Hey Mr Tallyman

Trying to measure how many dealers there are in the UK is like painting the Forth Road Bridge - by the time you're done, you have to start again. But that may change with Microsoft's profile scheme.

There is little doubt that the UK channel is big business. In fact,ting the Forth Road Bridge - by the time you're done, you have to start again. But that may change with Microsoft's profile scheme. research firm Romtec claims that about £10 billion sales go through PC dealers in the UK each year. But there is one area of great confusion - no one knows how many PC dealers there are.

The problem in trying to measure how many dealers there are in the UK is two-fold. At the low end, small dealers appear and disappear quickly.

The second problem is defining a dealer or reseller. The broader the definition, the more dealers one will find.

Romtec's database lists 5,500 separate dealers in the UK - a figure the research firm claims is closer to 7,000. Romtec defines a dealer as a company that has resold product in the last year, and in which the act of reselling accounts for 10 per cent or more of its turnover.

Distributors also hold large dealer lists, the largest of which (Computer 2000, formerly known as Frontline) claims to have 9,000 dealers on its sales database. Then there are PC trade titles like PC Dealer, for instance, which has a circulation of over 11,000.

Until recently, manufacturers had not got involved with trying to measure the size of the channel in the UK. Analysts liken it to a moving target - virtually impossible to measure. But since last September, Microsoft has been undertaking the largest ever review of the UK channel. With the help of specialist telemarketing firm Merchants Group, Microsoft is trying to contact - first by phone then via email - up to 25,000 unique channel organisations in the UK.

This polling exercise takes the widest possible definition of a reseller.

Microsoft uses the term value-added provider to define a population that comprises an estimated 8,000 pure resellers, 6,000 PC assemblers, 4,000 service companies plus independent retailers.

The reason why Microsoft is undertaking this massive task - which it is doing unilaterally and not in conjunction with its distributors - is its belief that many small dealers were being ignored by manufacturers, itself included. As a consequence, these small dealers were lacking the skills needed to sell increasingly sophisticated products. So Microsoft introduced its NetResults channel skilling programme, aiming to get small resellers to train up technical staff with distance learning packs.

The next step for Microsoft - in a bid to get a dealer base that would have the skills to sell and support product - was its Direct Access marketing programme. This involves Microsoft corresponding directly with its smaller dealers, offering them further skills training and sales promotions, particularly tailored to products like Small Business Server. Microsoft concluded that the best people to sell to small businesses in the UK were small UK dealers.

The problem was that until Microsoft started the channel profiling exercise it had no idea who these small dealers were or how to get to them. The situation became more complex when Microsoft vice president Steve Ballmer visited the UK in 1996, declaring that he believed the estimate for the number of dealers in the UK was too low - 20,000. He felt the figure should be closer to 30,000, given the size of the UK customer base. It was time for Microsoft UK to act.

'We made a decision to build a comprehensive database of dealers in the UK,' says Microsoft small business customer unit manager Joe Macri. 'About 65 per cent of the data we used was Microsoft legacy data - including its 8,000 dealer Microsoft sales records - acquired by pulling various databases together. Thirty five per cent of the records were sourced specifically for the project by buying lists from Romtec and Yellow Pages.' This gave Microsoft a dealer population of 40,000, which obviously included some duplication. The Merchants Group call centre - using 30 operators - has set out to contact these dealers.

'They are calling on behalf of Microsoft,' says Macri. 'But these are not only dealers that have dealt with Microsoft before, we want to profile the whole UK dealer population.' Dealers are asked for basic contact and customer details and asked whether they would like to receive regularly updated information from Microsoft. 'We have contacted 16,000 organisations so far,' says Macri, 'and believe we will get up to 25,000.'

Of the 16,000 dealers already polled, 11,500 have given Microsoft permission to contact then again by sending push email. 'The internet is a cost-effective way to contact large numbers of dealers,' Macri says.

The obvious problem for Microsoft is that the database is likely to be out-of-date before it is finished. 'We will keep the majority of records current because dealers responding to our offers will have to update their records,' he says.

Macri agrees that some dealers will drop off the list on their own, but says they are probably not the ones that Microsoft is interested in anyway.

Jinty Weldon, director of database solutions at Romtec, says Microsoft has taken a broad definition of a reseller in order to engage with the maximum number of companies. 'Microsoft has chosen a broad definition of what a reseller is, ours is a much tighter definition,' she says. Hence, the lower number.

Romtec has recently increased the size of its own dealer database by 500 dealers to 5,500, a sample that it polls once every six months on an ongoing basis to build a picture of the size and health of the channel.

'The dealer population is growing,' she says 'and fewer dealer are going out of business.' According to Weldon, three years ago Romtec was deleting up to 80 dealers a month from its database, now it is deleting 50 a month and the dealer population is on the increase.

Romtec covers about 75 per cent of the UK's dealers, but says it would be impossible to increase coverage to 100 per cent because of the problem in pinning down the smallest dealers. 'A database of total dealers will never be achieved,' says Weldon. 'By the time it's finished it would be out-of-date.'

Despite this, she says the Microsoft initiative is a good attempt at profiling the dealer population. 'Microsoft is the only manufacturer that could have done this,' says Weldon. 'Nearly everyone uses its products.'

One other hurdle for Microsoft to overcome in terms of trying to get a snapshot of who sells its products is that the definition of a reseller - and any organisation polled in the survey - has to be a company. Microsoft claims there are up to 60,000 self-employed, freelance IT consultants working in the UK, many of whom will have - at one time or another - resold product to the company they are consulting for. This massive army of contractors is largely invisible and does not appear on any of surveys, but they are responsible for delivering Microsoft product into the channel.

Nigel Judd, director of marketing services at distributor Ingram Micro, says the Microsoft channel poll is interesting, but that distributors are less interested in the numbers of resellers and more interested in the volumes they do. 'We think 8,000 is about right for the number of pure resellers, but it's not the number of resellers in the UK that is important, it's the volumes that they are doing. On its own, the total reseller population in the UK is not that useful,' he says.

Judd says the majority of Ingram's sales - as with other distributors - will come from a relatively small number of resellers, which are more important for them to identify. 'But we do want to deal with as many resellers as possible,' he says.

Ingram has about 7,000 active resellers, plus another 2,000 to 3,000 resellers it would like to target. There is massive cross-over and the danger of double-counting between large distributor resellers.

In practice, dealers will almost always go to more than one distributor.

Microsoft has tried to give the figures it is getting some value add, for instance, by getting the targeted reseller to list information such as number of sales staff and by banding so that it could segment the list further in the future.

The other interesting information for Microsoft, and its drive for the poll, is to try and find out whether these dealers are selling to local small businesses - the so-called Trading Estate UK customers - that Microsoft describes as 'the jewel in the crown'.

Weldon agrees that the Microsoft strategy of putting the same amount of effort into getting information on the smallest reseller as into getting information into larger resellers could cause problems in the future.

'In the long term, it should dedicate its effort not only in acquiring records on massive numbers of resellers, but in examining how useful those contacts are.'

The dealer market is continuing to splinter, with a small number of super resellers that are growing in size through mergers and acquisitions taking a larger share of sales.

Weldon says it would make sense for Microsoft to keep very detailed records on, say, the largest 20 per cent of dealers, and fewer records on smaller resellers, linking them more closely to sales. But what Microsoft wants is to use the listed dealers to crack the small business market in the UK - a market that has so far eluded every other manufacturer.

Macri says Microsoft will start by sending generic offers to dealers on the list, but hopes to tailor individual offerings according to what products dealers are interested in.

Microsoft is aware this database is a a potential goldmine - a snapshot of almost all of the organisations that are at the sharp end of selling PC kit in the UK. It says it has no plans to share the records because of the legal restraints of the Data Protection Act, which would make it an offence to pass the data it has gathered on to a third party without the data subjects permission.

'We now have email links to 11,500 dealers in the UK,' says Macri. 'This will enable us to better get our message out to the channel.'

But Microsoft knows that just finding and listing resellers is only half of the battle. 'The primary source of buying advice for the owner/manager of a small business is the local dealer,' says Macri.

'We have managed to locate all of these dealers, but the challenge for us is to achieve an ongoing engagement with them.' Microsoft has done the channel a favour by holding up a mirror to it and showing how large it actually is in the UK. But how well it does in keeping the interest of dealers that it pinpointed depends on Microsoft's continued commitment in helping them sell to their customers.