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Evolve to Solutions
‘Value Add’ – a potentially powerful word in channel business; unfortunately has become such a cliché today that both the customers and vendors have started turning a deaf ear to any channel entity who mentions this in his claim towards being a better alternative.
After the rise and consolidation of broad based volume distributors, what is clear is that the Indian IT market is fast seeing the emergence of a new breed of Channels: The Super Retailers and The Direct Marketing Specialists. Both these entities are based on huge investments in infrastructure and technology, criteria that a normal channel partner finds difficult to emulate. However, system integrators have evolved over the years to play a key role and bridge the gap between the progressive channels and their partners.
To illustrate this further, let me quote a recent news snippet from a leading Indian business daily – “A Pune based two wheeler manufacturer has announced plans to float a direct selling company which will focus on selling financial products, consumer items and PCs.”
As a progressive company, the vendor is constantly looking to build and evolve effective ‘Value Networks’. Within this chain, the marketing channel is an integral part – customer facing link of the Value Network. The traditional approach on which channel decisions were based was evaluating pros and cons of ‘Direct Sales force’ vs. ‘Indirect Channels’. In a diverse economy like
However with the advances in Internet, Telecommunications and organized Retail, vendors will increasingly face newer and better alternatives over the traditional ‘Indirect Channels’ route.
Direct Marketing channels (Internet, Tele Marketing, Direct Contact specialists etc) which provide a direct interface with customer, are best suited for low to medium involvement products. Vendors will do trade offs between value added per sale and cost per transaction. In fact they may adopt strategies to ‘switch’ customers to ‘low cost’ channels, even if it requires incentives at initial stages. And be aware, the definition of low involvement or low touch products will increasingly cover products which look complex today.
What does this translate into in terms of the net outcome on the channel partner today?
As a partner, the immediate concern must be to look at your business mix in the same way you look at your customer/ accounts mix. There must be a continuous upgradation up the value chain on the key solutions a networked economy may need. Network Uptime Solutions for example is one such opportunity for many hardware and software focused channel partners.
For the low involvement/low cost items, bring in cost efficiency on distribution and implement ‘high touch’, localized value adds/perks to differentiate. Always keep in mind that the bread and butter will come from the ‘Solutions’ designed around the high involvement offerings. A simple way to gain solutions specialization is to benchmark with the best of vendors or System Integrators in that solution category. Avoid their overheads, but match their capabilities and skill sets.
Let’s take the example of a network uptime solutions provider. The vendor reorganized his business to create Champions of Network Uptime Solutions for its customers over an entire power requirement range that has been available in the market. As part of the move to go indirect few years back, it also extended the same opportunity to its business partners. There was conscious investment made to build similar levels of ‘Network Uptime Solutions’ capabilities within each partner’s offices.
The result is a vibrant team of ‘Network Uptime Solutions’ evangelists who don’t need to talk price first to customers. These partners truly understand the customer’s uptime needs and propose Total Cost of Ownership based and budget bound solutions to customers. Customers in turn appreciate the special expertise and differentiation and most of the times are ready to pay sensibly for the value rather than limit themselves by the lowest price criteria.
For any partner, a solution evolves only when the partner is active in all stages of the sales cycle spanning lead generation, qualifying cases, pre-sales, closures, logistics, installation and commissioning, collection, post sales support and the most crucial activity of account management. The ‘Solutions Specialist’ Partner must create value around his organization beyond the sales or service attendance commitments. There must be an effort to brand that value and market the same. E.g. M/s XYZ Inc is itself a brand with certain value over and above the Vendor brand it represents.
Further the partner must invest strategically in able people and effective systems beyond the mandatory networking (the contacts). The partner must not only proactively invest in capabilities upgradations on its main solutions but also look to offer solutions that complement related needs that customer sites.
Partners graduating towards solutions must know that vendors do not engage channels only for economic advantage, but they need channel partners who are responsive. Vendors will prefer a channel member who presents minimum risk to their ability to adapt in a volatile and ever changing market place. A high degree of commitment to the vendor’s long term plans and an inclination to align with the vendor’s mission statement provides the impetus for vendor to invest more in the particular channel infrastructure. The ideal situation can be exclusive commitments by the partner to selected vendors, the fruits of which take a long time to mature, but offer definite opportunity to become a Solution Specialist in that line of business.
In a market where we will see increasing ‘Virtual Channel’ alliances guided by Internet and Technology, it is critical for every Box Mover to seriously introspect his business’ future.
Every related ‘Need’ of the customer and every ‘Reach Constraint’ of the vendor can be looked as possibilities to offer a ‘Solution’. A ‘Solution Specialist’ channel partner can thus create a Win-Win situation for both the customer and the vendor.