Maree Lowe: You also look for someone who's an entree into the market. With some of the more recent opportunities we've been involved in, particularly in the imaging area it's a major (partner) who knows that corporate customer, the risk of the project is so huge that as an SMB reseller we'll never get that business but if we work with that major partner we'll deliver what we do well and they'll deliver their portion. We've done that with some recent bids where someone has the product and we had the services.
Scott Robertson: We've seen that with our resellers as well. They may be a data storage player and they've got their customer lists but they work with a security reseller who can therefore provide the security around that database solution so by introducing to each others' accounts they are naturally expanding their reach into these existing customers - it's a natural way to grow, it's kind of organic growth through a partnership.
Security has been a great avenue for a lot of specialised partners and infrastructure players to get in and once you've handed over your security to a partner, a reseller, there's a huge element of trust behind that. We went into an education account with a security lead - the solution for us was maybe only $20,000 but the virtualisation contract [the reseller won] over the three-year life of the deal was worth hundreds of thousands [of dollars] to them.
It was a very large deal over the whole [UTM/XTM] infrastructure and those are the sorts of deals we want to introduce to other partners. It was an interesting case of specialisation getting them into that account and then being able to broaden the space out into the rest of the infrastructure.
Ross Cochrane: There's an interesting dynamic - from a vendor perspective, specialisation is what vendors push and they drive the channel to be like that. Resellers want that specialisation and get that recognition but a lot of end customers prefer to have one relationship and get those people to take care of everything.
[The end-user] is not that interested in the vendor, that they have that specialisation just in voice; they don't want the voice to work only, they want the whole thing to work.
We have seen some of our resellers take the approach that they are becoming more generalist so the trend is that resellers' go-to-market strategy is more customer centric than technology centric. They don't go away with a list and say I only do voice and I only do security, do you want to buy those?
They can't afford to do that, they go to the customer, try to understand what the customer's issues are and leverage that relationship to find opportunities and then they have to find the resources from their own base or partner and bring people in as they need to.
In this environment a lot of resellers understand that chasing new customers is an expensive exercise. They are often serviced by somebody else, anyway, and quite often going back to your existing base, and really trying to understand how you sell them more technology, how you help them get more benefit out of the technology you've already sold them by delivering more service or upgrading them or doing whatever (is the best) approach.
Most resellers, if you asked "how many customers do you have?" they'll exaggerate the number, often greatly. Like in most businesses, there's going to be a small number [of customers] that make up most of the business and little bits they've done somewhere along the way that they'll call a customer - it's probably somebody else's customer - and for many of them, they're starting to turn around and say, 'well, hang on, if I really focus on my core competencies and go for the relationships I've already invested in there are opportunities if I just spend some time working them out'.
CRN: From where does the push to mid-markets come? Is it because bigger customers are holding off spending coming into the recession? How should resellers deal with that?
Wendy O'Keeffe: The vendors have been looking at that since 2008, late 2007 so I don't think that's a recession issue per se other than that if you look at how the vendors globally have grown at phenomenal rates. They've been seeking geographies and technologies to keep that growth. So the mid-market became a discussion 16 months ago.
John Walters: In addition to that, technology has become more ubiquitous. Then obviously the enterprise level, vendors and the technology they bring to market has a role to play in the SMB market.
David Henderson: Trying to move a vendor out of an enterprise is exceedingly expensive. Trying to enter a market through SMBs is low margins and a lot of marketing. As a vendor, if you're coming into the market, it's the mid-tier you have to address because it's the easiest point of entry, it's sales-driven so you see a lot of activity.
In the recession we're seeing negative to flat growth in the enterprise and we all know that SMB is just surviving, so the only growth market would be mid-tier. The behaviour is being driven by access to the market and cascading enterprise technology down to the mid-tier. It's not about the recession, it's a business conversation.
A lot of Australia and all of New Zealand is mid-market. Our market is exactly mid-tier and SMB.
CRN: What opportunities does China present for resellers?
David Henderson: China's coming out of this economic maelstrom better and quicker than anyone else. They are buying commodities now and putting them in warehouses but it's still a very high-growth environment internally.
They're still building; they still need designers, engineers and architects. There's a lot of engineering companies and architects in Australia that service that market and you'll see more of that. I feel a great deal of optimism because of China. Local resellers will benefit from that Asian perspective.
Ross Cochrane: In this kind of economy it's high risk. Most resellers are saying to us they're not looking for big risk, they're looking for something they're pretty comfortable with. If you are already selling (to architects) but if you're deciding to go and find some new customers in that space you will probably find that market is saturated with existing resellers.
We signed Autodesk recently and we found a whole lot of resellers we didn't even know existed who specialised in that area. An interesting thing is it depends on your definition because if you have a business geared for 50 percent growth, you design a business around the kind of high market-growth expectations - and IT has high-growth market expectations - vendors, distributors and resellers have all been in this environment where, hey, isn't it boring, engineering is growing at 4 percent and we're in this 30 percent growth industry and we all build business models that expect that. And when it changes, that's the challenge: how do you change from this high-growth expectation to a much more mature (industry).
And my view is that we need to learn how to cope with that long-term because it will go from being this high growth (industry). We were getting growth rates of 70-80 percent in the glory days of the mid-90s and high-margin.
Suddenly the conditions change and your model is one that is exposed that needs high-growth and a lot of lubrication around it in terms of margin and all of a sudden you find that doesn't exist and you go, 'Whoa!' That's the challenge, that's where that risk comes in, because you say I'm already exposed because conditions have changed and now on top of that what I need to find is a level where I've got a sustainable model that works for these conditions, which might be the forever conditions. My view is the future will look more like the present than it looks like the past.
David Henderson: So is this just a boring downturn?
Ross Cochrane: We're in better shape today than when the dot-com bust happened. When that happened the channel was in much poorer shape and that had bigger impact. We're in better shape today, there's more skills, there's more depth, there's more quality in the businesses than there was back then.
The tactics of surviving the downturn
CRN: Marketing is an area where resellers can do a better job. It's a core business skill to get out there to tell a customer why they should go to them rather than to someone else. Where are resellers still lacking?
Maree Lowe: For the past two weeks we've been very busy on a business plan for a new product and it was interesting to go look at what we have been doing and where our current marketing strategies are and looking at the research and the major importance of what we all know is the web, search capabilities, email [electronic direct mail] as opposed to direct mail [in the post].
The importance of conferences and just seeing how over the next 24 months the message was clearly: digital, digital, digital. I've stopped opening the paper. I'm thinking digital marketing is much cheaper and far more cost-effective. I have 23,000 [prospects] in the database and I could bring it down to 13,000 and I could bring it down again and how good is the database?
Do I have it in shape to be really working with it digitally? When you're looking at a business plan, I'm thinking short-term, long-term. The short-term is what drives you today and the next couple of years, but trying to bank on do we go down this investment path, do we train our people, is this going to be a one-year or two-year business plan?
I remember a certain storage product eight years ago, evangelised for two years and no one wanted to know about it and then all of a sudden, bang, it goes to the top of the list.
So trying to work these decisions of where to put the money in, now knowing it won't give a return. And normally in tough times you batten the hatches and stop R&D and anything that isn't earning the dollars, you put it a little on the back-burner - I think they're the really difficult things.
Short term, what do I have to do? You have 185 people - how do you keep all around the country boiling and yet how do I bank on what next year's wave is going to be and the investment I have to put in there? And that's what I find difficult.
David Henderson: The thing that I found interesting is we had two partners who called lists, 500 customers, cold. The first partner made 56 appointments - 10 percent conversion - that's really impressive. The second partner [had 90 appointments].
The conclusion we're drawing from that is customers are of a mind to look at their options. This is the time to take every dollar you have and ram it into marketing. It's really about driving customers now because as we have a conversation about costs customers are thinking that maybe they should be doing something different?
So I think this is a fantastic time for resellers to go out and really drive marketing campaigns. But not the big-bang stuff; go to a customer and say: 'Here is the value proposition'.
The first critical thing is to understand what you are offering and then ram it into a market segment and I think you're going to find a very, very fertile field.
Wayne Small: How do you explain the difference in success rates? Did you use a telemarketing company?
David Henderson: I thought 10 percent was really fantastic. We had our sales organisation, myself and our partner sales organisation on the phone doing cold calling . . . around VMWare. Who's going to argue with: 'We think you can save 80 percent on your infrastructure?' Who's going to argue with you?
CRN: David, do you think that degree of openness from the end-user is the fear of going with the wrong option, to have explored every avenue so that they're not exposed?
David Henderson: If you're sitting in a bunker as a reseller trying to protect what you have, I have really bad news for you. The back door to the bunker is wide open. You have to be in there, really close and talking about opportunities [with your customers]. We have a real sense of optimism about that.
Paul Voges: What has changed in the past 12 months has been, particularly in a high-growth market, the customers were interested in technology because they were trying to differentiate themselves - you think of a CIO's view of the world. Now with the cost pressures they're under the difference between a good reseller and a reseller that needs some development are the ones that know how to sell a really strong business case, because the reseller has to uncover latent demand and bring some awareness to a customer that hasn't thought about an issue before and articulate a very clear business case.
In the past, there's lots of savings and efficiencies promised [by resellers] but I think one of the reasons why the dot-com [bust] occurred was because IT lost a lot of confidence from the customer audience and now it's a skill the reseller needs - not just marketing but that real strong returns [on investment] story for the customer that he can't articulate.
A customer can have the best intentions in the world but is not going to sign the contract, spend another $100,000 or a million dollars unless they can show to their board [a good return on investment]. What we are seeing a change in is where in the past a CIO had the power to sign a sales transaction that is now going to the board. So that skills set is more important.
There will be a lot of dialogue, a lot of interest but the hard, financial case will be more important now than ever.
Wendy O'Keeffe: We're an SMB in this market . . . 250 people in Asia and we don't get any engagement from resellers. I'm not criticising . . . and when we go to markets for an engagement we've already written our scope, we've already thought about what we want and we'll go and specifically target it.
But we don't have the reseller coming back afterwards going 'how did it go, did you have a good implementation, did you get the return on investment that you want'. Nothing.
We did a Sharepoint thing last year and we have three stages of that but the resellers didn't come back and ask us if we're at stage two. And it's a huge issue.
Gerard Florian: The days of running a campaign and jagging a large deal is highly unlikely. The sheer buying pattern of most organisations now is as a distributor. So your Sharepoint project isn't one massive project it's three or four projects. So from a marketing point of view part of the challenge is to continue to drive marketing messages around successful deployments as well as features, benefits.
You take your Windows 7 story and there's going to be an initial hype phase, which obviously the vendor will be responsible for, but then there's going to be a range of things to come after that . . . so from a marketing point of view that becomes a real challenge, as well is how to put those messages out.
A case study not of a win but how is Sharepoint going 12 months [after implementation] is of far more value than someone who has signed with an intent over the next three years to spend all this money and we never hear what ultimately happens to it.
Wayne Small: One of the biggest things I find a lot of my colleagues don't do in the market is they don't go back and say 'how did that deployment go, was it a good experience for you, what can we do better?' They don't seek this process of continual improvement in themselves and what they're doing and therefore they don't get more business from that customer.
From a marketing perspective we get probably 99 percent of our business from word of mouth and we're on target for somewhere between 70-80 percent revenue growth this year. We can't put staff on fast enough, good staff. This is a problem we want to have. It's also a really hard problem. One of the key reasons why we're growing is we're maintaining that relationship with the client. We're going back to you after the deployment and saying: How was it? What can we do better?
In a lot of larger organisations there's an account manager that looks after that client and he gets moved somewhere else so the client loses that contact.
Wendy O'Keeffe: What also happens is that the specialist put in to do the implementation - the engineer or certified engineer - they're not sales guys, they do their bit and they walk away.
Wayne Small: But it's those guys that build the relationship with the client and that's how you get the continuing sales.
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