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For years, traditional IT resellers piggybacked on vendors' branding to generate demand for product -- not anymore. As channel partners emerge from their tech-only caves and transition their businesses to include managed services and cloud, they're upping their game around sales and marketing, creating their own brand in the market rather than relying on that of the vendors they do business with.
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That's the gist of CompTIA's recently published Fourth Annual State of the Channel study, which homed in on sales and marketing at IT channel companies. The study solicited responses from 350 small, medium-sized and large IT channel businesses.
More than one-third of the survey respondents plan a major change to their sales and marketing operations over the next two years, said Carolyn April, senior director for industry analysis at CompTIA and the study's author.
While many channel companies have been transitioning their businesses for a few years now, one of the bigger surprises revealed in the research was that 23% of respondents plan on hiring a marketing professional. The research didn't get any more granular on hiring, e.g., full-time, part-time, etc.; nevertheless, April interprets the response to the questions as positive.
"The fact that channel companies are doing this at all is an indication that they're taking marketing much more seriously," said April, adding that 90% of IT partner businesses in the CompTIA study fall into the small category, defined by annual revenue of $10 million or less, with many firms closer to $1 million in revenue and fewer than 10 employees.
The CompTIA research showed that at least some degree of business transformation is taking place at three-quarters of channel firms. The biggest driver for business transformation was cloud, noted by 41% of respondents, followed by customer demand for different services and IT delivery models, at 36%; the desire to move to a recurring revenue model, at 35%; and the belief that new financial models are more lucrative, at 32%.
In addition, the following factors are driving business transformation among survey respondents: being pushed by vendors to do so, declining margins on product and needing to stay relevant.
Another dynamic at play: Because cloud services are so easy to purchase, technology budgets are increasingly shifting away from IT departments and toward line-of-business folks. "These new purchasers want to do things fast, and they don't want to have the IT department involved," said April, noting that selling to this new group of buyers shouldn't focus on speeds and feeds but rather on creating a great IT experience.
The shifting of budget from CIOs to business managers changes the sales and marketing conversation. It also means that channel companies will need to retrain existing sales reps or hire a different type of sales professional -- someone good at a consultative sale -- and change marketing efforts to focus on self-branding and the use of social media.
According to April, companies that have already made the transition to managed services tend to be ahead of the game when it comes to changing their sales and marketing strategy compared with their more traditional peers.
This makes sense, as the study noted that more than twice as many MSPs sell to either company owners or non-IT line-of-business executives than do conventional solution providers, who are more than three times as likely to sell to CIOs or IT staff.
Along the same line, the CompTIA research also found that older channel firms are less likely to change their sales and marketing strategy compared with younger companies. Only 22% of channel partners in business for 10-plus years plan on making any major changes to their strategy in the next two years, compared with 35% for companies five to 10 years old, and 44% for companies in business for up to four years.
Half of those partner companies that plan major changes to sales and marketing are medium-sized or large companies, while just 28% of smaller companies said major changes are coming down the pike.
Almost one-third of older partner companies have no plans to change their ways.
What's on tap for changes in marketing strategy? According to CompTIA, 42% of survey respondents said they would use social media; 34% said they would increase the use of white labeling; 32% cited increased thought leadership via webinars, blogs, etc.; 23% said they would hire marketing professionals; and 20% plan to diminish their reliance on vendor branding or vendor certification skills to attract customers.
Among those companies that are already using social media, 73% of respondents said that they would increase their use of social media somewhat or significantly, while 25% will maintain current usage.
Partner companies expecting to escalate their use of social media reported that they would use it to reach new customers, drum up new business and promote themselves.
The research indicates that older companies will take up social media in greater numbers than young companies, with 47% of them saying they will increase their use of social media in the next year. That compares with 31% of firms in business less than five years. The older companies are likely playing catch-up: Only one-third of companies 10 years old or older currently use social media, compared with 40% of companies that are less than five years old.
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