Top VAR Growth Strategies

When reached by phone for an interview last month, Groupware Technology CEO Mike Thompson was busy writing a speech for his company's customer appreciation event that evening.

That simple fact reveals two very important characteristics about the IT solution provider: The company knows the importance of identifying and fostering its most loyal customers, and it knows how to successfully market its image.

Such efforts are greatly paying off for Groupware, which had net sales of $58.9 million in 2006, and a whopping growth rate of 3,192 percent from 2004 to 2006.

It shouldn't come as a surprise then that building customer loyalty and growing market image and presence are the two top strategies VARs plan to employ this year to grow their businesses, according to the 2007 CMP Channel Group Business Growth survey.

If solution providers' efforts to build loyal customers are successful, that should easily translate into dollars, as more than half of small and midsize businesses said they'll recommend valued solution providers to their own peers, according to CMP Channel research. And as any salesperson knows, peer-to-peer referrals are often a business' strongest tool.

"As you build loyalty, you become a trusted partner, whereby you can provide additional services outside of normal VAR activities," Thompson says.

In addition to holding formal social events to recognize and network with its most loyal customers, the VAR says it's also building loyalty through proactive customer service, hiring strong engineering talent, and by being as responsive as possible. Responsiveness, in fact, was identified by SMBs as their most highly valued trait in solution providers, recent CMP Channel research found.

"Our secret is our people, our people are the "v" in value; it's them who are going above and beyond to make sure customers receive the highest level of customer service, which drives loyalty and repeat business," Thompson adds.

The company is also working to expand its market image and presence and is in the process of expanding into the Northwest United States.

Manny Buigas, CEO and founding partner of AXIS Integrated Solutions, is also realizing the value in expanding its market image. The Doral, Fla.-based solution provider, which reached $4 million in revenue in just its second year of business, has teamed up with Florida International University to create and offer an online course designed to teach people how to create a customer relationship management strategy. The effort has helped to increase its image and visibility in the market, Buigas says.

"We offer it to customers or peers, anyone who wants to train the next crop of consultants or anyone overseeing a CRM project," Buigas says.

Also top on the agenda for solution providers looking to grow quickly this year are plans to revisit and enhance existing sales techniques, found the survey.

"This is the first year in our company's history that we hired a sales training organization for our sales representatives and sales managers," says Angela Trillhaase, senior vice president of business development at Meridian Group International, Deerfield, Ill., which pulled in $131 million in revenue in 2006 and landed at No. 198 on the 2007 VARBusiness 500 listing. Trillhaase was also named one of VARBusiness' 50 Most Powerful Women of the Channel this year (August issue).

The VAR is also focusing on increasing high-margin activities—which was also cited as a top growth strategy on the survey. "It's all about solution selling now. Fulfillment and delivery just don't cut it anymore," Trillhaase says.

Last but not least, VARs will continue to increase effectiveness and streamline business processes, while devising new and innovative ways to help their customers do the same.

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