In Shifting Landscape, VARs Should Focus On Vendors

That was the message from Ryan Morris, director of channel intelligence for CMP Channel's Institute for Partner Education & Development, at a jam-packed session on the first day of the XChange '07 conference. "This is critically important for the future of your business," Morris told solution providers. "You will not be successful if you don't drive both ends of the equation."

Like distributors, solution providers have downstream end-user customers and upstream vendor customers, Morris said. "In that business model you know for a fact you will not drive a profit unless you manage actively in both directions. You have two sets of customers, end users who pay for the things you sell, and a vendor community that if managed effectively should and could provide you with their valuable resources."

Most solution providers are missing out on lucrative business assets "worth cash money" from vendors, including marketing funds, higher-level technical support, sales staffing, MDFs, advertising dollars and pricing adjustments reserved for their most notable partners, according to Morris.

"It's not the same old set of program requirements you always operated with," said Morris. "Change your thinking. It's not about the business of what you are required to do, but the access to resources that would actually help you run your business more effectively."

The benefits are many. "I would give you access to sales coverage without you having to go out and hire more salespeople," said Morris. "That is an HR staffing bonus. I would look at you in terms of actual economic advantage in the marketplace. I would give you pricing that I would not give to anybody else."

The changing solution provider business model demands that VARs more effectively manage vendor relationships to obtain those economic advantages, said Morris.

Under the old model, VARs were inbound-focused, often simply fulfilling orders and doing technology implementations with attributes like technical acumen, transactional volume and meeting vendor program requirements. Under the new model, VARs are creating demand with an outbound focus and must reorient themselves to focus on vendor demands, said Morris.

Morris said the right mix of focus for solution providers is 80 percent on managing client relationships and 20 percent on managing vendor relationships.

The six keys to effectively managing those vendor relationships are: 1. Proactive engagement: Call them—don't wait for them to call you. 2. Effective positioning and differentiation of your business market: What sets you apart from other partners? When was the last time you sent a newsletter to a vendor partner? 3. Develop a solid business strategy: Share your business model with your vendor partner. View your vendor partner as a venture capitalist looking for the best return on capital. 4. Execute, execute, execute: Make sure that you develop a reputation for getting results. 5. Manage the human aspect of the relationship: Understand how key vendor channel executives get bonused and help them reach their goals. 6. Demand respect: Whether you have $2 million in sales or $200 million in sales, stand up for the value you add and demand respect. "You own those customer relationships, take credit for them," said Morris.