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While it was a cold, dull day in January 1996 when Elio Levy arrived in Canada from Tech Data's head office in Florida, it was a bright day for the Canadian IT channel. The country needed to be shaken up and Elio knew exactly how to do it. In less then three years in Canada, I watched Elio quadruple Tech Data's sales. Like he had done for Tech Data during his two-year stint in France just before coming to Canada, Elio examined the operation from top to bottom to determine what needed to be changed, added or removed. Then set out to make it happen. I met Elio for the first time a couple of months later and almost immediately we started working together and became good friends. A veteran in the channel, Elio spent his first decade in the channel working on the retail side and then spent 13-years with Tech Data, retiring last year as Senior VP of Marketing. Elio is a ChannelLine Advisory Council member and sits on the Council's Executive Steering Committee. Robert: How would you describe your tenure at Tech Data? Elio: Basically, I did a lot of trouble shooting and building new value to the organization. Looking outside the box. In the early years I built Tech Data's software business and networking. I also built a vendor-funded System Engineering business within Tech Data to help us compete in the enterprise business. In France I organized, expanded and made Tech Data's purchasing office more efficient. Did the same thing for Canada. Regardless of which country, I was always involved in developing and harvesting strong vendor relations and in sales management. Robert: Do vendors trust distributors? Elio: Tough question. Successful vendors do. These vendors leverage their distribution partners. Unfortunately, a lot of vendors only work with their distributor partners on a tactical basis and don't get anywhere near the maximum possible value out of the relationship. They expect new customers. More volume. Less costs. However, these vendors send distributors the wrong products; lack the necessary channel marketing and so forth. Vendors think they can ship distributors product and give them marketing dollars and then wait for great sales to roll in. These expectations are seldom achieved. On the other side of the equation, the distributors get overly zealous and thus over promise and under deliver. The net results are not there. I wouldn't say they distrust distributors. It is more like they are not as satisfied as they thought they would be. Robert: What expectations do most vendors have when they engage a distributor? Elio: Some people in the vendor's channel organization know what distribution can do for them. But distributors always have some enemies within the vendor's organization. People who just don't understand why they have to pay the cost to market through distribution or the other values that distribution provides. Robert: What is the secret to success in a two-tier distribution system? Elio: They understand what value their distribution partners provide and that it is more than just products. Different distributors provide unique strengths and weaknesses & they are not all alike. By engaging distributors that do different things or reach different audiences, vendors can create unique offerings to each distributor that are geared towards net new business, as opposed to spending money on share shifting. The vendors who are successful are those that force their distributor partners to think outside the box. Distributors have to reinvent themselves but won't unless the vendors force them to. There is a general fear throughout the industry for taking risk. Everyone, including distributors, want to continue doing what they have been doing for the past 25-years, instead of looking for new ways so that they can do what needs to be done based on the current circumstances. Robert: So, why do many vendors fall short of their expectations? Elio: They treat all distributors the same way instead of looking at distributors as a diverse group that is an extension of their sales, marketing and logistics organization. They ignore the obvious: that distributors have to be profitable. Instead, they keep stripping out margin, over distribute products, and get upset if the distributor wants to charge for other things such as training, marketing, financing, etc. Unsuccessful vendors shy away from giving one distributor exclusivity on one or more products, geographies, etc. The more handholding, marketing, etc. that the vendor's offering requires, the stronger the need for exclusivity. The vendors that fight over every dollar tend to be inconsistent and are usually not successful. This thinking forces the distributors to make money by overcharging on things such as marketing and finance. Robert: As you were essentially the CMO (Chief Marketing Officer) at Tech Data, how often did you meet with the CMOs from the vendor community? Elio: Virtually never. I spent a lot of time with presidents, CEOs, CFOs, logistics specialists, etc. at the vendors, but never with the CMO. This needs to be changed. The messages they are sending out to other audiences are frequently not in sync with the messages the distributors are sending out for them. Robert: How often did the vendor send you a logo usage guide? Elio: Never. Robert: What is the biggest mistake the CMOs make? Elio: CMOs ignore IT distributors and resellers. If they had a discussion with their distributors in an organized way, everyone would win. We need joint business plans & logistics, marketing, sales, etc. They don't discuss any long-term strategic direction. They don't understand the value of a two-tier distribution system. Robert: Do distributors fear vendors? Elio: Always. They keep talking about going direct: direct to the resellers; direct to the end-users. Robert: Now that you are retired, what parting words of wisdom can you offer? Elio: The behavior patterns in the IT industry are unhealthy for all of us. We need to build a model where we don't over distribute, we protect margins and we allow each player to make a legitimate profit for the services they offer and risks they take.
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