Five Winning Ways For Vendors

It's a question that vendors have pondered since time immemorial: How can we prove our loyalty to our VARs? How can we show channel partners we care about the business they do with us? How do we prove that we aren't just paying lip service?

In the 2005 VARBusiness Annual Report Card (ARC), a number of vendors in highly competitive fields managed to do all those things and, ultimately, win their partners' loyalty. Loyalty remains one of the key factors for success in the assessed 19 categories. Key areas that support loyalty include top-notch business programs, steadfast dedication to partners and superior educational programs, inclusive VAR advisory councils and outstanding communication.

Here are five ways the best vendors hope to attract your loyalty--and why they seem to be successful.

1. Top-Notch Reseller Programs

Nothing shows a vendor means business like giving VARs reliable products, sales and marketing programs.

VARs need to have a tangible reason to invest in a program; too many programs in the industry sound like a good idea but have no real substance. Security appliance vendor SonicWall (Loyalty score: 84) meets with VARs regularly to hear what kinds of products they want to sell, and to determine what types of devices will help both companies increase business.

"The challenge for many VARs is determining how to align their resources to their businesses," says Marvin Blough, SonicWall's vice president of North America sales.

In response to VARs' requests, SonicWall developed TotalSecure, a kind of one-stop shop for resellers with customers that want a quick solution for their security needs. VARs frequently run into customers that don't want or need to make a tremendous investment. Available in three sizes, TotalSecure provides complete network security against threats, including viruses, spyware, worms and Trojans. The bundle includes a one-year subscription of the company's Gateway AntiVirus product. The graduated model will serve VARs well now and in the future, because it doesn't force customers to buy excess equipment and allows resellers to retain revenue through subscriptions, Blough says.

"[VARs] can sell someone $2,000 of product today, and next year they can make $1,000 in renewal fees," he says. "It's an ongoing revenue stream. For many VARs, the annual renewal time gives them a reason to have a conversation with customers."

Next year, SonicWall VARs will reap part of the subscription fees no matter where the sale of the subscription originated. So, even if the SonicWall user renewed a subscription directly with SonicWall, the VAR that originated the sale will share in the commission for the renewal.

It's all a part of understanding VARs' needs. At Samsung, VARs are given demo units of new products so they have a good feel for what they will be trying to sell. Often, companies provide VARs with demo units at the end of a product's life cycle.

"We recognize that resellers have to make money on the products," says Samsung's David Nichols, director of display marketing.

In fact, Samsung's VARs let the top-rated display vendor know they wanted it to "show them the money." So, Samsung (Loyalty score: 85), which won first place in the Display Technology category for the third consecutive year, offers VARs cash incentives to make sales. Its Big Deal Cashback program offers VARs rebates and has been very successful for the vendor.

"We are 100 percent channel," says Helman Lukito, senior marketing manager for Samsung resellers. "We love our resellers and, in turn, they love us. Those who work with us prize that relationship."

2. Total Dedication To VAR Partners

Channel dedication doesn't mean vendors have to sell solely through the channel, but a total commitment to channel sales is always viewed as a plus by VARs.

A dedicated vendor takes an interest in the VAR's business, is flexible and offers a quality product. But first and foremost, the vendors to whom VARs are most loyal really see the resellers as partners.

"We are not a channel sales company. We are a channel company," Blough says. "There is no confusion within the company as to how we go to market. Any employee knows how we sell product. It's a core piece of how we hire, how we deploy resources. Everything goes to that core belief."

As products such as those covered by the ARC become more commoditized, savvy vendors understand that their success will increasingly depend on how dedicated they are to their partners' success.

"One thing customers want to have is a good purchasing experience," says Mark McNeilly, program director of marketing strategy at Lenovo. "But that's just a short piece of the entire customer experience. One thing we focus on is the ownership experience. A big piece of that is reliability and making sure our products are rock-solid."

The more reliable a product is, the less time VARs will have to spend with it. Vendors that offer and stand by a quality product will attract quality business partners. VARs, in turn, only want to align themselves with products that enhance their own images. Case in point: IBM's iSeries (Loyalty score: 90), which has finished first in the midrange server category every year since 1999 (as the AS/400), has taken overall top honors in the Loyalty category for three straight years. The differentiator is product quality. IBM, partners say, produces products that satisfy customers and require little VAR maintenance. The lesson is vendors that are dedicated to their own products are ones that earn VARs' loyalty.

3. Superior Educational Programs

VARs want to be educated about their vendors' products, but they don't want to go on junkets to hear just about how wonderful a particular product is.

Cisco Systems, a leader in providing partners with quality educational programs, has three levels of certification: Associate, Professional and Expert. Those who master the entire program earn Cisco's Certified Internet Expert (CCIE) designation. Six different paths are offered, including Routing and Switching, Network Security and Service Provider. Cisco's career certifications are respected by end users, and VARs know tat they will reap rewards by investing in the program. (Cisco came in first in Loyalty in the Networking Infrastructure/Voice Networking category with a score of 82 and second in Loyalty in the Networking Infrastructure/Data Networking category, behind HP ProCurve.)

"We put a lot of investment into educating our resellers. We understand that this costs resellers time and business, and that they're looking for a return on their investment," says Alan Cohen, Cisco's senior director of marketing in its Wireless Business Unit. "So, we make it an attractive investment overall. [Cisco VARs] become better educated than other salespeople. And, we are accessible and we want to hear from them." Because wireless is a relatively new area and is growing extraordinarily quickly, Cisco has provided Cohen with his own training staff.

"You really need to give your partners the tools to be able to sell, but also to be successful in implementing the technology and understanding it," Cohen says. "That lowers their overhead and makes business more profitable. We are focused on making them experts on the ground with the end customer."

Depending on the technology, offering courses is not always enough. Increasingly, VARs are interested in how carrying a manufacturer's product will increase sales in other areas. That's where partners must get creative.

"A vendor has to be of value to the partner in order to gain his loyalty," says Lief Koepsel, director of channel marketing at SonicWall. "More and more, we are starting to bring in a third party, as well, to training sessions. We are trying to get our SonicWall message across and also build the VAR's business."

For the most successful vendors, the teaching doesn't stop after the training session ends. Solution providers may know the ins and outs of the technology that supports a new product, but they may not yet see how to effectively sell it to their own customers.

"Part of what we do is teach them what to talk to their customers about," SonicWall's Blough says. "We tell them, 'We released this new product. Go in to your customers and ask them what they're doing about a number of issues, and then have a business discussion on how much a particular product might help them.'"

4. VAR Councils

It's one thing to say you have a VAR council, and another to really listen to the ideas and grievances they present.

SonicWall, for example, meets with its VAR council on a periodic basis about a number of issues, including how the products are meeting customers' needs. Although it's effective, the company is rethinking how the council is set up.

"What we are seeing in our [VAR council] is that there are certain issues that some members really want to drill down on: marketing issues, business issues, program issues, product issues. And the challenge is that when you put a bunch of guys in a room, you have such divergent ideas that you never get to drill down on any one area," Blough says. "We're actually looking at having subsets of ours. For example, guys that very much want to get together on the business issues can do just that. And maybe there's a different set that just loves the technology and wants to tell us what to build."

Cisco has a stratified approach, and its VARs that love technology will get together at a council meeting this month. "It's really for a deep dive on the business, on the technology. This is above and beyond the regular, annual partner meeting," Cohen says.

The benefits to the VARs sometimes lie in the relationships the council fosters outside of the vendor itself.

"There are about 20 of us," says Steve Weeks, president of Netcetera, a SonicWall reseller. "SonicWall shares some of its plans that aren't public knowledge yet, and we have some influence on what the company's going to do. We get heard, which is great. [Our] group keeps in contact all the time, so I might have an issue with the SonicWall product line and e-mail it to the group, and they'll respond to me."

5. Meaningful Communication

Vendors with extremely loyal VARs know the difference between sending out endless streams of e-mail and creating a dialogue with VARs that will offer them excellent bottom-line results.

Such companies are responsive to VARs' ideas and needs, and know which VARs are familiar with certain products. This type of insight helps vendors support resellers and partners stay ahead of the market trends.

"We keep resellers familiar with the technology. We have regular technology updates--not just selling updates. We'll have members from the CTO's office or members of my product-management team tell them what's coming down the pike," Cohen says. "We really foster a two-way dialogue with them."

Communication extends past the individual product to include the vendor's brand. That's especially important for companies such as Lenovo, which is striving to create a reputation that is equal to, if not better than, IBM's in terms of notebook computers. Having the right to use IBM's logo on its products for the next five years will help Lenovo's efforts.

"When people think about ThinkPad, they definitely have a connection with IBM," Lenovo's McNeilly says. "The use of that logo is reassuring to them, so we are going to leverage that as we go forward."

Lenovo hopes its communication about the brand, products and new VAR programs will add up to a company that is easier to do business with than IBM.

Of course, many vendors rely on the old standby annual partner meeting to do their communicating. One meeting can't take the place of an ongoing stream of communication, but it can be a worthwhile supplement to an ongoing dialogue.

"We were invited to SonicWall's Peak Performance in New Mexico in 2000; there were probably 80 people there. We got to meet all these guys, and we thought that was pretty neat and came back and sold a whole bunch of SonicWall product," Netcetera's Weeks says. "We go back to Peak Performance every year, and now it has [in attendance] about 500 to 600 people. I feel like I'm part of the family."

Vendors that have earned their VARs' loyalty understand that they have a somewhat intimate relationship. The reseller is the human touchpoint with the end user.

"They provide the human component to the sale," Samsung's Lukito says. And in the end, isn't loyalty the ultimate "human component?"

Jennifer D. Bosavage is a freelance writer based in Huntington, N.Y.