mSelling hardware as a channel partner was much easier when the hardware vendor had only two ways to make a buck. Either they sold direct to the customer or only through the dealer channel. But with vendors wanting to offer their customers choices, the buying/selling process is much more complicated today. Most hardware manufacturers offer their customers the choice of either purchasing direct or through the dealer channel. Which begs the question, how can value-added resellers (VARs) and systems integrators convince customers to purchase from them and not direct? In other words, how can you compete with a billion dollar hardware vendor?
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From a vendor perspective, let's look at NEC. The integrated device and semiconductor manufacturer had been doing about 20% of its business through direct sales, before moving exclusively to the channel about a year ago. This move assures resellers that the vendor has no intention of competing with them. The company felt strongly that a hybrid model caused problems and that a 100% pure channel play would work best for everyone involved.
Network Appliance is another company that has been pushing very strongly for more business through its channel partners. Mark Weber, vice president of federal business for the maker of storage solutions, has stated, "We're doing everything we can to get in front of customers. You can't do that with just direct employees. You've got to have partners."
Reseller alliances with systems integrators also help boost the vendor's sales, and the reseller model is a good one for growing companies. Novell has a mixed model for its products. Steve Erdman, VP of channels and alliances at Novell has said that the customers "ought to buy the way they want to buy . . . We're channel-led but it's a customer-driven business."
Imagine the confusion these differing philosophies produce for your customers! As a VAR or systems integrator, you have the ability to add clarity by positioning yourself as the best way to purchase the product.
First and foremost, it's all about the deliverable product. Put yourself in the place of the IT Director. He has to juggle production issues, HR problems and large projects. He'd rather not spend hours looking for the best deal on a piece of hardware. But he doesn't always make the buying decision. Sometimes the procurement department has complete authority over such matters. In some companies, the responsibility is shared.
Whether it's to the IT director or the procurement manager, you have to make the case for buying from you. In order to do so, you must know your product. How is it sold? Can the customer buy direct? Does the vendor discourage purchases of the product from a VAR or systems integrator that is not 'authorized' by the vendor? Are you an authorized reseller of the product?
You must be able to provide value to the customer that they wouldn't otherwise get when buying direct or -- heaven forbid -- from another channel partner. That value can come in different ways. You may be in a position to offer better pricing, given that the hardware vendor is encouraging direct channel sales. If not, can you offer configuration and/or support services? How about faster delivery? Let your customers know exactly what they will gain by purchasing the product from you. A friendly face, some Knicks tickets and a local face to blame when something goes awry, never hurts.
Unquestionably, the best way to convince a possible customer to purchase from you and not direct, is by knowing the customer and knowing the product. That way, you can help the customer make the correct choice, which actually might not even be purchasing it from you. I've seen VARs recommend to customers purchasing direct, though they had the ability to sell a product themselves. Imagine the credibility you earn when you do that. Bottom line is, be honest and real. The customer will always know when you're giving them a raw deal, if not at the time, at a later date. Better to be straight up with them on a given deal and lose that sale, then lose the entire client.
About the author
Ken Milberg is the founder of Unix-Linux Solutions. He is also a board member of Unigroup of NY, the oldest Unix users group in NYC. Ken regularly answers user questions on Unix and Linux interoperability issues as a site expert on SearchOpenSource.com.