Ambitious endpoint security vendor ESET talks through its reasoning for switching its resellers to a two-tier channel model
Adding distribution to the channel mix may be a natural step for a growing vendor, but it's also an undertaking that can create friction.
Resellers used to dealing directly with the vendor may harbour concerns about pricing and support. Will they be forced to give away more margin? Will the new distributors really understand their needs?
The newly added distributors, meanwhile, will want reassurances that all legacy one-tier partnerships are quickly severed and that all resellers are buying through them.
Ambitious endpoint protection specialist ESET is one such vendor in the throes of moving from a one- to a two-tier channel model, and its UK sales director Quinton Watts said the process initially led to pushback in some quarters.
Appointed last year, distributors Exertis and Distology will eventually handle all of ESET's 1,200 to 1,300 active monthly UK resellers once their systems are up to speed.
"Resellers currently have the option to choose either us or the distributors," Watts explained.
"We are waiting primarily for the distributors to get the right systems and processes in place to ensure they provide no less a support infrastructure than we have traditionally. That goes across not only technical support and account management, but also license administration and license manipulation.
"Once that's in place and the distributors' systems are aligned with ours, we will then be proactive about moving resellers across."
"If anyone has the expectation that we are going to disappear from the channel and run it all through distribution, that's not the case," - Quinton Watts, ESET
ESET, which was recently ranked as the only ‘Challenger' in the 2018 Gartner Magic Quadrant for endpoint protection, is on a growth charge, with plans to become a top three player in its space, both globally and in the UK.
But its UK growth potential has been held back by its one-tier model, Watts admitted.
Bringing on market giant Exertis and boutique security specialist Distology will not only help it grow its footprint, but will also boost service levels into resellers and end users, Watts claimed.
"It's paramount that our reseller channel - and end users - are well looked after, so we have no intention of stepping away from them with regards to tech support, pre-sales support, account management, market engagement and marketing support," he said. "All those things will remain a key focus of ours, but we will have the additional resource of the distributors to back them up.
"If anyone has the expectation that we are going to disappear from the channel and run it all through distribution, that's not the case."
To back up this point, Watts said ESET is aiming to add another 40 partner-facing staff to its 60-strong UK headcount over the next two years following its move to a bigger office in Bournemouth.
"Our capability to deliver is very high," he said.
"We've got the products, but we've also go the support both in the UK and globally. There is a big infrastructure behind each of the ESET partners that can support any aspect of our business. The target for head office is to be the third-largest across B2B and B2C, both globally and across all the territories."
Pricing improvement
In reductive terms, adding another tier to the channel could be seen as an economic bargain, where the vendor accepts sacrificing a cut in margin in return for reaching a wider audience.
But Watts stressed that resellers will see no change, or in some cases even a small improvement, in their pricing as a result of buying through distribution.
"[An increase in prices] is not a valid point from the reseller's perspective," Watts (pictured) said.
"We will still control and maintain our existing partner programme, which is your typical tiered programme with Gold, Silver and authorised resellers - and they have a set of margins that will be maintained.
"They won't under any circumstances be at a financial disadvantage. Indeed, the converse may be true."
A bigger source of concern has been support levels, Watts admitted.
"The key thing they are asking us is ‘will we have the same access to your pre-sales and your tech support team'? 'Do we still have an account manager'? We will still maintaining the relationship with the resellers though. When we look at the larger ones in the market, we are still expecting to go into their offices, run incentives, write up business plans - alongside the distributors. We are not just going to leave them to the distribution network to handle - we are still building the internal team here and that will be to maintain and improve the support to the reseller network."
He added: "The only hurdle at the moment is the systems. Resellers are asking if they will be able to access their licenses through a portal. Everyone is working very hard on that, and once we've got that in place I can't see there being a disadvantage or any further resistance."
Although ESET is currently dealing with resellers both directly and indirectly, a mixed model is not sustainable, according to Watts.
"You can't engage with distribution and also continue to engage with resellers. The distributors don't like it, the resellers get confused, and it just makes a bit of a mess of the market," he said.
