Who Knows Your Customers?

Jay Tipton, vice president of Technology Specialists, a Fort Wayne, Ind.-based solution provider, was shocked earlier this month to hear from two customers that Novell had contacted them regarding their Novell Small Business Suite 6.6 Upgrade Protection renewal plans. The renewal notice quoted a full list price to the customers and told them to contact their reseller for a discount, but did not specifically name Technology Specialists.

Tipton said he was caught off-guard because he didn't know Novell was sending the e-mail. And, he added, it just confuses his customers.

Slide Show: Who Knows Your Customers?

"I don't care if they contact the client directly as long as they give me the same opportunity to make the same margin as the direct sales initiative, and they should list our name and number," he said. "I don't think that's asking too much. If they want me to stop selling their product, this is the way to do it."

The increase in drop-shipping, deal-registration programs and service contracts has led to more customer information being asked for—sometimes even required—by vendor partners.

But few solution providers say they know what actually happens to that information once it's collected. All they know is that more vendors, citing the need for better control of their products or to crack down on fraud in the channel, want more end-user information these days. It's a trend that makes many of them uncomfortable.

In a recent CRN survey of 779 solution providers, 26 percent said they regularly share customer contact information with vendors. Of those who share the information, 21 percent said they share the names under duress to maintain a vendor relationship. Of that group, 38 percent said sharing that information is driving them to seek a substitute vendor.

Art Torres, president of Post Computer Systems, Wilbraham, Mass., said flatly that he won't give vendors any customer information. "I don't want them back-dooring me," he said.

Vendors tell solution providers the information is necessary to ensure their products end up in the right hands. Novell, Waltham, Mass., said it requires customer information from any VAR placing electronically delivered software at a customer site. "Our practice is to involve our partners in the renewal process whenever we can " Novell said in an e-mail response to CRN. "When we do contact a customer, it is not our policy to take the order direct."

Collecting customer information is a necessary part of doing business with Cisco Systems, said Keith Goodwin, senior vice president of worldwide channels at the San Jose, Calif.-based company. Cisco doesn't recognize revenue until a product is sold to a customer, not when it's sold to distribution, Goodwin explained.

"Our VARs have always been pretty good about providing us with sales information because that's how we pay our sales force," he said. "If they want to be aligned with our sales force working on their behalf, it's important to provide that information."

That said, Cisco's sales force is seeking to foster tighter relationships with solution providers that buy through distribution, an effort the channel chief hopes will yield more in-depth sales data.

"Strengthening that relationship with two-tier VARs will help us get more information on customers to [help us] sell more to them ... not just that a customer buys a Catalyst switch and three phones, but how customers are using them, more about the environment they're selling into, what the future plans are," Goodwin said. The result of gathering such details should be more product sales through distribution, Goodwin said.

While many VARs say they understand why vendors might need to gain a window into the end user, several told CRN they are afraid the information could end up used against them by competitors—or even the vendors themselves.

"We've been burned in the past," said Audrey Levi, president and owner of Altek Computer Group, a Miami solution provider. "I'm always willing to give vendors one shot, until they burn us. They say the customer has to purchase the way they want. But that only seems to work in the vendor's mind if the customer wants to buy direct. When a customer says I want to purchase from [a VAR], why is that not OK?"

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