Distribution Executives Forge Tighter Links

McDERMOTT: [New vendors] are hungry. They want to get momentum in taking their product to the market. If they find a distributor that they can partner with that will show them the way, they're excited, they're interested in diving deep because they know that you're going to help them. It's all about speed and brand identity because a lot of these new guys don't have a brand in the marketplace. Distributors have very strong brands. They look to attach to that brand, they need your speed, and they want access to your partner base. That's the fastest way for them to get momentum.

SPIERKEL: Most companies when they're nascent are going to go out and sell directly. It's not an unusual phenomenon. But if they've got a low price point or a relatively limited approach to market, they're going to start considering us. Of course, if we reach them at the right time, we can get them to change their thinking. Part of our objective is to go create the awareness in these companies of the value we bring.

I'm working every day in front of individuals or companies that have nothing to do with our channel, but I know they could. Whether they just don't see us, don't believe in us, or have a misconception about us, that evangelizing and time is well spent. There's not as many new ones as you'd think. Clearly, there's always new innovative stuff but, if anything, you hear there is less innovation and less new companies in the past three or four years than there were in the mid-1990s when there was more money available.

CUEN: We've worked with some [venture capitalists] that are very interested in new technology. I think there is some innovation going on in certain segments of our industry and, in these particular cases, these VC folks are very focused on what they're delivering, not wanting to build a whole bunch of extra stuff because they don't have the money to really do so. So, their willingness to partner with these new product sets, I think, is better. And I think that they're looking for different routes to market than direct.

ILLSON: We've seen some cases where a vendor actually really consists of some people who have a neat idea. They may have some venture funding behind them, but it becomes a nontraditional relationship. What they look for from us is not to just promote and sell the product, but also to manufacture the product for them. They bring a good idea and what they think can be quick access to the market, but they don't want to invest in infrastructure. That's not their core competency. And they can leverage us.

We source the components and assemble it and turn it quickly. When they scale, they're successful, they may go to a full-blown contract manufacturer, but we can help them with time to market.

PAGET: I think all of us are looking to the future and what's going on, and one of the best places you can go—there are some very significant technical VCs. You can create relationships with them very early on as you start to look for what's going to happen in the marketplace in two years, in three years. I think that's just part of being of a student of the industry.

COLEMAN: We're Agilysys—agile systems. You do have to be agile and smart about the lines that you pick up. You need to make sure that you make that bet, you make it right, and you make it on the long term. We're also looking for companies and for suppliers that are going to come out and be large, quick, predictable and, again, a value to the solution providers that we have.

ATTRACTING NEW CUSTOMERS
Each year, distributors and vendors spend millions of dollars to recruit new solution providers. They all have the same goal—to increase their solution provider base—but the process to get there can be quite different from each other. And in some cases, a refocus on existing customers can be just as fruitful as a list of new leads, the executives said.

LAMNECK: We'll sell in a given quarter to 57,000 different resellers in the United States. So, some of the issues are really more do we understand the real dynamics of those 57,000 partners, not trying to find 3,000 or 10,000 more.

To get to the point about the new emerging ones that we may not know about, the easiest way for us to do it is through the product lines. If we get into a differentiated new product line, again, it always amazes us to say, where were these people before? That's the easiest way for us to do it vs. trying to really go out and try to canvass it through all different sorts of telemarketing campaigns.

SPIERKEL: I think you never lose sight that it's not all about new customers. You get more return and a better return by developing and exercising the relationships that you have. So, you're helping them transform with solution sets so they can grow, they can split up their businesses: Instead of being infrastructure only, I'm infrastructure and security, because they start getting more confidence and they grow. We've got a key role to play in that—introducing them to new technology, but also getting smart enough to help them understand that there's pieces of the solution they could be adding with their own capabilities.