You are entering med school and trying to decide your area
of specialization. Do you go dermatology, hematology, oncology, orthopedics, pediatrics…or
do you get on the track to become a family practitioner or internist? We all
know that the specialist can charge more. But the internist is probably going
to have a greater following and be able to charge more too.
So why specialize?
As the IT market continues to mature, the idea of access to
technology “specialists” is becoming more attractive to both solution providers
and IT vendors. Partners want to differentiate and drive higher-margin sales
and services. Vendors want to drive end-user satisfaction through deeper
partner competency and use partner-led selling to penetrate new markets.
In Amazon Consulting’s recent channel study, “How Special
are Specializations?” 400 solution providers and 40 IT vendors were surveyed to
gain insights around why channel specialization programs matter. Today nearly
half of the solution provider survey participants already hold between 3-5
specializations with their top four strategic IT vendors. Most solution
providers we talked to did perceive specializations as an effective way to
differentiate their business. The question is, how do you assess if a
specialization is worth your investment?
When it comes to desired value from specializations, there’s
some alignment between vendor and solution provider needs. Vendors have a
higher priority around building partner skills and loyalty, followed third by
higher profitability. Of course, partners want higher profits first, then
they’re interested in deeper training and better sales teaming with vendors’
direct teams. It was interesting to see that the benefits of marketing support including
vendor leads were ranked much lower by solution providers, and they seem to
care least about overall program benefits and tiers.
Specializations’ promise of profitability and market
differentiation are there, but the investment appetite and risk levels of
today’s solution provider is not what it was in years past. More than half of
the solution providers we interviewed said they had at one point considered
getting a specialization but decided not to.
For partners with less than $5 million in annual revenues that abandonment
rate was even higher at 63 percent.
Outside of the two most common reasons: too expensive and
too much time commitment, we hear from smaller partners that there is too large
a commitment in terms of number of staff for training. Oftentimes, this cost issue relates to
technical training, which cannot be done online and may include lab work and/or
live presentations. Despite these barriers, partners seem to be getting sufficient
differentiation when they do invest since increased market
differentiation was ranked as the lowest barrier.
So why get
Solution providers who specialize become strategic partners
for vendors who need to expand into new markets or accelerate their selling
activity in some way. Through
specialization, partners establish their focus and credibility in the minds of
the vendor’s direct salespeople which fosters more trust and better sales
teaming. It’s a great way to boost mindshare with the vendor and gain the teaming
support needed to close deals with the vendor at your side. When vendors need
to lean on partners during new market expansions, having a core team of
solution providers to do important pre-sales work or help provide professional
skills delivery is extremely valuable. This is especially true when the vendor
is trying to reserve their own direct Professional Services teams for their
largest, most strategic accounts.
For solution providers, specialization makes sense when
their key vendors’ product portfolio gets too big to have basic product
training and certification alone. Specializations give solution providers the
differentiation to propel through tough economic times by helping drive
revenue, profit and net new customers. In addition, when channel conflict among
partner segments becomes a problem, specialization helps to boost partners into
a higher level, attracting more vendor marketing support and funding and providing
better sales teaming.
So, whether investing in a program to gain vertical market
expertise, service delivery proficiency or technology solution skills, solution
providers need to get the most out of their specialization status. Here are
Track all your specialization investments and ROI carefully
Be clear about program requirements and benefits well before
sending that first person to training
Ensure specializations fits into your longer-term marketing
and competitive strategy
Demand special treatment from vendor partners in the
field. Fight for your unfair share of
their attention and support.
Crank up the marketing to get the full leverage out of your
To learn more about Amazon Consulting’s “How Special are Specializations?” research
study, click here.