Curing growing pains as the recession subsides

Piers Carey looks at routes to growth for resellers heading out of the downturn

Carey: Make sure you have the right skills to continue helping the customer

We often define our business in conversations with peers by reeling off the vendors with which we do the most business. We judge each other by our vendors and evidence of sales success with those vendors. Success is often based on partnerships with one or two key vendors – picking winners and managing those relationships well.

At our core we are a reseller business. However, resellers can be simply box shifters, a link in the chain which commands a margin to pass on hardware. Where there is no differentiation between reseller X and Y, margins will spiral downwards.

Resellers must not only nurture their vendor partnerships, but build independent, service-based solutions around their products. Many customers couldn’t care less who makes the products but do care whether or not they will deliver on time and if they can get problems resolved quickly.

You then need to make sure you have the right skills to continue helping the customer. A service-based ethos can differentiate you from your competition, even if they are slashing prices.

We rarely get into a "box shifter" discussion as we can easily show value-add to our customers in our integration, configuration, after-sales and maintenance offerings.

Yet how does a company proud of its reseller background monetise the expertise it has developed? It starts with a commitment to support customers and engage with their business challenges.

For our clients, these problems might be associated with improving home worker productivity or a server centralisation project. Become consultants to your customers, advising them and helping them with installation and maintenance issues.

The next move should be to make the services into products as much as possible and broaden your areas of expertise and their associated services. Leasing has proved interesting as it allows for recurring revenue generation.

We think our core business in network performance and optimisation is growing well with a specialist team that continues to go from strength to strength. But we wanted to broaden our portfolio, surrounding the customer with more services. For us, the solution was to buy a company with different areas of expertise.

We now work with many new vendors, introducing new products and services to both our respective customer bases to deliver new network management solutions and have formed a professional services division to further build on our consultancy-led approach.

It is a big change for us. We have integrated five employees into our business and now need to ensure that our first acquisition starts to pay off.

Our advice to any reseller planning for growth in 2010 would be to remember the business basics. If you have an excellent track record in a particular product or service area, do not load up your staff with a heavy portfolio of products too quickly.

Focus initially on building value-added services around your core business to give the offering strength and depth. This makes you more valuable to your customers as a technology partner rather than simply a technology supplier.

Your customers can help you with this transition, so ask what other services they seek. If they are not buying these services from you, why not? Ask them why not. Use this feedback to shape your expansion plan. Do you need more technical capacity, new expertise or a consultancy-led sales approach?

Once you have surrounded your core offering with service and consultancy, you are ready to consider diversification for growth – broadening your portfolio.

We did not want to disrupt our core business, so acquisition was the right route. With the recession hopefully easing, now is the time to plan and act for future growth so think about what you need to do first.

Piers Carey is chief executive officer at Teneo