Analysis: Education leads the charge

Hugh Marquis made himself a promise 20 years ago - to make a difference in education. Ten years later he started Network Neighborhood (No.7), anIT services business with a single mission: "We wanted to provide schools with good, honest support."

Marquis stuck to his promise and now services schools almost exclusively across the Victorian state. The reseller rode the Rudd Government's education revolution and saw revenue rise 108 percent to
$11.98 million.

Niche players such as Network Neighbourhood (see below) did well this year. Of the CRN Fast50's top 10 resellers, two focused on one industry (manufacturing and education). Another two had more than 60 percent in one industry (entertainment and engineering).

However, the statistics show that resellers with highly diversified customer bases were more likely to grow faster. Only six had a customer base comprising three industries or fewer; 23 companies had moderately diversified by servicing four to six industries; and 21 had highly diversified customers
from seven or more verticals.

The breakdown for the average size of customer is almost exactly the same as last year. About 40 percent of business came from small businesses with less than 100 seats. Again, mid-market (100-1000 seats) and enterprise (1000 seats plus) made up 30 percent each.

The statistics suggest there is plenty of action among the SMB segment, which for two years running has provided 70 percent of revenue for the CRN Fast50.

The top four industries is an interesting indicator of which markets drove the most growth in the previous financial year. As a measure of average revenue from industry the top four remained the same as last year.

But financial services and government came off the boil slightly, dropping from 15.4 percent to 10.6 percent and 13.5 percent to10.4 percent respectively.

Education jumped from 9.9 percent to 12.8 percent and manufacturing remained relatively steady at
9 percent, a 1.5 percent drop.

The hangover from the global financial crisis dampened sales for many of last year's CRN Fast50
resellers; several reported their revenues had shrunk despite impressive growth the year before.

However, customers were out there and the ability to discover prospects was clearly an aid to fast growth.

The average CRN Fast50 reseller this year drew 35 percent of their revenue from new customers.
The figures for the top 10 were even more remarkable. The top 10 resellers drew an average 50 percent of revenue from new customers; three of those managed to make it 70 percent.

How did they find customers?

For niche players with strong reputations in their chosen industry, customers often sought them out.
"Most of our customers come to us," says Rob Cheesman of Kettering Professional Services (No.10). "We're beyond most of those shortlists."

Once a name has been established in an industry with only a few hundred potential customers, there
is little need for marketing.