Strategies for Surviving the Recession

By Lawrence Walsh  |  Print this article Print

Solution providers are not immune to the recession. However, the Channel Insider Market Pulse survey shows solution providers are prepared to weather the economic storm forecast for 2009, and, with a little luck and smart planning, position themselves for growth.

Saying that 2009 will be a tough year for the technology business isn’t news. If the sluggish start of the first half of 2008 wasn’t enough to signal tough times ahead, the Wall Street and financial services collapse of the fall was a clear sign of economic change. Solution providers told Channel Insider in the Market Pulse survey that their customers in the financial services, retail and manufacturing sectors are leading the verticals in cutting IT spending. Additionally, solution providers say they’re seeing the most slow down in business from small (less than 50 employees) and midsized businesses (50 to 250 employees).

Solution providers recognize that they must adapt to the downturned economic conditions, and many are executing on strategic plans to bring them closer to their customers to preserve existing revenues sources while seeking new opportunities to tap new revenue streams.

Nearly one-half of solution providers surveyed for the Market Pulse say that their top business goal for 2009 is improving customer satisfaction and retaining existing customers. The logic is simple: It’s much easier and cost effective to expand sales within an existing customer than it is to acquire a new customer and build a relationship.

But improving customer satisfaction and retention may just be a strategy for sustaining rather than growing business.

Of the solution providers focused on customer satisfaction and retention, most anticipate their profits will remain flat or decrease. The same can be said for survey participants focused on increasing revenue (the second ranked business goal for the year). Solution providers focused on improving quality of service have a higher expectation of profit erosion. Conversely, solution providers focused on increasing market share or profitability have higher expectation of improving profitability in 2009.

Behind these goals are desires for maintaining or improving revenue and profitability. Solution providers are taking a mixed approach of growth and sustainability strategies in reaching their 2009 goals.

For revenue growth, 60 percent of solution providers are squarely set on acquiring and developing net-new customers. Another one-third are expanding their relationships with existing customers. Interestingly, solution providers are not looking to their peer communities for support during the recession. Only 13 percent of survey participants said they would increase sales efforts with their solution provider peer partners or partner with more peers to reach new markets and customers.

Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

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