NC: Is there more vendors can do to build a partner’s long-term profitability?
SB: Vendors need to make it easier for partners – if we made it difficult for our customers to work with us, they wouldn’t do any business with us.
Joe Arcuri, Synergy Plus (JA): It’s the frameworks and process, and the lack of control locally. I’ve mapped out our last three-year spend, and our targets are going up every year but our rebate structure is going down. The amount of people that used to cover our account is significantly less, and the response times to get evaluation equipment, data or pricing are not enabling the business to perform.
CS: Ten years ago, if an opportunity came in the door, you would make a call, the machine would work and drive you to a sale. I’ve just come from a recovery meeting today with one of my vendors because I actually went to another provider for equipment I’d spent five months trying to source for an opportunity. It’s too hard. And if I want to do it, I have to achieve full-blown certifications before I can source pricing to do the deal. We spend so much more time managing our vendors. Our job is to bring technologies to market, but because there is so much new technology, it’s a lot harder than it used to be. In fairness to the bigger vendors, they have a lot of technology and there’s lots of stuff coming out they struggle with. We have demand and customers we could sell it to if we could productise it, but it takes a year to productise it because the machine is so slow.
JW: With SMBs like ours with 20 people, you’re dealing with enterprise-level businesses. Vendors have thousands of staff and they’re structured in a way to cope with that size of business. Just that as a principle brings up issues around communications and how you deal with each other. The other thing is larger vendors will have a faster turnaround of staff, so if you’ve built a relationship with someone and it goes, it’s hard. On the flip side, the integrator really has to drive the relationship and grab whoever it is in the vendor or distributor.
JA: If we treated our clients the way our vendors treated us, we’d all be broke. We have lost a significant amount of business in the last few months, and it’s not our fault, it’s because we’re tainted by vendor perception.
SB: We had a significant deal with a printer vendor which we tried to negotiate pricing on, but the vendor just claimed we’d make up the margin on services. But that’s my business.
Brian Nisette, Frontline Systems (BN): Vendors compete with us all the time, which is the problem. One of our vendors is planning to change their compensation plans for staff to gross profit, which means if they give margin to a reseller, the rep gets less commission. So there’s less incentive for him to bring in a reseller.
SM: One of the challenges we see going forward is getting you to invest enough of your time in training and gaining knowledge, so you can successfully deliver these solutions to the end customer. We are privileged to have a large portfolio of solutions, but if we get technology one into a customer and it’s not working properly, we won’t get technology two, three or four in there.
Nick Stranks, Ethan Group (NS): We have had several staff accredited in a vendor’s technology in the past, and have asked the vendor to support us as a result, but then they’ll tell us they’re scrapping the accreditation. We go through it again, but then there’s specialisations introduced in the US, or the rules change. In the meantime, we find out another three partners have been invited into the program without any accreditation at all, yet we’ve spent $800,000 building those resources. If vendors put something in place, it’s either got to be with a select group of partners you concentrate your resources on, or you have to recognise and market the partners who have invested and are doing things well.
JA: What is the value of accreditation for a business partner these days? It’s a me-too. You’re not getting anything special that allows you to continue to invest and back that product into your business and build opportunity around it.
BN: It comes back to that vendor commitment. If I went to vendor Z and said I had a large customer who will only buy from me, I’m sure they’d give me their pricing even though I don’t have the accredited staff. I’d rather invest money in a vendor that I know will support me in a deal.
CW: Do you think that mentality is being driven by the quarterly targets vendors are so focused on?
CS: I’m not sure what the solution is, but it’s huge bugbear for a lot of us who have been in this business a long time. There are vendors we have built whole markets for, who support us in year one or two, then there’s a change and the market we build is suddenly not protected.
TH: Part of that partner profitability equation is about having long-term tenure in your relationships with vendors.
SM: Most importantly, your relationships have to extend beyond the core business unit. You’ve got to take the time to build relationships above, below and sideways because nobody stands still. My question for the table is whether you all prefer some form of specialisation? This at least narrows the field and your expertise is rewarded. Or is it better to stay in a broader, open market where you compete against anyone including the seagulls?
TH: It does depend on how broad your product set is. Specialisation has been built to drive deep capability into the channel. The cost associated with being a broad-brush product with a level of expertise is impossible. So we either rely on distribution or vendor or provide that, or we go deep into one area of technology.
JA: If we wanted to go down the path of having a dedicated relationship with a specialised X or Y vendor, you will get penalised by other vendors around rebates because it’s an attach and measurement. All of a sudden, you’ve lost $100,000 in rebates. You have to measure what’s good for you as an organisation in the front-end, as opposed to what’s right in the back-end and it’s a difficult and fine balance.