Know your customer. As business maxims go, it is hard to imagine anything more sacred. And it is a maxim that distributor Alternative Technology Inc. has put into practice in a very real way.
The Denver-based distributor’s CEO, Bill Botti, hails from the ranks of the company’s customer base, the VARs and integrators that sell products and services to end users.
“I know how their business works. I know the key elements that they’re looking at,” said Botti, who is most likely the only former integrator or VAR currently running a distribution company.
Alternative employs about 120 people and has revenue of about $200 million. Prominent in its line card, which leans strongly toward security and infrastructure technologies, are such brands as Citrix Systems Inc., Novell Inc., SonicWall Inc., Wyse Technology Inc. and BlueCoat Systems Inc.
Botti owned an integration company, Futurelink, Irvine, Ca., that he sold in 1999. He took over Alternative about three years ago and has since spearheaded a host of initiatives that have allowed Alternative to distinguish itself among distributors by placing a strong emphasis on value-add.
Such programs include a voucher system that reduces the costs and pain of learning a new technology, a “Follow-the-Wire” solution selling initiative, and help desk and engineering outsourcing services.
When he took over, Botti wanted to make Alternative stand out from the crowd of distributors and make it more responsive to customer needs. He found the answers by looking at the business model of European IT distributors, which wrap their product sales in layers of value-add services.
“We began building a model similar to that here in the United States,” Botti recalled.
Central to the model is the Alternative Advantage Partner Program, which takes a frequent-flyer approach to rewarding VARs and integrators that do a lot of business with the distributor.
The more purchases VARs and integrators make, the more vouchers they accumulate, which they can redeem for other purchases, technology training, consulting, demo equipment or market-development activities.
“A lot of times we use the vouchers to pay for services,” said Glen Holmes, an Alternative customer and Southwest regional vice president at DynTek Systems Inc., in Irvine. “We accumulate vouchers as we buy Citrix product or other products.”
Holmes said DynTek also has used vouchers to offset training costs and the distributor’s outsourcing services.
The outsourcing services come in handy when a VAR or integrator has a customer engagement for which it lacks the necessary on-staff skills to see it through. Rather than pass on the opportunity, the VAR or integrator can contract systems engineers from Alternative for the job.
Botti said the voucher system is instrumental in opening up new technology opportunities to Alternative’s customers. VARs and integrators can use the vouchers to train their staffs on a product line they do not yet represent.
“We effectively have removed, through your purchase of other products, your cost of entry into a new technology,” Botti said. “At the end of the day, we’ve allowed you to put on a set of training wheels.”
Alternative’s programs are designed with an eye to increasing the profitability of its VARs and integrators.
Boosting profit margins sometimes requires a change in thinking, one that Alternative seeks to address through its “Follow-the-Wire” program. The idea is to think of a sale not in single-product terms but as a complete solution.
Botti said it could be something as simple as if the customer is buying a desktop or a laptop, why not also suggest buying an APC unit or anything else that is connected by wire to the computer? Another example would be adding anti-virus software and spam filters to a firewall sale, he said.
“VAR sales guys tend to focus on the product and not the solution,” he said.
Another way Alternative helps VARs and integrators boost margins is by enabling them to take advantage of outsourcing help desk and systems engineering services the distributor delivers on behalf of its customers. Round-the-clock help desk service is available, so VARs with small staffs can provide the service to customers whenever they need it.
The distributor even offers services on technology it doesn’t carry. For instance, Alternative is a Microsoft Gold partner, even thought it doesn’t sell the vendor’s products.
Botti said Alternative’s line card features about 35 vendors, and he wants to keep it limited. “As we add lines, we will very likely continue to drop lines at the same time,” he said.
High-growth technologies such as security will remain the focus, he said.
“The security space is the single fastest growing segment in the industry, and likewise at Alternative,” he said.
To help VARs seize security opportunities, Alternative has built a regulatory compliance practice that offers them a consultative approach to security solutions and assessment services.
The distributor also holds a General Services Administration contract through which VARs and integrators can qualify to do business with government agencies. Recently, Alternative added security vendor Vericept Corp. and mobility solutions vendor SonicWall to the GSA schedule, which means the vendors agreed to certain conditions and pricing required to sell into that customer base.