Tim Harmon, an analyst at Forrester Research, recently penned this blog on Channelnomics about the challenges to the profitability of channel partners - namely resellers and system integrators. With changes in the market environment he suggests that although partner margins are declining, asking for bigger discounts from vendors is not the answer. He argues that the fastest route to increase profitability is to reduce costs.
One of the barriers to partners reducing their cost, however, is the comparable ease of doing-business with vendors. With channel partner systems being a low investment priority for vendors (rather improvements to internal processes and systems are favoured), channel partners will continue to face challenges reducing the cost associated with working with vendors.
Harmon says the answer for channel partners is to take a more active role and align their investments and loyalties with vendors that have better enablement technologies. While I agree with his observations I would also add that rather than passively be a victim of circumstance, partners should also “get active” and invest in their own capabilities.
Of course, vendors will always need to be the supplier of some information, such as new product marketing and training, but there are many areas where partners can use their own information and relationships to their own advantage and then demonstrate that advantage to their vendors.
How, I hear you ask?
Knowledge is Power – Sir Francis Bacon
With access to direct customer data, VARs, System Integrators and even Distributors can create a competitive advantage not only with their customers but also with their vendors to drive growth, deliver better services, improve customer relationships and reduce the “vendor-cost”.
For example, once you’ve installed a product or service at a customer site, you know that at some point in the future there will be a need to either renew, upgrade or refresh it. But this relies on tracking and monitoring your installed assets (a.k.a. the data). However few VARS and System Integrators actually do this. Instead they rely on their vendor to supply this information. And it is often not available or requires several logins to different systems to obtain it – adding to the vendor relationship cost.
In another example, a vendor releases a new product that is a perfect complement to another that has already been on the market for a while. Since you are tracking your installed products, you are able to quickly locate all the customers that have that established product and introduce the new offering as an upgrade or upsell, thereby creating immediate opportunity at minimal cost.
So, in addition to Harmon’s suggestions, rather than always relying on your vendor to drive your business and determine your profitability, an investment in your own capabilities is a better answer.
Of course you can try to manage this data with a spreadsheet, but take my word for it, this becomes unmanageable over time and is easily prone to inaccuracies. Rather than enhancing your profitability, working from poorly managed and inaccurate data can have the opposite effect. To be the key to increased profitability, your data must be managed and maintained properly and professionally.
iasset.com offers a channel-based SaaS that can be deployed to VARs to help track, monitor and generate renewal, upgrade, upsell or refresh opportunities across any distributor or vendor line.