Capitol Gains For Tech Data

It's no surprise that Tech Data is pulling out the stops to go after such lucrative, high-growth markets like the federal government sector, which has bulked up in the last year like a light-hitting infielder on copious amounts of steroids. The world's second largest IT distributor knows that TechSelect, an exclusive group of more than 300 VARs focused on small and midsize businesses, is one of the few bright spots for the company in North America and is making every effort to shield TechSelect members from sales shortfalls.

Walking into the event at a downtown hotel last week, I was eager to see how Tech Data was positioning its TechSelect organization against chief rival Ingram Micro and its SMB group, VentureTech Network. Last month, I attended Ingram Micro's VTN fall event in L.A. (which, coincidentally, was held at the same hotel franchise as Tech Data's event in Washington).

One of the more obvious differences between the two events concerned the brass; while Ingram Micro had much of its top sales executives, as well as company president Mike Grainger, there, Tech Data's top officials were not in attendance. I sometimes feel that many vendors and distributors underestimate the importance of having their chief executives and leaders at partner conferences. Many VARs expect to see the captain of the ship at these events.

That's not to say that Tech Data officials at the event did a poor job. In fact, the team, led by Annette Taber, director of TechSelect sales, filled the two-day conference with plenty of added incentives and benefits to whet the appetite of solution providers. Among them were programs and resources for Tech Data's government VARs that included extended 60-day floor-plan financing terms from GE Commercial Finance (the previous offering was a 45-day floor plan); extended 60-day credit on products for certain vendors such as Cisco, as well as shipping discounts; and bid and performance bonding from Textron.

In addition, Tech Data introduced the new Prime Contractor Referral program, a tool designed to help small, disadvantaged and minority-owned solution providers partner with national integrators to win federal government small-business contracts. Erich Ohngemach, director of government field sales for Tech Data's government division, calls the Prime Contractor tool a kind of "dating service."

The distributor also said it will introduce "loyalty" initiatives for its Specialized Business Units beginning in January. The SBUs, which cover technology areas such as networking, components and digital imaging, will recognize solution providers that display strong commitments or sales growth to a particular area by delivering additional rebates and training and marketing funds.

While some of the new programs and initiatives Tech Data introduced were murky on details and clearly needed more ironing, the event showed the distributor's commitment to making TechSelect a more powerful and influential group. There's plenty of evidence showing it's already happening, too. Taber merrily announced that TechSelect enjoyed more than a 20 percent increase in membership this year, and that solution providers in the group showed 5 percent revenue growth year over year.

To keep the ball rolling, Taber said Tech Data will work on adding new vendors to the TechSelect program and establish larger relationships with companies like Sun Microsystems. In addition, Taber said the program will offer members more training and education around business consulting and vertical markets.

"VARs are interested in running their business better, not necessarily speeds and feeds," she said. "You're going to see us take much more of a focus on vertical markets and sales and marketing initiatives."

But with all that said, is TechSelect worth it? If I were a VAR, would I join a program like this?

I supposed I'd be crazy not to consider joining TechSelect, or VTN for that matter. Clearly, entry to these programs isn't easy and the requirements, especially in Ingram Micro's case, are tough and designed to get the strongest possible commitment from members. But if one thing is clear about these organizations, it's that they're going far beyond just members-only clubs for special pricing and discounts.

TechSelect members, for example, are enjoying relationships with vendors like IBM and HP that unaffiliated VARs simply don't have -- and that means everything from special rebate offers and access to top executives. For instance, IBM says 38 TechSelect members have become certified to sell Big Blue's products in the past four months, while 22 percent of TechSelect members have increased their IBM sales during that time. As a result, IBM is offering 3 percent rebates for TechSelect VARs that surpass their IBM sales goals for the fourth quarter as well as an additional 1 percent to all members that purchase 60 percent or more of their IBM product through Tech Data.

In simple terms, the solution providers within TechSelect and VTN are more powerful and demand more respect as a unit than individually, not to mention with strong advocates like Tech Data and Ingram Micro behind them. Dave Gilden, partner at TechSelect member Acuity, a solution provider based in Tampa, Fla., may have said it best with this statement: "Tech Data isn't just an aggregator of product. They're an aggregator of influence."