How Top ARC Scorers Pulled Off Their Wins

Knowing that, Brailsford appealed to his Samsung sales rep, with whom he maintains a tight relationship. It worked.

Samsung made an exception to its policy, and Brailsford ended up with his two flat-panel screens. The charity event went off without a hitch. "There has never been anything that I've asked for that I haven't gotten from Samsung," he says.

That above-and-beyond treatment has endeared Samsung to its partners. And nowhere is partner devotion more evident than in the results of VARBusiness' 2004 Annual Report Card (ARC) survey, where Samsung, for the second year in a row, grabbed top honors. Not only did it sweep the display technology category, the company posted the highest marks in almost every criteria across the entire survey.

Partners like Brailsford say it's Samsung's willingness to give partners whatever they need to bring a sale over the goal line that makes it No. 1. "That is a key reason why we concentrate on Samsung," he says. "We know that if we need to sell a customer, they will provide whatever we need. We don't see the same type of support from other vendors."

Keeping Samsung company in the top echelons of this year's ARC survey are some familiar vendor names: Intel placed second overall, nipping at Samsung's heels with a total score of 83 to Samsung's 84; NEC/Mitsubishi scored third overall, followed by Xerox, which, in fourth place, broke into the top tier for the first time. All four of these companies are doing things right in their partners' eyes, whether it's in sales support, crystal-clear communication or top-notch products to sell. In the following pages, we'll examine just why these vendors have risen to the head of the class.

Partners First

So how did Samsung manage to maintain the top spot? Ask Rey Roque, vice president of marketing for Samsung's information technology division. Roque says he was intent on making sure last year's scores were not a fluke and that Samsung had built a strong infrastructure to ensure that the company partners effectively with its resellers and solution providers.

Staying on top for Samsung meant "looking at new ways to help solution providers get away from a pure commodity sale," he says. More specifically, Samsung revamped its Power Partner Program, nicknamed P3, which now focuses on four major areas: a margin component for the partner; incentives for sales reps; a support component that includes training and Webinars; and communications, which is embodied in Samsung's top-scoring partner portal SamsungPartner.com.

In addition, this year Samsung offered a big-deal bonus cash-back program to reward both the company and individuals who sell its products. To help with profitability, Samsung also launched The Samsung Lease Program in conjunction with GE Commercial Finance. "This will enable our VARs to offer leasing to end users and start getting paid quickly on the deal," Roque says.

Product quality/reliability also is vital to Samsung, Roque says. Samsung scored a top-notch 93 for that criterion. Roque places a lot of stock in the fact that Samsung develops every component of its product line, a soup-to-nuts approach that contrasts with other vendors'. "If you're just buying products from different factories in Asia that you don't own or control, I think the solution providers recognize that," he says.

Brooks McCormick, director of sales at Tampa, Fla.-based Megabyte International, a reseller in the federal government space, says product quality is key for his company as well. "We have had virtually no customer or repair issues with [Samsung]," he explains. "When there is a problem, it gets taken care of very quickly and without much intervention on our part."

McCormick says that Samsung also has been one of the easiest companies from which to get rebates and sales spiffs. And on the communication front, the vendor stacks up well, making efficient use of e-mail to share information about rebates, promotions, coupons and other issues. The company also makes liberal use of the phone and its Web site, he says.

During last year's flat-panel shortage, Samsung's spot-on communication about delivery and availability dates was critical, McCormick says. "With other companies, we would get ETAs, and they wound up not being accurate," he says. "That is not good when you pass that on to the customer and then can't deliver."

Intel Takes Two

In its two-horse race with AMD, Intel swept the desktop and server processors category in the ARC survey this year. Perhaps more impressive, however, was Intel's overall performance, which came in at 83. Across all subcategories, Intel ranked consistent second to Samsung and second to IBM's top place in the loyalty subcategory, with a stellar score of 88.

Steve Dallman, senior director of North American channel and distribution sales and marketing at Intel, attributes the high marks to changes made during the past year. For one, Intel aggressively dropped prices to make the lives of its partners easier. In addition, Dallman says, Intel bolstered the competitiveness of its products by adding Centrino-class technology to its mobile lineup geared for systems builders.

On the partnering front, the Santa Clara, Calif.-based company closely monitored channel conflict.

Sanjay Prasad, president and CEO of Pompton Plains, N.J.-based Global Business Dimensions, a PC manufacturer and services provider, says the high quality of Intel's products is key. "We hardly have any returns," Prasad says. "But it's not just about the technology quality—Intel is the technology leader, and they drive the business." Intel's pricing is also a big draw to doing business with the vendor, he says.

Looking to the future, Dallman says Intel is streamlining its supply chain and "getting a handle on some of the price arbitraging that's going on." To accomplish that, Intel has hired an executive from Seagate to identify methods for tracking products and prices around the world. The aim is to help curb abuses that can happen when gray-market goods turn up in one country that were supposed to appear in another.

Intel's channel, itself, is also undergoing some changes, Dallman says, because too many partners can no longer make a business out of integrating at the desktop and need to branch into more parallel opportunities to be profitable. For companies that use Intel's products, Dallman predicts that security, storage and advanced networking hold great promise. He also sees VoIP as a money-maker for VARs because it requires big, server horsepower.

What Intel is helping partners do appears to be working. The vendor is already making strides in the ARC revenue/profit potential criterion, according to its partners, improving on its score of 72 last year to a 77 this year. It also has maintained its top spot for loyalty, upping its score from an impressive 86 in 2003 to a whopping 88 in 2004.

NEC/Mitsubishi Steps Up

Another consistent high scorer in the display technology category and across the ARC board was NEC/Mitsubishi. T.J. Trojan, president of NEC/Mitsubishi Electronics Display of America, says the company values its partners' advice when it comes to developing and changing partner programs and strategies—listening skills that translated into its overall third-place ARC score in the overall solution-provider program criterion (72), behind Samsung (83), and Intel and Xerox (tied with 76).

Trojan says that during the past year, his team has been focused more on providing solution strategies for its channel partners. Through its Solution Advantage partnership program, the company aims to bring vertical solutions to the market, combining NEC/Mitsubishi hardware with its software partners. "We know VARs out there have different kinds of expertise, and we want to leverage that to help them be profitable," Trojan says. "So we sat down with the VARs and said, 'If you're focused on this segment, what kind of program or support do you need?'"

For example, the company has expanded its CustomerCare service program to include NEC-backed extended-warranty programs sold through the channel to end users with the ability to earn additional margins. It also has introduced trade-in and recycling programs such as EcoCare, a new, cost-effective recycling program for hardware. In addition, the company is tailoring its programs to help VARs achieve profitability.

One VAR, in particular, was quick to acknowledge that NEC/Mitsubishi worked very closely with its partners to understand their needs and launch a program to effectively meet them. "We told them what we wanted, and they listened very closely," says John Samborski, vice president at Ace Computers, an Arlington Heights, Ill.-based solution provider that has been selling NEC and, subsequently, NEC/Mitsubishi products for 15 years. "With monitors, it's a fairly straightforward product and a big commodity. There isn't a whole lot of margin, so we need a dependable product that gives us the least amount of pain."

And, of course, the name brand is also important. "We're never ashamed to put an NEC/Mitsubishi panel in front of a customer," Samborski adds.

Xerox Makes the Grade

This year, Xerox broke into the top tier, not only capturing the win in the network color printers category for the third year in a row, but more important, improving on last year's partnership scores. Mark Drum, director of channel marketing at Xerox, says the channel has been critical to the company's success from the start, and feedback has been instrumental in recent improvements.

"We are passionate about sustaining a position as our partners' best opportunity for growth and profitability," Drum says. He explains that after last year's ARC results, Xerox did a "deep dive review" and found a couple of things that it wasn't so pleased with, such as partner feedback being inconsistent with other feedback it had been receiving. So Xerox decided to do more survey work with its partners and used it to reshape the program.

More specifically, Drum says Xerox found it needed to improve its value propositions and communication with partners. To combat that, Xerox rolled out a new partner program in January, restructuring around "providing recognition for value and reward for volume," Drum says. The changes included instant rebates for resellers going through quarterly training and an extra point of back-end compensation for resellers becoming authorized solution providers. In the end, trained resellers who could add more value with services could earn an extra three points of compensation. It also differentiates the value-added resellers from the purely Internet resellers and, ultimately, aims to help them maintain profitability.

Another key to the program is increased touch with the partners, Drum adds. His team also worked on building infrastructure around the company's programs, including better demo support for resellers and more marketing assistance.

Xerox has already seen improvements in its scores; in communications, the vendor went from a score of 70 in last year's ARC to a 76 this year, tying for second highest overall with Intel. Xerox's average partnership score also has improved from a 63 in 2003 to a 70 in 2004.

In the ARC Class of 2004, these vendors are more than just passing—they're leading the way.