Finding new clients is a high priority for VARs and solution providers even in the best of economic times. In tough times like now, developing new business takes on an even greater sense of urgency. Without a steady stream of new customers, VARs can quickly find themselves in trouble.
Fortunately, there are plenty of steps VARs and solution providers can take to drum up new business among small, midmarket and large companies. Many of these efforts can apply to all the market segments, and all are worth considering at a time when finding new customers is so critical to business success.
VARs are deploying these strategies to actively expand their customer bases, and they note that finding new sources of revenue is a key business objective not only to help weather near-term economic challenges, but for long-term viability.
"New customers are an essential component to the long-term growth and the sustainability of our business," said Steve Johnson, president of Optimus Solutions, an Atlanta-based VAR that markets networking, server, storage and other solutions from vendors including IBM Corp., White Plains, N.Y., Cisco Systems Inc., San Jose, Calif., and Microsoft Corp., Redmond, Wash. "The minute you stop looking for new customers, you're dependent on and#91;existingand#93; customers that could become stagnant," Johnson said.
Tom Sweeney, chairman and CEO of Incentra Solutions Inc., a Boulder, Colo., provider of storage, networking, security and server products and professional services, said creating new ways to find customers was an integral part of the company's three-year business plan, which it put together last fall.
Shortly after that, concerns about the health of the economy began to grow, "and the importance of finding new customers went up considerably. Now it's critical," Sweeney said.
New Customer Focus
One effective way that VARs and solutions providers can find new clients is by creating specialized groups dedicated solely to locating new sources of business.
Each year, Optimus Solutions hires a group of young professionals, fresh from colleges and universities, for a two-year program designed to help the company locate new customers. Optimus recruits the professionals mostly from local business schools in the Atlanta area and puts them on the payroll, with the understanding that they're free to leave the company after the two-year period. Most who join the program end up staying with the company, Johnson said.
As part of the deal, Optimus provides education and training for team members, explaining what the company is trying to accomplish through the teamand#8212;scouting out new customers.
The program launched seven years ago and has been a huge success. The team generated about $10 million worth of business for Optimus in 2007, Johnson said. "The vendors love it; these and#91;team membersand#93; are the brightest and most competitive folks."
Other VARs have also had success in having new business development specialists work with their sales forces. Artech Information Systems LLC, a Cedar Knolls, N.J., company that provides IT staff augmentation and consulting, project management and business process outsourcing services for commercial and government clients, formed a New Business Development team that's charged with reaching out to customer prospects.
The team simultaneously supports Artech sales personnel who also make new contacts and try to attract new business. "This ties non-centralized sales efforts to centralized New Business Development management, ensuring a cohesive effort and guidance for further engaging each prospect," said Antonio Carrion, marketing and communications manager at Artech.
Next: Networking For Success
Networking For Success
Getting out into world and meeting prospective customers is an age-old way to find new customers. But VARs who are successful at expanding their business say they're continually looking for new groups to join or events to attend where they might find new sources of revenue for the business.
Optimus views each of its sales reps as an entrepreneur, and encourages them to go out and network to find prospective customers, Johnson said. The company has memberships in chambers of commerce, technology organizations and business groups. And while face-to-face meetings are considered the most effective ways to win new business, the company also urges reps to take advantage of business social networking sites such as LinkedIn and to use other online collaborative technologies.
"In our world today you can network 24x7; we try to instill this in our young people," Johnson said.
Incentra also emphasizes joining industry organizations on a regional and national basis in large part to meet prospective new customers. For example, the company recently became a member of the Colorado Software Industry Association, and belongs to other organizations such as the International Legal Technology Association, various OEM User groups (Oracle, Microsoft, Salesforce.com) and multiple chambers of commerce.
Some VARs meet new prospects through associations that aren't directly related to technology. Carrion said Artech is certified by both the National Minority Supplier Diversity Council and the Women's Business Enterprise National Council. "These organizations host networking events that have a good supplier/procurement mix," he said. "Although capitalizing on these events requires a significant amount of follow-up work, and the sales cycles are long, the long-term benefits are significant."
FusionStorm, a San Francisco-based provider of storage, networking, IP telephony and other technology solutions, draws many of its new clients from the technology events it puts on across the country nearly every week, said Josh Krasnegor, vice president of marketing.
PC Universe Inc., a Boca Raton, Fla., reseller of computers, peripherals, and software, invites prospective customers to local sporting events such as hockey games and entertainment events such as concerts, said Gary Stern, CEO and cofounder. "This has gotten us a lot of new business," Stern said.
New Technologies/New Markets
New and emerging technologies also present VARs with opportunities to expand their customer bases. VARs that develop expertise in emerging technologies such as unified communications or virtualization can find a whole new set of customers.
In addition to entering new technology markets, VARs can move into geographic regions or vertical markets where a particular technology is hot or where there's growing demand for IT products and services in general.
Artech has hired new salespeople in regions where the opportunity to gain market share is apparent, Carrion says. These salespeople are mentored by senior executives at the company and also supported by the New Business Development team.
The company periodically reviews its sales practices and incentives. "Because of the dynamic nature of the global business environment, Artech does not believe there is one strict set of guidelines that fit every sales situation," Carrion said.
Ongoing training of the sales staff to ensure that reps are up on the latest technology developmentsand#8212;either internally or in cooperation with vendor partnersand#8212;can help reps better prepare for finding new customers.
FusionStorm holds a yearly sales meeting with all of its partners. The meeting is for experienced and new salespeople, as well as the company's entire engineering team, Krasnegor said.
"Our partners also do several trainings per month to make sure we are up to speed on the latest and greatest," Krasnegor said. The engineering team also has off-site training sessions with all of FusionStorm's partners.
Next: Expanding Into Services
Expanding Into Services
One of the most effective ways VARs can expand their customer bases and revenue stream is by offering new types of services and support programs to go along with their products.
PC Universe strives to offer any new services that can add value to a technology offeringand#8212;and this attracts new customers that are looking for more than just a product implementation. For example, it has begun offering network management services and voice-over-IP (VoIP) expertise to go along with deployments of Cisco routers.
"The biggest thing we can do to attract new customers is add some type of value, because margins are so low today," Stern said.
Incentra last fall launched a managed security service, including a service to remotely monitor and manage a customer's wide area networks for security breaches. "That service has generated a significant amount of interest among prospective customers," Sweeney said.
The company also expanded its first-call support services to include vendor partners Symantec Corp., Cupertino, Calif., and Network Appliance Inc., Sunnyvale, Calif. Sales reps meeting with prospective customers are instructed to not only discuss technology solutions, but complementary services and how these can benefit the customer.
"We're gaining not only new customers, but new customers that are buying services from us for the first time," Sweeney said. The increased emphasis on services "is one of the reasons why we're seeing a higher volume of customers. We're starting to distinguish ourselves as being more than just a technology provider."
In the first quarter of this year, Incentra added 90 new customers, Sweeney said, largely because of the new services.
"That feels pretty good. We had said we need 300 to 400 new customers this year, and this has us running toward that and#91;goaland#93;."
FusionStorm, which has a data center managed services practice that includes network and application acceleration and optimization, virtualization, storage and security/compliance, recently added new managed services to boost business. These include hosted virtual servers, threat management, log management for compliance and remote managed storage.
Krasnegor said about half of the company's $100 million in new revenue per year comes from new customers.
Many VARs and solution providers are working with some of the most powerful marketing forces in IT, including companies that are household names.
VARs can leverage relationships with vendor partners such as Hewlett-Packard, Microsoft, IBM, and Cisco to win new customers among small, midmarket and large companies.
Sometimes working with business partners as part of a services offering can generate new business. Optimus partners with companies in different areas of information security, and this has led to finding new customers.
"It's a whole new way to find new customers," Johnson said.
Costs Of Customer Acquisition
Strategies for finding new customers comes with a price, VARs say. Be prepared to spend money in order to expand revenue sources through new customer acquisition.
Launching a new product or service might not be extremely costly if the VAR already has some in-house expertise in a particular area. But if it's starting from scratch, that's a different story.
"If we are creating something totally new and rolling it out, the challenges and costs are much higher, with 40 percent typically spent on creation, another 40 percent on training and hiring, and finally 20 percent on marketing," Krasnegor said. "For every new service, we are initially spending $10 to make $1. Over time though, this investment pays off once marketing and sales takes hold of it."
FusionStorm's Client Advisory Councils help the company "by validating our research and delivery of future services, as our clients play a key role in helping us decide and deliver what services are in need," Krasnegor said. "The bottom line is that finding new customers with new services does not have to be super expensive, but it does depend upon knowing your clients and prospects, who you build it for and how you market it. But if you are not providing true value, then you will have to spend a lot to possibly convince new clients to buy this service."
Next: HITTING FOR THE (SALES) CYCLE
HITTING FOR THE (SALES) CYCLE
Some VARs look for unique ways to provide incentives to sales staff for bringing in new business. Incentra Solutions Inc., a Boulder, Colo.-based provider of storage, networking, security, and server products and professional services, this year launched a baseball-themed sales contest to win new customers.
The contest rewards sales personnel for bringing in clients that haven't worked with Incentra or its vendor partners before, and for signing customers up for Incentra offerings, such as professional services and managed services.
Participants accumulate points based on the offerings they sell. Some sales are designated as singles, doubles, triples or home runs, based on the importance of those sales to Incentra's business. The bigger the hit, the bigger the point reward, explained Tom Sweeney, chairman and CEO of Incentra.
"We've seen a strong response from our sales team after the first three months, with 90 new customers added," Sweeney said. More than 80 professional services contracts were signed, he added.
Sweeney said one important feature of the contest is that the sales engineers are included and receive an equal amount of the reward as the sales professionals. "I believe this has further aligned our sales team with our engineering professionals," he said.