Attention, Please!
“It’s a chicken-and-egg phenomenon,” he said. “From my perspective, if a vendor wants to engage us, they have to be our partner and commit to those funds in advance before we have sold $1 million worth of product. That is something most vendors are not willing to do.”
oe Balsarotti has seen the President of the United States more often in the last couple years than he has seen his vendor sales reps. And he’s not happy about it.
Balsarotti, owner and president of Clayton, Mo.-based solution provider Software To Go, first met George W. Bush at an economic summit in Texas in August 2002 and has since been invited to join him at an SMB roundtable in nearby St. Louis, at the White House for a bill signing and on stage during a campaign rally. But he hasn’t seen a local vendor rep—from any company—in more than three years.
“If it looks like there’s easy money to be made elsewhere, that’s where they focus,” he said of both vendors and distributors. “They forget about the small-business guy. Anyone in my position who wants to sell a name brand, be it [Hewlett-Packard], IBM, Lexmark [International], whatever, is in this position.”
Balsarotti’s sentiments are echoed by many solution providers serving the small-business market. They feel distributors and vendors have forgotten them after cutting costs out of their supply chains, which has led to less personal relationships with suppliers than in the past.
Jay Tipton, owner of Technology Specialists, Fort Wayne, Ind., said he’s in the same boat. “I’ve been fighting to get [IBM] to answer a simple question. I have a couple of people I know that I can call to get things moving, but I shouldn’t have to do that to get a simple answer,” Tipton said. “They are more concerned about the larger deals than SMB. They don’t understand that small resellers represent a lot of volume.”
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Far too many vendors that do have small-business programs miss the mark because they’re still thinking too big, often 100 seats or more, said Darren McBride, president of Sierra Computers & Training, a Reno, Nev., solution provider. McBride defines small business as a customer with 60 seats or less and said 85 percent of his $3 million in sales comes from that size customer.
“We have a total of 60 companies that have 100 seats and above in the Reno metropolitan area, and that is in a market that has a population of 350,000 people,” he said. “The vendor definitions of small business are out of whack. They don’t understand what a small business is. If we get a 30-seat company, we are ecstatic. That is a big deal for us.”
Added McBride: “Most vendors pay lip service to the fact that small business is where the employment and sales growth is coming from, but they can’t envision these 10-user companies are out there. They don’t know what a 10-user company looks like because it is so foreign to the environment they operate in. They can’t even imagine it.”
It can be difficult just trying to obtain basic information about the products that vendors would like to see solution providers sell, Balsarotti said. “I have a customer interested in a $17,000 oversized scanner from HP. It’s not something I normally sell, so I would like to see it first so that I know what I’m selling. Where can I go to see the products I’m supposed to be selling? There’s nowhere I can go to see the current lineup of HP desktops, Lexmark printers. Reps aren’t bringing them in. I can’t buy demos for every product I want to sell.”
Balsarotti said he has voiced his complaints to executives including John Thompson, HP’s vice president and general manager, Americas Solution Provider Organization. “They’re helpful, but they never get the problem solved,” he said.
Some vendors, including HP and U.S. Robotics, have started demo programs again, but the products are still hard to get or require an investment or volume guarantee, Balsarotti said.
Vendors don’t often realize—or don’t care—that SMB solution providers won’t stay loyal to a vendor or its products if they don’t get some attention, Tipton said. For example, Technology Specialists started selling Symantec solutions because the VAR had a dedicated rep at the company. When it lost the rep, the solution provider went to Computer Associates International, which has a strong channel program, and started selling CA’s eTrust instead.
Yet, at CA, Tipton found himself confronted with another of the issues many SMB solution providers face: volume requirements. “Let’s put it this way, it’s so high, I don’t even bother with it because it’s not going to happen,” he said.
Some vendor executives said solution providers may not realize channel programs are structured to include many benefits besides rebates. For example, CA offers free online certification training and technical support to complement a 10 percent rebate for partners that sell about $30,000 in products per quarter. Members of Ingram Micro’s VentureTech Network and Tech Data’s TechSelect organization can receive up-front rebates with no volume requirements, said George Kafkarkou, senior vice president of worldwide channel operations at CA.
“We base our partner programs by listening to the partners. They wanted free training, free tech support, which we gave to them. The small solution provider is integral to the success of CA,” Kafkarkou said.
Another problem, Tipton said, is that too many vendors are still stuck with the mentality that solution providers should showcase their product, rather than integrate it into a solution. “I don’t lead with product, I lead with a solution,” he said.
Distributors and vendors counter complaints like these by saying they are providing more money and programs dedicated to small business than ever. For example, Ingram Micro has an SMB Alliance program, offers business development resources for SMB solution providers, holds “Knowledge is Power” events in tertiary markets for small VARs and provides its Agency Express online marketing tool to VARs that do not have large marketing budgets, said Jim Manley, area vice president for VAR sales at Ingram Micro. “As a fast-growth market, SMB and the solution providers that service them are a must-have to our business. That’s why we continue to invest in resources like these,” he said.
Microsoft, which boasts that it spends more than $2 billion annually on small-business products and services, may be investing more than any other vendor to capture the small-business opportunity with specially tailored products such as Microsoft Small Business Server.
Doug Leland, general manager of small business for the software giant, said the company is looking at a program to promote small-business VARs to customers. “This will help partners identify themselves in the marketplace as a partner focused on small business so we can expose them and highlight them in our engagement and marketing to small-business customers,” Leland said.
One of the things that separates Microsoft from other vendors is the company’s precise definition of the core small business as businesses with 11 to 49 employees and with one to 24 PCs, Leland said. “Other vendors look at it much more broadly,” he said.
HP, for its part, said it is increasingly working with small-business VARs to sell and deliver HP-branded services. Effective April 1, HP will allow service partners to sell and deliver HP Care Pack Services for printers. They can already deliver HP Care Pack wireless LAN services.
What’s more, HP is looking at other ways it can work with small-business VARs, said Vyomesh Joshi, head of HP’s new Imaging and Personal Systems Group. “They have some unique vertical capabilities,” he said. “What we need to do is to really understand how that small VAR can add value for our customers, and based on that I would like to construct the right program. Pricing is not the only lever.”
McBride said distributors and vendors simply must do a better job working with VARs on things like mailings and seminars for prospective clients in the under-60-seat market. The problem is that most vendors base the use of MDF funds for such seminars and mailings on past sales rather than opportunity, he said.