How Do VARs Manage the Multi-Vendor Burden?

Jim Stockwell

When a VAR works with multiple vendors, and potentially multiple distributors, the complexities of managing those relationships increase exponentially. No two vendors work in the same way, and no two distributors work in the same way, even if they are offering the same vendor's products. VARs therefore spread themselves thin trying to adapt to each vendor's and or distributor's set systems and processes. The primary challenges of having so many relationships with upstream suppliers include:

Constantly evolving price lists (which often means working with outdated pricing data)
Keeping track of aged inventory
Ensuring accurate billing and vendor compliance
Working with varied approvals and operational processes
Integrating with different manual or software-based systems and portals (e.g. XML, EDI, spreadsheets, PDF quotations, or even flat CSV files)
Pressure from the vendor to meet increasing sales targets

In addition, a VAR's priorities change as products and market demand shifts constantly, and so VARs may end up shifting their focus from one vendor to the next. At the same time, VARs are being hit by distributors or vendors to focus on their respective business first. The administrative effort becomes overwhelming, and it is impossible to unify processes across vendors/distributors.

The result is a channel in a state of constant flux, with many manual and software-based systems that aren't integrated, outdated data, and inefficiencies that impact both the bottom line and the end customer's satisfaction with the product and service.

Renewals: The Lost Opportunity

For VARs that are struggling to manage multi-vendor programs, renewals receive little-to-no focus. The perceived value of renewals is low compared to net new sales, and the pressure from the top of the channel forces VARs to prioritize their time and resources on net new sales (especially given margins are generally higher on net new). However, the underpinning of net new product sales is – and should be – the annuity (renewal) business.

There are major risks associated with ignoring renewals. To begin, although renewals are typically lower in value, they are generally much quicker and easier to close, with the opportunity for upsells and cross-sells. When done well, renewals can easily exceed the value of net new sales. However, that requires sufficient support and tools for renewals team (if one exists) to enable them to prioritize and schedule workflows, which can become a huge burden when working with multiple vendors/distributors.

Failing to pay attention to renewals also puts the end customer relationship at risk, as customers feel unsupported at the end of their contract period. This can lead to the loss of the relationship and the associated potential future revenue, which impacts net new and tech refresh opportunities, and can increase compliance risk.

How to Streamline a Multi-Vendor Program

The keys to streamlining this complicated process and maximizing profits lie in relying on tools that provide real-time data on pricing, inventory, and contract data. With this information easily accessible, VARS can establish workflows to ensure that quotes and invoices always match, track order history, and easily address renewals. The results are crucial to the bottom line: better customer satisfaction and improved profit margins.

Leading VARs that have recognized this and have made significant improvements to what was previously a reactive job and transformed it into a powerful, proactive sales program have done so by deploying an integrated renewals platform. Managing renewals requires a dedicated system rather than relying on systems not built for the task (e.g. spreadsheets, ERP, or CRM) to accommodate not only the constantly changing and fluid nature of this type of business, but the shear flow of data flowing through the channel as well.

VARs can and do grow revenues, improve customer relationships, and provide better support for their vendor's renewal programs through a properly integrated renewals platform.

If you haven't yet taken action to build your own renewals program, get yours started with our ebook, “5 Tips to Successfully Growing a Renewals Program.”