The news media continues to discuss the impending recession with a financial market crisis, massive sub-prime write offs high energy costs ( oil has crossed the $100 per barrel mark) and a slowing in consumer confidence. With all this dark financial news what should solution providers be doing to ensure they have developed sound strategies for recession proofing their businesses. Having meet so many Executives on my channel courses and trainings I have seen some of them that are very good at Channel Strategies, while others really can’t, and I have to be honest that I have wondered how it is that one can do it, while the other can’t ..…and another thing that interests me is how they do can do their channel strategies consistently good, especially when recession is influencing the channel? So what I’m trying to do in this forum article/discussion is to stimulate your thinking about how to align your different business and Channel strategies especially when recession is influencing the channel.
Solution providers need to be closely examining their existing business models, how they "do" business, and utilize their resources. I believe this introspection or "heads up" time will empower those that take the time to carefully evaluate the market dynamics and their models, in the long run . The result will be a stronger channel that is better positioned for even stronger growth after these turbulent economic times recede. Partners need to be asking themselves questions such as;
• Where/Who are we primarily deriving revenue from?
• Are we demonstrating true value to our customers in our selling proposition?
• What are we selling? What is the mix of products and services? Are we selling them more services and the right services? Hint: the answer should be yes and yes!
• Are we selling products or solutions? Hint: the answer should be solutions
• Are we selling managed services? Hint: the answer should be yes!
• Are we offering our customers leasing and financing? Hint: the answer should be Yes
• Do we have the 'right' vendor relationships? Are they healthy and poised to weather a challenging economic storm?
These are all questions that partners should have been asking all along but unfortunately many have not had to, which has caused additional strain. Meeting monthly payroll, holding inventory, utilizing highly paid resources effectively, providing training and education for staff and keeping day to day operations running smoothly are just a few of the daily challenges for resellers. Layer on top of that the strains of lengthening sales cycles, tighter budgets and being competitive in the marketplace, solution providers must look for consistencies in their business. Relying on a traditional resale and betting on closing deals within the pipeline as the only measure for forecasting business during a recession can be, and one could argue has long been a recipe for disaster. IDC believes the following opportunities for solution providers can provide a level of predictability that partners can reliably build a business upon to weather uncertain economic times.
Managed Services
With growing reliance on the network as a competitive asset and its increasing complexity, partners are having success in selling and providing managed services to their end customers. These offers are not only derived from their own IP, but smaller partners are also leveraging the reselling of third party offers ( such as Ingram Micro's Seismic for SMB partners or Cisco's Powered MSP program for enterprise customers). For channel partners who embrace selling managed services ( I say selling here, because not every partner can build and maintain their own NOC but can provide managed services with third party offers) they will be rewarded with a predictable recurring revenue stream applied to their balance sheets. Aside, from the fixed monthly revenues, offering managed services to end customers also provides partners with a tighter long term customer relationship. They now own the network, and can focus their customers on Recession Proofing the Channel more high value strategic initiatives that are more lucrative. This may be an effective way for partners that are struggling to migrate away from the resale business, to start to change their model as it still allows for the resale of some of the premise equipment and does not require a total re-do of the model. Rather this is a smoother transition. Additionally, customers are feeling the crunch as well and this type of monthly billing may be more palatable to many who are in similar financial situations.
Leasing and Financing
Partners who have expanded their relationships with their customers to include financing and leasing options have done well to create a tighter bond and change their relationships with their customers. Partners move from a cost based conversation to a higher level strategic conversation that does not involve price. Partners who are now having financing discussions or are actively offering leasing and financing options for customers also enjoy the fixed billing that accompanies that offer.
Vendor Relationships
Effectively managing vendor relationships, can be one of the most challenging aspects of a solution providers business. Partners must ensure that not only are they working with suppliers that offer sound technologies that open opportunities, but are also cost effective and profitable to implement and manage. Additionally, partner programs that the suppliers deliver must be compelling, reliable and consistent. A challenge for partners are suppliers that consistently revamp their programs, policies, requirements and compensation that makes it costly for partners to do business with them. This has been a long standing issue for partners but one that really is brought to the forefront in this challenging times. The channel has weathered rocky financial times in the past emerging more innovative and healthier. But one point that always remains a constant with the channel is the value of close relationships that the channel delivers to its end customers. Vendors have also seen the value of these partnerships and have invested in nurturing them therefore, these suppliers would be wise to pay attention to the financial health of their partners and work with them to help them ride through this difficult time.
The subject of how "recession is influencing Channel Sales and our Channel Management" is wide and a lot of different issues and challenges can be discussed in connection with this subject ………and if you want to discuss how you need to react to this new changes, please feel free to contact me mvr@rosenteam.com
Regards your Channel Sales Moderator – Mark
