A bad deal from vendors

Vendors be warned: Drop your VAR in it once and you'll have a really upset partner. Do it twice and they'll be signing up with your competition.

What is it about vendors? They are always going on about their commitment to the channel, how they will help create demand, and how vital it is to co-call our customers to 'help' close deals.

A continual theme heard at conferences is how good vendors are at ruining sales, letting other value-added resellers (VARs) in on them, or worse, squeezing margin by giving unilateral discounts and expecting the VAR to pay.

The biggest benefit VARs bring to the vendor is loyal repeat business. The main reason they deal with us is our customer base.

Introducing a 'favoured' VAR to the deal just before it drops with supported pricing is a favourite: "Well, he helped me out last month moving some stock; we went to school together."

When will they learn? If it's a long-standing customer, you are not going to shift the business and you'll end up annoying everyone: the end-user, the VAR and your boss, who has to take the flak from all sides.

Another classic is pricing, especially with US vendors. If you're dealing with a blue-chip multinational, the vendor's US sales people go berserk.

They have to have this name on their customer list. They drop their pants on price, offering worldwide discounts, and in the process they often foul things up not only for the VAR, but also for their own sales people.

I know of a $3m (£1.7m) City deal where the UK VAR and the vendor's salesman were dropped in it when the vendor took the deal direct in New York.

It resulted in the vendor losing a good VAR, the salesman (who was ahead of target) resigning in disgust, and the vendor making less money than if it had sold through the VAR.

What really boils my blood, though, is 'preferred' pricing. After offering the customer a special deal, vendors expect the VAR to supply the product at that price while still having to buy from the vendor at normal pricing.

Vendors, trust your channel to know their customer, and remember that it is their customer.

Listen to what they're saying, especially when crunch time is approaching.

And if you're going to drop your price, be prepared to pay for it yourself if you haven't got the good manners to involve the VAR in the decision.

Drop your VAR in it once and you'll have a really upset partner; do it twice and, if they're any good, the VAR will be signing up with your competition.

Mark O'Hara is managing director of Hydra.