VAR Group Finds Partnering Makes Sense

A fast-growing group of Southern California VARs banded together last year to increase their buying power and clout with vendors.

By acting as a unit, the VARs concluded they would be more likely to get a vendor’s attention when necessary while qualifying for the volume discounts that elude the smallest VARs, those who focus on customers with fewer than 50 seats.

In the process of boosting their clout with vendors, however, the Small and Medium Business Technology Network, based in Pasadena, Calif., got wise to another benefit of working together—partnering.

It’s a common theme these days in the channel: Again and again, VARs that come in contact with each other are finding that often they have more reasons to work together in winning customer business than trying to outdo each other in securing contracts.

As they got comfortable with each other, SMBTN VARs quickly discovered they could learn a lot from other group members about business strategy and customer retention. And as long as they were sharing that much about their own businesses, why not find ways to collaborate?

So they did. SMBTN members can enter informal agreements through which they share customers on a 70/30 arrangement. One VAR sells a service and bills the customer for 30 percent while the provider of the service receives 70 percent.

As thousands of other smart VARs across the channel have discovered, partnering makes a lot of sense. Partnerships with other VARs contribute to the bottom line and are instrumental in customer retention.

The reason is simple: If a VAR can’t provide a technical skill a customer needs or service the customer in a certain geographical location, the customer is going to look elsewhere.

Rather than letting that happen, smart VARs turn to a partner that can either provide the technical skill or the required geographic presence.

Jim Locke, president of J.W. Locke and Associates LLC, one of the founders of SMBTN, told The Channel Insider he will earn an extra $100,000 this year as a result of one of these partnerships.

“I took on a client I didn’t have the bandwidth to handle,” he said, “but I didn’t want to turn down the business. So I asked for some help, and I got it. I do the billing, and I pay my partner.”

SMBTN has grown to about 250 members, mostly in Southern California, though the group is expanding into other states, such as Florida and Virginia.

The group uses its clout to negotiate discounts with vendors, gain access to executives and provide vendor training to members at locations of its choosing. Vendors send instructors to SMBTN locations and on the group’s terms.

Nothing that SMBTN is doing is truly groundbreaking. After all, the ASCII Group Inc. has been in business for two decades, and its mission is similar to that of the SMBTN—to provide members with the increased buying power of a large group.

In addition, the ASCII Group encourages alliances between members, as does the IT trade association CompTIA.

Distributors Ingram Micro Inc. and Tech Data Corp. also promote partnering among their VARs, integrators and service providers.

And the increasing popularity of managed services, through which providers take over some or all of their customers’ IT functions, is creating a lot of partnering opportunities. Partners with different skills often team up to deliver managed services to customers.

With so many examples from which to learn, the SMBTN certainly doesn’t have to reinvent the wheel. But by employing a lot of the same strategies and practices that other successful groups have perfected, the small rag-tag Southern California group may well grow into a nationwide force to reckon with.

And that will largely be a result of the group’s foresight in promoting partnering.

Pedro Pereira is a contributing editor for The Channel Insider. He covered the channel from 1996 to 2001, took a break, and now he’s back. He can be reached at ppereira@ziffdavis.com.