer-Focused Strategy as a Success Factor” on Tuesday, March 11, at 10 am. Attend the session to better understand the customer-centric commerce concept, which is a core reason why Avangate is such a trusted commerce provider for more than 3000+ Software, SaaS and online services providers worldwide.

To schedule a meeting with Avangate at CeBIT, please fill in the form on this page. Our first 100 registered visitors will receive a free ticket to attend the event, and everyone who comes to our booth and leaves a business card will be entered into a raffle to win a drone (yes, really). How can you say no?


Get Your Product Ready For Self-Service – The 30-60-90 Day Plan

Over the past few weeks, we’ve probably convinced you that self-service is an option worth exploring. Self-service can increase customer satisfaction, pull leads out of “purgatory” and into active product use, and deliver more qualified leads back to the sales team. It’s clearly a win-win – but how can you make it happen?

Avangate has a simple 30-60-90 day plan for embedding self-service commerce into the sales process at any organization. It starts with preparation, continues with refinement, and ends by inserting usage-qualified leads back into the sales process. Here’s the process in brief – to dive into more detail, check out our lead-to-revenue management whitepaper.

30 days: Prepare the product for successful self-service

The first step in the self-service process involves breaking down a product into manageable modules. In order for customers to adopt self-service, there needs to be an extremely simple way for them to get started. By dividing the product into specific modules that cater to self-service, and pricing those modules appropriately, companies will set themselves up for success with the self-service channel. Product breakdown should be based on existing marketing data about customer signups, usage, and retention.

In addition to dividing the product up into manageable pieces, it’s extremely important to automate everything behind the scenes. Self-service can’t become just another route toward managed services, such that customers will have to wait for responses or assistance. Everything from currency adjustments to product changes should populate automatically, making sure self-service truly provides a service for users.

60 days: Get the self-service train running smoothly

After the product has been divided into parts that are manageable with self-service tools, and the behind-the-scenes aspects of the product are running smoothly, it’s time to expand self-service and make it more appealing to specific audiences. By combining the self-service usage data available from initial testing and early adopters with existing customer data, companies should be able to create and market to specific personas who can benefit from self-service in different ways. Understanding the self-service customer’s needs will help companies expand the self-service channel and drive more customers this route.

90 days: Recapture UQLs for direct sales

Following a period of extended product usage, self-service customers will often be ready to upgrade to a more advanced version of the software. Depending on the self-service modules available, they may be able to do this on their own, which is obviously desirable. However, customers may also reach the point where they need something more than what’s available through self-service. These customers should be passed back to the sales team as usage-qualified leads, or UQLs.

UQLs are uniquely qualified because they have done something that few other prospective customers do: told the sales team exactly what they want, without saying a word. Simply by looking at what the customers do with the product and how often they use it, the sales team has a wealth of information that can be used to develop a customized upgrade plan for these usage-qualified leads. And while usage information is most relevant for customers who have used the product, it can also be extended to other prospects, giving salespeople a better understanding of all of their leads, across the board.

This easy 30-60-90 day plan can take almost any organization from zero to self-service in just three short months. Combining the tips in this blog post with the in-depth advice from Avangate’s lead-to-revenue management whitepaper will help all kind of software companies transform their sales process and increase customer satisfaction.

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