A Failure to Communicate

As we head into the second half of 2006 it seems an appropriate time to reassess how solution providers are feeling about their business, especially given that the second quarter offered a pretty tough selling environment.

A survey of over 1,000 solution providers conducted by CompTIA, an association for solution providers that is hosting its Breakaway event the week of July 31, found that the highest number of the solution providers—46 percent—are reporting their companies saw modest income and revenue growth and that 51 percent of those surveyed said they expect this level of modest growth to continue for the next 12 months.

In contrast, 20 percent said they saw significant growth, while 27 percent said they expected to see significant growth in the next 12 months.

Another 34 percent said business was either flat to down, while 22 percent said they expected this trend to continue for the next 12 months.

Overall, that paints a pretty solid case for optimism going forward. In fact, 47 percent of those surveyed said they have increased new customer acquisition activities in the past 12 months and 43 percent said they have expanded into new markets.

Looking forward to the next 12 months, 53 percent said they plan to expand into new markets while 48 percent said they would increase new customer acquisition activities.

Given the fact that vendors are always lecturing solution providers about increasing demand generation, these numbers are all positive signs.

But within the survey, there are some other telling numbers that vendors should pay attention to if they want to maintain any semblance of credibility when it comes to demand generation.

When asked about what partner programs they participate in, 50 percent said they participate in seminars and 51 percent said they use vendor portal sites.

But here’s where the numbers start to drop off the cliff. Only 43 percent said they participate in rebate programs; Forty-two percent said they sign up for incentive programs; Thirty-seven percent make use of lead generation programs; Thirty-two percent make use of market development funds; and twenty-seven percent use co-op dollars.

Turning those numbers on their head would suggest that 57 percent don’t participate in rebate programs, and 58 percent don’t sign up for incentive programs. Also, 63 percent don’t make use of lead generation programs, 68 percent don’t use MDF dollars and 73 percent don’t make use of co-op dollars.

Given the fact that these types of programs are the heart and soul of most channel programs, this would suggest that there is a major disconnect in the channel between vendors and solution providers.

Assuming that most vendors actually want solution providers to fully participate in their programs, these numbers suggest that most solution providers are finding that vendor channel programs are either too dense to fathom or too laborious to deal with.

In fact, when you get right down to it, most vendors have managed to create overly complicated programs that hide the real value they are trying to bring to solution providers.

Most of this has happened because of the administrative overhead that has been created to make sure channel programs are not abused, but doing so only serves to choke the life out of the program.

At the end of the day, all any solution provider wants is a vendor that is easy to do business with at a reasonable margin. Anything vendors add on top of that equation ultimately detracts from the real value proposition of the channel.