Would You Give A Manufacturer More Sales For More Training?

As predicted, the push by suppliers into the service space over the past few years is doing more to drive down service margins than any other single factor.

The margin erosion is greatest, of course, in larger deployments where the competition is the fiercest due to the perceived gain for the winner.

But with the midmarket continuing to be a significant focus for companies like IBM, Hewlett-Packard and others that see that arena as having the greatest growth potential, service margins will continue to decline.

Luckily for all of us, these multinational behemoths are incapable of servicing the small-business market. When they do try, they do it so poorly that they actually create more business for the channel.

What would be best for the channel right now is for growth in the enterprise to push beyond the 2 percent to 4 percent we're seeing now. Then most of the manufacturers involved in midmarket services would jump ship and chase the enterprise business.

Since that's not likely to happen in the next year, solution providers need to be prepared for continued pressure in the midmarket. There are a few steps I believe the channel can take to improve its success here.

Increasing your training and expertise is important. I'm not specifically talking about technical expertise, although that will always be important. But it's also essential to acquire more know-how in nontechnical areas to be able to apply technology to more business processes.

This is an area where manufacturers are not going to help you. They will say they want a well-educated channel, but I guarantee that not a single major manufacturer is willing to do what it takes to make it happen. This is particularly true of hardware-focused manufacturers including Cisco, IBM, HP and Sun. Unless a solution provider can show how nontechnical training is going to directly correlate to sales of the manufacturers' products, they are not interested.

Thankfully, most channel players are entrepreneurs themselves. They can look at technology and see applications that manufacturer bureaucrats fail to spot.

We are heading into a period where the ability to change a customer's business process through technology application is a powerful selling tool. More training in the intricacies of vertical markets and best practices in those markets will benefit the sales process. But paying for the training is a challenge.

Solution providers need to force a discussion on this with manufacturers. The next time a vendor asks how they can help you, stop asking for those lousy sales leads and tell them you want them to pay for more nontechnical training.

Manufacturers ought to bring forth programs that will pony up for this training and, in return, potentially ask for a larger percentage of the solution provider's business.

In the end, there are short-term and long-term investments. Very few manufacturers are willing to make farsighted investments in the channel because executive compensation requires a quick return.

But solution providers would be better served by access to training than access to poor lead-generation programs. Money is available to accomplish this and ultimately drive more sales; it's just being spent in places that are not performing but are more easily measured, and no one is willing to change.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].