Originally posted on 4/26/2013
Global 1,000 IT companies have sold their products through Value-Added Resellers (VARs) for many years. These allies, also referred to as “channel partners,” have provided tech vendors volume sales without incurring a significant cost in closing the transactions. These “sell-through” relationships have typically been transactional and not nearly as collaborative as “sell-with” partnerships in which salespeople of two or more companies go into customer pitches arm-in-arm. In the past, vendors have simply provided little more than a few pieces of sales collateral, some complex incentive programs, and a support hotline for their VAR community, which numbers in the thousands for big companies, and let their reseller partners drive the bus from there.
The role of the VAR is changing, especially for those selling to midmarket companies. In our forthcoming Q2 2103 Strategic Alliance Magazine cover story on alliances between big and small companies, Manoj Bhatia, CA-AM, senior product marketing manager of go-to-market strategy and alliances for the collaboration business at Cisco, spoke about his company’s new approach to its VAR community. He said the company is cultivating a few select channel partners with whom it will work almost as closely as it does with strategic IT vendor partners—hand-in-hand with an active ongoing dialogue about marketing and product strategy. On the reseller’s side, VARs are now increasingly selling managed services and other offerings that entail them interacting with customers well after the sale thanks to the emergence of cloud-based solutions, which also necessitates closer cooperation with vendors.
For Cisco and Bhatia’s collaboration technologies group, midmarket companies represent a tremendous market opportunity. In his 2013 ASAP Global Alliance Summit presentation “When Your Customer or Partner Is Small,” Bhatia said the market for products that integrate voice, video, data, and applications is $7.1 billion; he added that 75 percent of companies have yet to upgrade to these new networking technologies. Interestingly, the resellers working with Cisco to tap this market share similar DNA with these customers; they are largely SMBs as well.
Take these dynamics together—potentially lucrative midmarket revenues and the increasingly collaborative reseller—and you get an environment in which the classic short-term sales mindset becomes a double-edge sword, according to Bhatia. On one hand, the salesperson’s relentless focus on the deal at hand is perfect for the shorter midmarket sales cycles. However, that mentality won’t necessarily get the most out of the top-tier VARs that show signs of having the chops to rake in vast revenues in the longer term.
“If you focus only on sales and not the rest of the handholding and keeping a constant pulse of the market, you won’t get volume results,” said Bhatia.
He added that it is well worth the investment in time and resources to apply some of the standard alliance methodologies and practices, such as governance and rules of engagement, to this segment of the partner base.
“We don't have to adopt every [alliance tool] for the midmarket, but at least we pick up one very simple principle of alliance management, which is high-touch relationship building and listening to the partner,” he said.
Cisco is betting that patience and a long-term view is going to help these select resellers flourish like they never have before.
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