VARs have been giving away much of their value for little or nothing, just to make the deal, and it’s time they started charging, CompTIA officials told Channel Insider.
For too long VARs have included implementation, setup, user training and other services as part of deals just to make the sale. But as hardware and software margins continue to erode or disappear to other sources, the channel needs to consider charging customers for these extras.
“There are plenty of valuable things VARs give away just to get the business, that clients are perfectly willing to pay for,” said John Venator, president of the Computing Technology Industry Association, headquartered in Oakbrook Terrace, Ill. “That’s where the sweet spot in the market is for VARs. That’s where opportunity is.”
“Some resellers have figured this out and they can go so far as to send customers elsewhere to buy the hardware or use distributors as a drop-ship and then ‘let me service it,’” Venator said. “Those who haven’t gotten [this idea], even with increased sales, are going to see their profitability diminish.”
CompTIA’s Breakaway reseller conference Aug. 2 to 4 in Orlando, Fla., is crafted to send this message to VARs, with courses, seminars and keynotes designed to provide guidance on how to make it happen, representatives of the industry association told The Channel Insider in a preview of the event.
The organization will also unveil the results of a months-long study by itself and TNS Prognostics on channel opportunity. Among other things, the study highlights what CompTIA called a “gap” between VAR activity and customer interest. For example, most businesses owners have very little interest in VOIP (voice over IP), despite a rush of VARs entering the field, said Steve Ostrowski, CompTIA’s corporate public relations manager.
The solution sale, as opposed to the product sale, has been the rallying cry of the industry for several years, but most VARs still make products about 50 percent of their business, said Brett Martin of Lexar, a member of the Breakaway advisory board. Lexar is based in Fremont, Calif.
“People think deployment is services,” Martin said, “but it’s just one small portion. If you install a Lexar drive, now suddenly the customer needs a discussion on end-point security, there are other products and services that need to be bundled, they need to be trained. Without that the deployment is unsuccessful.”
“Ultimately, services push product,” he said.
Among the biggest opportunities and challenges for VARs are training and education, Ostrowski said.
“Customers are very willing to buy training and education from VARs, but less than 40 percent offer it in any way,” Ostrowski said. “It’s a great opportunity, but it takes not just a willingness to do it. You have to have people who can actually instruct. It’s not just a case of taking existing service people and turning them into trainers. One VAR found the answer in a local community college.”
Other questions such as how to sell it and how to compensate salespeople for such sales will also be covered in educational sessions at Breakaway, he said.
The curriculum at Breakaway is to be focused more on the business end of the channel and less on the technical, where VAR business owners (who make up the bulk of attendees) are more confident, executives said.
“Historically, if you understand how many got into the business, they had technical skills they started selling,” Venator said. “Whenever I talk to VARs, they say the area they are most challenged in is how to hire skill sets, the need [to provide incentives for] the sales staff, salary ranges for techs, things like that. Many of them have booming businesses and they don’t know how to take it to the next stage.”