Partners, Resellers and VARs are Hero's

Partners, Resellers and VARs, let's just use Partner, are an essential and important part of the Channel.  They are the glue that brings what a Manufacturer has to the End User, installs it, and keeps it running.  They often are the consultant to an End User who is lost in the world of IT.  All the End User wants is for their systems to work just like their car.  They don't need to know the mechanical engineering that's going on in the engine.  They just want to sit down at their desk, turn on the computer, and see it work.

Partners have evolved with the Channel over the last 25 years.  They've had to change with the market, become smarter and more competitive.  Most End Users are more informed about what computers do for them and have basic knowledge of different types of applications for office use.  But more complexity have come into play with Storage, Virtualization, Disaster Recover and Converged Infrastructure.  These have replaced common terms like CPU, memory and hard drive. Customers can look up most of this stuff on the Internet these days.  But, if you asked most Customers to explain how Virtualization works they would be at a loss.  Thus our hero arrives, the Partner.

I've worked with Partners who focus on one specific market offering as well as with those who carry everything you need and if they don't have it, will get it for you as long as they can make a dollar.  Some Partners will only provide service like installing cables for your network or just break fix.  There is one Partner here in San Diego who has built a nice solid company on break fix of products.  They service in Southern CA and have 10 people in the company.  Nice little business that brings in $2 or $3 million a year.  Another local company has a national reach with offices across the US.  They work with large global organizations, government (federal and state) as well as smaller mom and pop shops and they do it well.  They have sales numbering in the $700M to $800M and over 500 people working for them.

If a Manufacturer and or Distributor wants a Partner to purchase their products and resell them, then the Partner is going to ask, what's in it for me?  It might be the best price for one item or a whole solution.  Maybe it's training and certification or additional marketing funds to promote their business and find new customers.  The best approach, I found, it to first understand their business model, market, corporate structure, customers and goals.  This may take some digging but once you've answered these questions, it becomes easier to show them the value in your product or offering.  I use Question Based Selling (QBS) as my sales methodology (see link here or on the right).  If you are struggling with building re pore in your sales and meeting quota, QBS can provide help.  Standardizing on a methodology is a must.

Margin is a key part in this equation.  If a Partner only make 5 points in a deal and their overhead is 6, they've lost money. (thus why you need to understand their business model)  Your product might bring in great margin but if they don't know how to pitch it to a potential customer they won't sell it.  You might have to provide training and go on a few calls with the Partner account representatives to get the ball rolling.  Great, they've made a sale but are their technical people capable of installing it and maintaining it?   As you can see there is a lot of parts to getting into the Partner market but it does put a lot more feet on the street driving your offering.  Like any model, you have to have money and resources to make money.

Determining which Partner market to go after is hard.  There are generalists in the US alone which numbers in the 30,000 or more.  That's a lot of opportunity but getting your foot in the door is a challenge.  Do you go out and knock on all of them with your own staff or do you look for help.  This is where distribution might be an option.  They have a staff that is managing Partner accounts already.  But, there will be a cost plus it has to have a compelling story.  $2 items won't get it.  If it helps compliment a virtualization install reducing ramp up time from days down to minutes, you've most likely got their attention.

Will you sell direct?  Years ago when Dell hit the market they upset the apple cart and started to sell computers directly to End Users both at home and in the commercial market.  IBM, HP and others scrambled to fight this be selling direct as well which created a lot of ripples of unhappiness in the Partner and Distributor part of the Channel equation.  To Partners it looked as though the big manufacturers where taking business away from them.  Eventually things settled down and programs where created to make this one of many ways to market that all could benefit from.  As an example partners could recommend a product from a specific manufacturer to an End User and have the End User buy it direct adding the Partner name and ID number to the order.  Then the manufacturer would provide a commission to the Partner.   

There is good and bad for the Partner when End Users buy direct.  Good, because they don't have to carry inventory or tie up their credit line.  Bad because those commissions are smaller than the over all sale, obviously, and thus sales numbers are small (no inventory no sale).  How do you grow your business and credit if you can't show sales?  Banks won't give you credit or loans if you can't show business growth.  Plus the Manufacturer will give less product sales credit to the Partner who uses this model compared to one who uses Distribution.  Example: if one Partners sells $100,000 of computer hardware using Distribution and another only receives commission on the same amount, the Manufacturer may only credit the commissioned Partner for $7,000 in sales (using a 7 % margin).  End of the year comes and the Manufacturer looks at the total sales of each Partner.  One Partner has $100k and another only $7K.  Who do you think they might want to work more with. Each Manufacturer has their own program and I highly recommend that a Partner completely know these types of details or call in an expert to assist.

But the real secret sauce for Partners is how they bring all the elements together for an End User.  As I mentioned earlier, they have evolved over the years.  Selling just a computer won't pay the bills.  Partners need to install it, maintain it and bring additional value as well.  A foot in the door with an End User might be with a project to replace an aging sever farm of 4 systems.  That partner, if they are smart, is going to take a look at what the End User has, what might replace existing units with but also how to improve that End Users other business elements.  Can he reduce costs, help them go green or free up employee time. Lets say the End User creates a lot of paper that has to then manually be entered into a system.  The Partner might recommend some options to help reduce that paperwork and process with a Multifunction Device and software from a company like InfoDynamics.  InfoDynamics has several solutions that extra detail from those documents and stores them for easy retrieval later.  This frees someone or possible several people's time at the End User to focus on other elements of the business thus saving them money.  To me, this is the true meaning of Value Added Reseller (VAR) another name for Partner.

Again, I hope that I've added some ideas and knowledge to the hero's of the computer world as I refer to them.  They have been the bread and butter of my career.  Many have been fantastic business partners and still others turned into great friends as well.  Big or small I love them all.