But VARs still say membership has its privileges
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At Ingram Micro's recent VentureTech Network spring event, Bob Stegner, vice president of channel and U.S. marketing at Ingram Micro, delivered a blunt message to VARs in attendance: VentureTech Network (VTN), an exclusive group of more than 300 SMB-focused solution providers, was not meeting the company's expectations.
"[The numbers] don't reflect the community that we are," Stegner said during an address to VTN members. "We have to re-establish our criteria and enforce the [membership] rules."
With that notice, the world's largest technology distributor got tough, upping the requirements for members and enforcing existing rules more stringently, in an effort to cultivate a stronger commitment from VTN members. Stegner says Ingram Micro is looking for more exclusivity from members. "It needs to be a stronger, more cohesive group that has buying power and can go anywhere in the country," Stegner says.
Ingram Micro certainly isn't making it easy for VARs to join VTN. Along with a $2,000 annual fee, new and existing conditions for VTN membership mandate that VARs must have A++certification for IBM, Hewlett-Packard or another major vendor and have at least two outside sales reps focused on SMB solutions. Members are also prohibited from participating in other distribution programs, such as Tech Data's TechSelect. In addition, they are now required to participate in annual profit and compensation surveys and submit their year-end financials to Ingram Micro within 90 days of the end of each member's fiscal year.
Perhaps the most taxing changes are that VARs are now required to have combined product and services purchases from Ingram Micro exceeding $300,000 annually for tertiary markets or $500,000 for primary markets. In addition, 65 percent of VTN members' total product purchases must be bought through Ingram Micro; previously, VTN required that 65 percent of distribution purchases be made through Ingram Micro. Stegner said most VTN members currently meet all the requirements; those that don't will have until the end of the year to comply.
Is being part of VTN, or any other exclusive distributor, vendor or industry group, worth the trouble for VARs? Many VTN members give a resounding "yes," and say that Ingram Micro is adding significant value to the organization. Brian Okun, director of marketing at Chips Computer Consulting in New York, believes VTN membership increases his company's marketing power. "Ingram Micro has done an amazing job branding the organization. This is far and away the best $2,000 investment we've made," Okun says. "I don't mind the new membership requirements. I'd prefer for them to weed out those bad apples in VTN by making it harder for people to join."
Along with adding significant branding strength to SMB-focused solution providers, VTN also offers a wealth of support services and assistance to VARs, according to its members. "I think Ingram Micro does a great job with providing tools and programs for helping SMB VARs grow and evolve their businesses," says Tommy Wald, CEO of Riata Technologies in Austin, Texas. "The offerings that are exclusively for VTN members include marketing tools, technical assessment tools and special vendor programs."
One of those exclusive vendor programs includes a recent alliance formed with IBM Global Services (IGS), the world's largest IT-services firm. Ingram Micro struck a deal that allows VTN members to partner with IGS on SMB market deals. The distributor also has forged close ties with other top-line vendors such as Hewlett-Packard and Microsoft. One such VTN offer gives members $1,000 for completing IBM training courses.
Paul Thompson, CEO of IPT Northwest, a VTN member based in Portland, Ore., says VTN has provided a number of opportunities for his company. "The [IBM] deal doesn't do much for us, mainly because of our market," Thompson says, "but we've certainly been selling a greater percentage of IBM hardware. The programs and pricing work very well and are not difficult to take advantage of."
Support and commitment from VTN solution providers will be key for Ingram Micro this year. The distributor's U.S. sales have dropped the most of any region, according to the company's first-quarter 2003 results. Ingram Micro president Mike Grainger has high hopes for the group, and expects the performance to improve as the year progresses. "VTN is a huge area for us. We have a great group of vendors, and we've worked very closely with them to generate demand in the SMB market," Grainger says. "I think there's a huge opportunity there that hasn't quite blossomed yet."
The Right Stuff
To be a VTN member, VARs must:
- Have A++certification for IBM, Hewlett-Packard or another major vendor.
- Have at least two SMB-focused outside sales reps.
- Make at least 65 percent of their annual product purchases through Ingram Micro, including at least $300,000 in a tertiary market and at least $500,000 in a primary market.
- Submit their annual financials to Ingram Micro, and participate in annual profit and compensation surveys.
- Do 50 percent of their business with SMB customers (defined as companies with up to 500 employees).
- Not join a competing distributor's program.
- Pay $2,000 in annual dues.
- Attend at least one VTN invitational event each year.