In an effort to keep customers satisfied, Microsoft is incentivizing its sales representatives to help them pump the brakes on their spending on its cloud services. The strategy was revealed by Microsoft CEO Satya Nadella during the company’s fiscal-Q4 earnings call. During the quarter, the company’s revenue and income fell short of expectations, but its stock rose 5% based on a positive guidance prediction for the next fiscal year.
On the call, Nadella explained that as customers try to balance investing aggressively in the cloud with tightening budgets, Microsoft’s sales reps are encouraged to help them optimize their monthly spending. Traditionally, the reps’ commissions have been based on the volume of cloud services a customer consumes—the more they use, the more reps earn. The new strategy is meant to combat the current state of high inflation in the American economy. The CEO sees the cloud—and software, in general—as a deflationary force based on technologies, like automation, that boost productivity.
Microsoft’s cloud software business has rapidly grown in recent years, and its Q4 revenue of $25 billion is nearly half of the company’s total revenue of $51.9 billion.