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Are You Part Of The Solution... Or Part Of The Problem?
30 January, 2008
By Robert M. Cohen, President and Business Editor, Integrated mar.com Corporation |
Traditional Method
Channel partners can, and usually do, play a very significant role for Vendors who are actively selling to the SMB marketplace. They provide the reach, trust and ability to take a wide variety of products and turn them into a unified solution for their customers.
Unfortunately, most of the time Vendors and VARs are out of sync with each other and what they want from the relationship. This is caused by misconceptions coupled with poor lines of communications. Some of the key areas where they are out of sync include:
- Roles: Vendors partner with VARs with the objective of increasing their sales team. Most VARs are fabulous techies who have very little interest or capability to do marketing or sales. This is the root of most problems in the channel.
- Objective: Vendors manufacture hardware products and software programs and expect VARs to market and sell these products for them. VARs sell technology-based solutions that meet the needs of their customers.
- Leads: Vendors promise VARs leads. Problem is, most Vendors have a direct sales force that competes against VAR partners without clearly defined rules of engagement. Regardless of whether it is true or not, VARs believe that the direct sales force gets all the hot leads, leaving the VARs with cold unqualified leads that do not warrant the time and effort required to follow-up. Vendors are upset that the VARs don't follow-up and VARs are upset with the perceived lack of quality leads.
- Trust: Starting with a lack of understanding of roles or core competencies and different, somewhat non-compatible objectives and without rules of engagement, it is no wonder that there is very little trust between Vendors and VARs.
- Margins: Vendors promise high margins but don't protect prices at the street level. Most products are over distributed and, in many cases, street prices are dictated based on advertised prices from mass retailers. Instead of selling solutions, many VARs focus on product sales, thus having to discount prices to compete against street prices. Higher margins based on MSLP aren't the equivalent of higher prices.
- VARs' Databases: Vendors expect VARs to send promotional material provided by the Vendor to the VAR's customers and prospects. VARs do not have the time or resources to do this. Furthermore, the average VAR has about 20 key Vendor relationships. Each of these Vendors want them to send out between one and five items per month to their customers, on the Vendor's behalf. This would entail the VAR sending their database about three promotional pieces every business day ... resulting in the VAR becoming his customers' biggest spammer ... sending customers a massive amount of information to go through ... most of which they don't really understand and expect the VAR to sort out for them.
- Marketing Tools: Vendors spend significant time and money on creating FREE marketing tools for VARs. VARs don't trust the Vendors and won't let these Vendors near their databases for fear that they will take the sale direct.
- Training: Vendors frequently provide free or subsidized product and/or sales training for VAR partners ... and get frustrated when the VAR does not take the training. VARs rarely have the time for the training and tend to want on-demand training that they can take if and when they need it, as it pertains to a specific customer situation.
- Customer Ownership: Vendor's own the technology and feel that they own the customer. VARs own the day-to-day relationship and have usually earned the trust of the customer. Neither the Vendor nor the VAR is willing to relinquish ownership.
The New Model
Vendors sell products. SMBs want to purchase solutions specific to their business. VARs are not the sales people ... but rather, they provide the conduit. They help remove the FUD Factor (fear, uncertainty and doubt) from SMBs by assisting in the determination of what solutions are available, sourcing the necessary products, configuring and integrating these products, training staff on how to use the solutions, providing on-going service and support and acting as an on-going trusted business advisors to SMBs. Simply put, they bring together the various products and make them work harmoniously as a solution for the SMB. Then, they stay around to assist with problems, updates, etc.
The North American IT industry's go-to-market model is inefficient and ineffective. It is based on a flawed strategy whereby Vendors rely on technology-focused VARs to act as their sales team. Most VARs lack the business knowledge and selling skills necessary for survival. Meanwhile, Vendors ignore the core problem and continue to train them on their technology.
For the channel to survive and thrive, it needs to change. The paradigm shift is already starting as Vendors are pushing their marketing and sales people to show measurable ROI on channel marketing expenditures. Distributors are cutting services in order to turn positive net profits. VARs are leaving the industry in record numbers as they cannot survive on the margins they are earning and do not understand how to change their business model. The change coupled with declining profits and mixed go-to-market messages has created a state of distrust within an industry that is out of control.
The VAR's Role In The New Paradigm
In the new paradigm the industry's human resources need to be realigned so that strengths are being leveraged and weaknesses are being complemented. Integrated mar.com has assumed a leadership role in this area, educating the industry on the basic notions of what VARs are capable of doing extremely well and where their shortcomings are. Integrated mar.com has then gone one step further by building tools and providing education for VARs that will help compliment these shortcomings.
| VARs' Strengths |
VARs' Weaknesses |
- Deploying technology.
- Developing long-term relationships with their customers.
- Passion for problem solving.
- Hard working.
- Locally based.
- Accessible to clients.
- Solution focused.
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- Obtaining new customers.
- Selling new product categories.
- Acting as extension to vendors' sales forces.
- Loyal to providing technology solutions, regardless of Vendors requirements or their own business' requirements.
- Business skills.
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As Vendors are looking more and more downstream into the SMB marketplace for sales, they are quickly realizing that it is a daunting task to reach, sell solutions to, service and support these businesses without the tremendous assistance that only the VAR community can supply.
What The ChannelLine Advisory Council Is Doing
With about 800 members, including marketing and channel sales people from Vendors, Distributors, System Builders, Resellers and service providers to the industry, the Council, in conjunction with Integrated mar.com, has been actively discussing the problems and working on developing and implementing solutions. Some of the core activities for 2008 include:
Vendor Education:
- Channel Advisor: This monthly eNewsletter provides education and tips for Vendors regarding channel marketing.
- Channel Sales Cycle Program: With the growing focus on the hard to reach small and mid-size businesses, the need for leveraging the skills, relationships and reach of VARs to provide service and support for these businesses is greater than ever. This is most successfully accomplished by considering all stages of the Channel Sales Cycle and how it fits your specific situation: Engage (Recruit), Enable, Collaborate, and Maintain
- Doing IT Business In North America: Working with the American Chamber of Commerce (AMCHAM) and several other government and private organizations, this initiative is designed to help companies sell IT products and solutions to US and Canadian organizations. Through a large array of communication vehicles and tools, Vendors will be walked through the process and introduced to partners that will assist them along the way.
- Channel Forums: taking place within existing shows and events, the objective is to have industry experts discuss best practices for increasing sales through the IT Channel.
VAR Education:
- Trusted Business Advisor Seal and Certification Course: Focusing on the business aspect of being a VAR, courses are being developed that will allow VARs to earn the dubious distinction of being a Trusted Business Advisor. This accreditation will be heavily marketed to the end user community along with a channel advocacy program.
- VAR Locator: Provides a home for VARs to promote themselves, free of charge, to end users via a search engine that will be accessible from a multitude of end user publications.
Enhanced Communication:
- W3 Channel Enablement Program: This program has been developed in conjunction with The Business Network, specifically to help alleviate the problem of channel partners not wanting to, or just not, sending out information supplied to them by Vendors, to their customers and prospects. Rather then treating these channel partners as sales people, we are providing them with business tools that enables them to easily (can be fully automated) send out information to their customers and prospects that promotes their entire business. A Vendor providing these FREE tools will be looked at as a true Channel Advocate and trusted business partner, rather then as another supplier that wants them to flog their products.
- Channel Communities: Focusing on the business aspects of the Channel (as opposed to the technology aspects), we have created the infrastructure, provided some of the content and are promoted the communities to the various audiences, developing and maintaining the rules of engagement including setting boundaries between members and non-members and help drive traffic. Owned and managed by the various stakeholders (members), the communities will grow organically in scope, activities, content and membership. The members will have the freedom to formulate objectives, goals, schedules, content and strategies that can develop further sub-committees beyond Channel business.
How You Can Be Part Of The Solution:
If you believe in the IT Channel and passionately want to help ensure its long-term success, please join the ChannelLine Advisory Council and become active in helping us develop and implement solutions. To join, please email Sharon Ashfield at
sashfield@integratedmar.com, or by phone at 506.854.2188.
I hope you join us. Together we will all be more successful!
Part 1 of 2: The Role of the IT Channel - Are You Part Of The Solution... Or Part Of The Problem?
Robert Cohen, a passionate and enthusiastic channel advocate, is the founder of the ChannelLine Advisory Council as well as president and business editor of Integrated mar.com, publishers of Channel Advisor, eChannelLine and ConnectIT. Since 1980 he has worked with 300 IT vendors, distributors and resellers in developing and implementing strategic go-to-market programs, using a variety of direct, channel and hybrid models.
Integrated mar.com, in its role as publisher, channel marketer and founder of the ChannelLine Advisory Council is proud to be a leader in orchestrating the paradigm shift. To find out how the Channel Sales Cycle Workshop Series (a CLAC initiative) can assist you in growing your channel sales, call Robert at 1-800-465-2059 or by email at rcohen@integratedmar.com.
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