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12 Aug 2009
Comments:2
Having started Sapphire 14 years ago and worked in the security industry since 1984, I have noted some good, bad and plain ugly practices in the channel.
A couple of years ago, we decided to rationalise our product lines and distribution to focus on a few key products. So we were not about to be seduced by the next new distributor or vendor who came knocking at our door.
However, one company managed to change our mind, but not by battering us into submission or tempting us with the prospect of unachievable revenue.
Instead, it demonstrated a commitment to and understanding of our business and impressed us with its range of security products, which fitted our government, health, legal, criminal justice and utilities customer needs.
What’s more, its knowledge extended beyond the products to an understanding of the issues of our clients, such as government regulations. This level of understanding is so rare among distributors and even many vendors. It encouraged us to evaluate the company's security products for added value.
In my experience, not all distributors or vendors add value. Some do not understand intimately the products they sell. Basic elements of customer service – such as returning calls within a reasonable time – can be notably lacking.
Some persistently demand reports on sales pipelines, forecasts and vast amounts of time and money to train up sales and technical teams even before you are authorised to make a single sale.
These issues and others have prompted us to choose product that is not going through distribution. We do not look to a distributor for after-sales support or to provide a credit line; what we’re after is something more basic – a knowledge and understanding of our business.
There are a few ground rules that vendors and distributors would do well to consider. First, choose your reseller partners carefully. Many vendors and distributors seem to focus on signing up as many resellers as possible.
Most resellers actually want to minimise their number of vendor and distributor partners. Choosing a reseller partner is a bit like choosing a romantic partner – you need to make sure that you have compatible expectations of the relationship before you forge ahead.
Like any good relationship, it is also important to take time getting to know each other. Being based in north-east England as we are, a regular trip by an account manager generally costs significant time and money. Yet this is an important aspect of building a meaningful relationship.
There are ample examples of failed vendor and distributor relationships along the way for us, yet there are distributors out there that can add substantial value.
Some do not pressure you to take on as many of their products as possible, but opt for a long game and invest their time and energy in building the relationship and working alongside us in customer deals to close business.
Be clear about the sort and number of channel partners you’re looking for. Do your homework about your potential channel partners and make sure there is some common ground between your proposition, the market they serve and the sort of business they are.
And even if you’ve done all this, please don’t expect us to jump through a dozen resource-heavy hoops until we’ve both proven that there is some mileage in the relationship.
John Morrison is managing director of Sapphire
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Do you agree?
If only life was so simple...
I also agree with many of John's recommendations and applaud his commitment to relationships. However, there are a few pressures in the system that make it difficult to put into widespread practice.
Firstly, all vendors seek dramatic growth. They either need existing partners to find new customers (which means that Sapphire would encounter some of the challenges currently felt by distribution) or they need to find more partners. Inevitably they press distribution to focus on both and when growth doesn't occur they hold a distribution review. The pressure within distribution for (relatively) quick wins is immense.
Secondly, most senior execs and sales people in vendors and distribution are paid on quarterly targets. Therefore, their standard of living and job security are at risk if they spend too much time developing relationships that might not bear fruit for 12 months, if at all.
And finally, not all resellers share John's commitment to reward Distributors that put effort into the relationship. In my experience, there are too many that hawk deals around distributors or squeeze margins too hard. Lower closure rates and reduced margins force distributors to cut value add, employ fewer overlay experts and focus on internally based sales teams.
There isn't an easy answer I'm afraid but it would be great if more people shared John's vision and loyalty.
Posted by Antony Young, Director, Demuto | 04 Sep 2009
Some Vendors & Distributors
I totally agree with John, basically both vendors & distributors need to keep a flexible approach.
Resellers are the people who are directly in touch with end users/customers so making a close relationship with them is very important both for vendor and distributor.
Posted by Devang Mehta - Business Development eScan | 14 Aug 2009
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