What are the pressing issues facing technology integrators, VARs and consultants? "Channel Pro" Scott Karren reveals the top 10 questions you should be asking yourself.By now you have realized that your vendors are not able to make your business successful. They are worried about the average performance of their entire channel and the sales of their product. You, on the other hand, are worried about your business and its performance. And that is the way it should be. Do what is right for your business and vendors will respect you.
When I was teaching the Executive Conversation's
Executive Focused Sales for Channels, I had the opportunity to have the managing partner of a Hewlett-Packard reseller talk to their channel sales force in attendance. With no advance guidance, prompts, or hints from me, he emphasized the exact same points I made during the previous two days, but even more bluntly. "Programs don't matter, performance does." His business performance established equal business stature with the vendor's sales organization.
Yet performance does not mean the same thing to providers and vendors. For the channel provider, performance is not some academic issue to be studied endlessly and debated by committee. Performance is the consequence of the myriad decisions you make every day. To me, the difference between a channel partner and a vendor is like the difference between a sail boat and a windsurfer. Although the physics and theory are the same, the experience is much more immediate to the windsurfer.
For relationships in the channel to be successful, they must be based on business performance, not products. Products are just the most visible, tangible part of the relationship.
Here are 10 critical, real-life performance issues facing today's provider.
Next page: Productivity, Positioning, Promotions, and Launches
Productivity, Positioning, Promotions, and Launches
1. Sales Team Productivity: The sales productivity formula is a tough task master. Only by changing the individual components of headcount, order size, frequency and close rates can sales productivity be increased. Where is the untapped power in your sales force?
2. Branding and Product Positioning: Proper positioning can make the difference between 10 point 40 point margins for the exact same service. Ask yourself: Why are your customers buying your solution?
3. Marketing and Promotions: Although generating qualified leads is the objective, few providers put their best foot forward. In-house materials can be both unprofessional and ineffective. What is the ROI on your marketing spending?
4. Launching New Technologies: New products and technologies require investments of both cash and overhead with no payback for as long as 12 months. Even worse, most product launches fail. How can you avoid launch disasters?
Next page: Services, Overhead, Alliances and Cash Flow
Services, Overhead, Alliances and Cash Flow
5. Services: For years everyone said services were the key to profitability. But Dell offers $500 dollar service contracts for servers. Where is the profitability in competing with that?
6. Blood Sucking Overhead: Every employee, every square foot of space, each hour of time and every asset has to deliver. And in a services business, employees are the largest expense category. How can you make better staffing decisions?
7. Alliances and Channel Development: Everyone knows the potential of alliances to touch customers and enter new markets. Unfortunately, alliances are often even less productive than government employees. What will take to get more than press releases out of your alliances?
8. Capitalization and Cash Flow: Since the dot.com collapse, less than 1 percent of ventures get funded. Vendors also have reduced their soft dollar support. Where will you get the money to fund your next big idea?
Next page: Margins, Stragegies and Surfers
Margins, Stragegies and Surfers
9. Specialization to Increase Gross Margin: There is no safety in selling any technology, no matter how big the vendor or how attractive the market. No matter how hot the product, over time its margins drop. What changes can you make to ensure your continuing relevance and value-add?
10. Business Strategy: Nothing stays the same. Technology matures, customer needs evolve, markets decline. Sometime we are so busy with the current project challenges we miss the signals about our role in the ecosystem. What big decisions need to be made this year?
Like the windsurfer, successful providers do not have time for abstract models and theory. During the next several weeks, my columns will explore the business performance issues introduced above. While I will describe the context and implications, the emphasis of each column will be on actions and solutions: real-world examples of how to fund, sell, launch, decide and partner for improved performance.
Scott Karren, the "Channel Pro," is chief executive officer of Channel Ventures,
a consulting firm and channel development agency that helps companies build profitable channel businesses. Read his weblog, The Channel Professional.
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