May 13, 2013

Channel Survey: 25% of resellers fired a vendor last year. Are you next?

This blog was co-authored by Mike Howell, channel marketing manager with Enterasys

An Enterasys channel survey found that resellers are struggling to position themselves to remain competitive in their rapidly-changing high tech market. Poor support from vendors can be crippling in this market, to the point where 25% of resellers worldwide and 33% of US resellers have had to fire their vendors.

More than ever, resellers are focused on positioning themselves as solution providers as they struggle to make-up for diminishing hardware margins. They need to thoroughly understand their customers’ business and challenges to be able to add value. To provide a higher level of support to their customers, resellers need to be able to depend on strong support from their vendors. This could leave many mature and emerging technology manufacturers out in the cold as the resellers fill their dance cards with only the strongest players.

Top trends this year

The Channel: The move to selling integrated solutions is by far the hottest trend in the channel today. Why? The primary reason is that hardware margins have eroded. Resellers simply can’t make enough profit on the hardware only and have turned to integration and the delivery of services.

Technology: Channel partners are looking at BYOD and Mobility, and how this fits in with their current—and possibility new—business models. While most IT vendors have responded with messaging around BYOD, there are striking differences in the types and capabilities of solutions in the market. These vary greatly in the way they address customer challenges and therefore how well they enable the channel’s success.

Business Challenges: In addition to tried-and-true channel challenges related to finding and closing new business—namely providing access to leads and avoiding channel conflict—partners are struggling to support their existing customers. Poor vendor service and support is a key concern. Support is critical since resellers simply cannot afford to hire a staff of engineers to support every manufacturer they carry. As a result, resellers need to lean heavily on their vendors for support.

Channel Trends Infographic

4639-Channel-Infographic_v5

Top 3 things vendors must do to support the channel

If you are a technology vendor and want to be channel-focused, here’s where you need to start. These are the top 3 critical things your channel needs now:

  1. Open Interoperability – As the channel seeks to enhance its line of offerings through broader solutions, integration is increasingly important. While many vendors talk about the openness of their products, interoperability can be a challenge. Manufactures need to provide integration points, but also communicate transparently with partners about capabilities and what is and is not included out of the box.
  2. Service and Support Insourced – At a time when everyone is under increased cost pressure, many manufacturers have outsourced post-sales support. The result is that resellers are unhappy with their vendors’ service and support. This is negatively impacting their ability to deliver integrated solutions and pursue new business models. IT vendors need to excel here, consistently providing outstanding customer and partner support.
  3. Mutually Successful Relationships – A great deal goes into creating a successful business relationship. Managing channel conflict tops the list. While eliminating it totally isn’t realistic, vendors need to be diligent about avoiding it where possible. The proof point is that partners say over-distribution is their second largest challenge.

In an environment where technology, business models, and market conditions are shifting simultaneously, partnerships are under close scrutiny from the channel and vendors. Both are evaluating current and potential partnerships. Those relationships that make sense are nurtured, and those that don’t are being terminated. Resellers need to carefully define what it means to them to work with a “channel friendly” vendor. Likewise, manufactures need to focus on the right key areas to truly support their partners’ business.

Sources:

1. Enterasys Global Partner Survey.
2. Constellation Research.

 

If you want to embed this Infographic on your website, please copy and paste this code:

<div style=”width: 720px”> <a href=”http://blogs.enterasys.com/channelsurvey-25-percentof-resellers-fired-a-vendor-last-year-are-you-next” /> <img src=”http://blogs.enterasys.com/wp-content/uploads/2013/05/Enterasys-Channel-Survey-Infographic.jpg” alt=”2013 Channel Survey Infographic” /></a><br/> Infographic authored by <a href=”http://www.enterasys.com/”>Enterasys Networks</a>. To view the original post, see the original <a href=”http://blogs.enterasys.com/sdn-it-is-about-new-services-simplicity-and-agility”>2013 Channel Survey Infographic</a>.</div>

About The Contributor:
Bob NoelDirector of Global Field Marketing

See My Other Posts

  • http://www.bilal.ca/ Bilal Jaffery

    Great point about service being insourced vs outsourced.

    • http://twitter.com/RobertNoel3 Robert Noel

      Thank you Bilal. ROI for the additional cost of insourcining is found in customer retention and loyalty. Value added resellers work very hard to win new customers and want to align themselves with vendors who protect that relationship by fostering strong customer loyalty.

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  • Stuart Armstrong

    Hello. Great survey. Thats very high churn in a mature 30 year old market. LEADGEN no1 pet peeve (again).

    As my VP Channels used to tell me at Digital Equipment a few years back “son, wanna succeed with VAR CEO’s/Owners – 1) find out what makes their cash register ring and work backwards (ie LEADS, BIZDEV, GMs) and, 2) “don’t interfere with their existing run rate business, find a way to enhance it or find new markets for them.” (TRUST), 3) FIX em or flush em.
    Vendor

    The recent PartnerPath blog post hints that the Tier 1 vendors are still struggling with “partner enablement”, leaving lots of room for smaller vendors to grab “mindshare” and “bizshare”.

    http://partner-path.com/blog/2013/05/09/partnering_new_enablement/

    regards,

    Stuart

    (ex Arrow, Westcon, Avaya, Digital, Altos)