When the Going Gets Rough, VARs Fire Vendors

Posted 2013-05-20 Email Print this article Print
 
 
 
 
 
 
 
Business troubles

Lack of trust, poor service and support, and channel conflict spurred one in four resellers to end relationships with a vendor during the past year.

By Ericka Chickowski

How often do value-added resellers really get what they need from their vendor partners? For 25 percent of VARs during the past year, not often enough. According to a new survey conducted by Enterasys Networks, approximately one in four partners reported that they've had to fire one of their vendors within the last 12 months.

The survey is based on interviews with 170 VARs from around the world. Among all respondents, the top challenge associated with vendors was the lack of leads produced by vendors to help the sales cycle—a stumbling block named by nearly 43 percent of VARs. Additionally, another third of partners reported channel conflict and an excessive number of competitive resellers as a challenge, while just more than 31 percent said poor service and support stand in the way of good vendor relationships.

Approximately 30 percent of resellers said that their vendors didn't provide them with enough return on investment (ROI) for their efforts, and 28 percent said vendors don't understand their business.

According to Bob Noel, director, global channel and field marketing for Enterasys, the shift by resellers to position themselves as solution providers in order to make up for diminishing hardware margins is causing them to turn the screws on their vendors for higher levels of support throughout the entire sales cycle.

"[Resellers] need to thoroughly understand their customers' business and challenges to be able to add value," he said. "To provide a higher level of support to their customers, resellers need to be able to depend on strong support from their vendors. This could leave many mature and emerging technology manufacturers out in the cold, as the resellers fill their dance cards with only the strongest players."

Noel's observation tracks with others seen recently across the industry. Last fall, professional group CompTIA reported that at least half of all resellers currently offer some form of managed services. It's an expensive transition, and CompTIA reports that 51 percent have got to retrain staff, 50 percent must retrain technical staff and 50 percent have to restructure their sales compensation models. This kind of business transformation can spur internal changes, as well as adjustments to existing partnerships.

"In an environment where technology, business models and market conditions are shifting simultaneously, partnerships are under close scrutiny from the channel and vendors," Noel said. "Both are evaluating current and potential partnerships. Those relationships that make sense are nurtured, and those that don't are being terminated."

According to the Enterasys survey, U.S. VARs are even more demanding than worldwide resellers, with 33 percent of them reporting that they'd fired at least one vendor over the past year. Among global resellers that have fired partners, just under 49 percent said it was due to lack of trust, while 36 percent noted it was due to poor service and 27 percent said it was due to the vendor not sharing business goals or go-to-market plans with them.

Ericka Chickowski, a Channel Insider contributing writer, specializes in technology and the channel.

 
 
 
 
 
 
 
 
 
 

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