Channel News

Distributors - Why bother?

Tuesday, December 02, 2008

Author: Nick Verykios
Beyond the question of “which distributor should a vendor partner with?”, a more relevant question in many cases is – “do I even bother contracting a distributor?”

There is an old Buddhist philosophy that suggests in order to cut through the root of all phenomena and our attachment to its false representations, we need to first cut the root of the mind and its ignorance. This philosophy could not be more relevant to the selection of an ideal distributor. Answering the difficult question of “why bother contracting distribution?” with a contemporary business mind set will assist any vendor in cutting through the plethora of irrelevant (dare I say ignorant) Tender Response documents that focus on whether a distributor will be a good credit provider, or whether they can move boxes around efficiently.

So, do you even bother using a Channel?

First, ask yourself, as a vendor, what do I do? And therefore what do I not do? What does a channel do? What does a customer inevitably buy?

Business fundamentals dictate the need for contemporary channels in various IT sectors to translate complex technology into business benefits. A vendor’s responsibility is to create exceptional technology, create awareness and demand for this technology, and maximise sales.

But ongoing product development, combined with expanding customer awareness, drives the commoditisation of products – even with complex emerging technologies. The predicament from the end-customer perspective is that there is nothing commodity based, discretionary or un-considered about IT purchase decisions. This paradox – the commodity selling of complex technology – presents an enormous dilemma, and with it the real channel opportunity.

The channel therefore must assume the role of translating mass-marketed, complex technology into highly customised business enablement, productivity and continuity initiatives. End-users are not concerned with the technology and the general commoditisation of products, but they do expect that the channel will provide answers to the major concerns of modern business – corporate governance, business productivity, business systems enablement and business continuity.

OK, so a channel is critical to the vendor. Tick!

Now you need to divvy up responsibility and determine, “do I need resellers, distributors or both”? If so, “what kind of distributor”?

Why contract a channel of resellers?

Nobody owns a customer. Get over it! The best anyone can do is rent a customer and the entity best equipped to do so is the reseller. They hold prime contractor (and inevitably trusted advisor) responsibility for as much of their customers IT needs as they can cope with. Yes, resellers are critical. Tick!

In this context, to create the necessary channel culture to resolve the disparate needs of vendors and end-users, you will need to contract a proven “technology translation” model.

In doing so, you will need to contract a channel services provider (typically a distributor) to assist resellers to perform their role profitably. However, in today’s world, distributor must be able to deliver services that a reseller can augment into their own set of credentials and therefore say yes to every deal they come across (where your technology is suitable). In doing so, you have created the ultimate competitive advantage for your technology.

This criterion shifts the decision from “Time & place vs Value-add” to “ALL of the above”.

This allows prime contractors (resellers) to concentrate on their core competencies. In this way they fulfil their obligations to the end-user as competitively as possible.

The distributor must deliver a portfolio of technologies, not just yours (and in some cases competitive so get over it), and services in a business framework that enables vendors and resellers to deliver on the unique IT needs of their customers. The distributor will be free to establish a business partnership with any reseller who holds a transactional or prime contractor relationship with an enterprise to deliver cutting-edge IT initiatives.

Therefore, the distributor will:

  • Help seek out additional revenue opportunities that are outside a resellers core competencies,
  • Help prime vendors realise substantial cost savings, thereby increasing their own profitability, and
  • Provide a strong competitive advantage for its vendors, thereby delivering to them a more permanent and substantial stake in the market.

Yes, distributors of this ilk are critical. Tick!

What is the profile of a contemporary distributor?

Against a plethora of commoditised products with little room to add value, the distributors business model must provide the vendor’s reseller partners a way to differentiate technology, translate it into business initiatives while maintaining the profitability of these technologically advanced IT solutions for their customers.

Clearly there is a need for specialised, technical, service-oriented distribution for contemporary IT products. The distributor must provide excellence in the specialised core functions of an outsourced operations centre for vendors, whilst simultaneously providing significant competitive value and competitive edge to both the vendor and the customer-facing reseller.

The distributors service portfolio needs to be flexible to cater for the varying needs of resellers who will differ based on their level of expertise in a vendors technology and the markets they address. The greater the reseller’s expertise in technology, the less they require from a distributor. That means a distributor must be able to offer a range of services from simple transactions to advanced business services.

Where the prime contractor is already a specialist in your technology, the distributor must be able to handle the ever-growing transactional requirements (eg. creative finance options, on-line ordering, accurate order processing, real-time reporting, license and serial number tracking, enforcement of multi-tier discounts, deal registration authorisation, and end-user contract pricing maintenance).

However, where the prime contractor is an expert in an industry, but less so in your technology, the distributor is required to provide a far broader offering. This may include dedicated technical resources, professional (technology) services, infrastructure design, advanced hardware replacement, staging and technology preparation, technical and sales consulting, education and IT infrastructure design, and specialist training.

Conclusion

A vendor needs a reseller to sell its technology. A vendor needs an effective distributor to make its technology saleable. In both cases, you (the vendor) need to firstly determine what you need from your channel, and identify partners who fulfil those needs.

Work on this premise and you will be successful in your selection. Seek independent advice that can tailor this premise for you, but for your sake, don’t engage in antiquated cookie cutter tender exercises. You will end up at the same place you started; asking the question … “do I even need a distributor”?

Nick Verykios is the Sales & Marketing Director of Distribution Central Pty Ltd. He can be contacted on nverykios@distributioncentral.com


Back to News

Comments From Our Clients

  • "I have worked with Moheb on several channel projects including the ARN IT Industry Awards. He has deep channel knowledge and is passionate about how indirect sales can deliver product to market effectively. I would recommend him to anybody looking to build or improve their sales channel"
    ARN – Editorial Director, ARN, IDG Australia
  • "Moheb, apart from his extensive knowledge of the ANZ channel, is an excellent presenter. I have used him on many occasions to present some "unique" sales training courses, and would wholeheartedly endorse his professionalism and ability to deliver on commitments"
    Adobe – Channel Sales Manager
  • "It's great to finally work with an organisation that understands the simple and practical ways of maximising channel value"
    CA – Director, Channel Sales
  • "Channel Dynamics provided us with a straight forward and completely practical way to teach our channel how to understand and deliver complex messaging to their customers. Through this project we were able to set completely new positioning, in a very efficient and timely manner"
    Cisco – Regional Manager Channel Sales
  • "I have engaged Moheb and Cam for channel surveys and the facilitation of planning sessions. They bring with them a detailed understanding of the ANZ channel and knowledge of the market, and added measurable value back to our organisation."
    Citrix – Manager, Channel Development Team
  • "The Channel Dynamics team was a tremendous help in driving toward a more optimized, streamlined, and rational approach toward managing our channel, and helping them and us to grow"
    Citrix Systems – Area Vice President, ANZ
  • "The team at Channel Dynamics helped us understand the channel landscape, identify complementary partnerships and build a strong value proposition that addresses the IDEAL 15 questions"
    Dell – Channels Director
  • "Cam & Moheb are two of the best guys in the industry. Their knowledge of the channel and their professional approach makes them a pleasure to deal with. They have certainly made a difference to the way we do business - I can't recommend them highly enough"
    D-Link – Marketing Director ANZ
  • "Spot on. Cam had a lot of market knowledge and really stimulated discussions. The content was relevant, and I will be able to apply the content gained to my role."
    Ingram Micro – Product Manager
  • "Cam had excellent (inside) knowledge of the industry"
    iProvide – Partner Manager
  • "The most relevant training for the channel that I've ever seen and the feedback from every member of our sales team who attended his course was fantastic. If you're looking for an effective channel model, have a chat with Moheb."
    itX Group Limited – Marketing Manager
  • "The real value of Channel Dynamics is their channel insight and professional approach. Their research provided us with valuable feedback from executive management within our partners, which gives us the building blocks to develop and enhance our channel program."
    Juniper Networks – Channel & Enterprise Marketing Manager ANZ
  • "The absolute best training course we have ever done. Really hit the hot buttons where we were experiencing difficulties talking to resellers, and enabled us to talk to partners in a much more relevant manner. I would certainly recommend it."
    Lexmark – General Manager Channels
  • "Channel Dynamics delivered a combination of strategy development, training, recruitment, and general board level consultancy that significantly contributed and shaped the growth of our business. I could not recommend them more highly for their professionalism, knowledge, wisdom and experience"
    Mailguard – Sales & Marketing Director
  • "Channel Dynamics helped us focus and build upon our own knowledge and strengths to enable us to go to market with a strong, consistent message. The results were truly remarkable!"
    Netgear – Director - Distribution & Retail
  • "I have done several channel courses, and this one was tailored to the market we address. The other programs were cookie cutter approaches"
    Optus – Channel Manager
  • "Channel Dynamics has helped us to define a partner framework from beginning to end and has consistently exceeded our expectations in regards to their professionalism and the way they transfer their knowledge"
    Software AG – Channel Manager
  • "In one word their course was SUPERB. I also found that it provided a great environment for team building. The course encourages an environment where you learn the personal side to your partners, customers or colleagues"
    Symantec – Business Development, Education Services
  • "Channel Dynamics has always added tremendous value in my role as a Channel Director. The combined experience and knowledge of Moheb & Cam make it very difficult to go past them whether you need to train your staff, build strategy or improve partner engagement. In fact they can pretty much fulfil all your needs when it comes to partnering"
    VMWare – Channel Director
  • "There are many consulting companies but there is only one Channel Dynamics. The difference is their experience. Our engagement with them gave us an insight into our channel requirements that we never would have found by looking from the inside out"
    Watch Guard Technologies – Sales Manager
  • "Channel Dynamics understands our business, customers and partners. We don’t have to spend time teaching them our business - they get it. They are always professional, consistent, focussed on attention to detail, and the follow through is outstanding."
    Westcon – General Manager, ANZ