First, I want to give a shout-out to all of you who sent me such positive feedback on the whitepaper Unified Communications – Capturing the Growth Wave. I truly appreciate your comments and will refer to them in future posts.
I’d like to continue on the topic of improving channel sales performance. As an industry poised for significant growth, the Unified Communications (UC) market is getting quite crowded. More competing vendors are coming onto the UC stage bringing disruptive innovation and new business models, all claiming market leadership. As a result, the resellers of UC aka VAR’s will naturally align with vendors and delivery partners that can lead them to sustained sales success with the least amount of resistance and complications. Are the UC vendors prepared to deal with this?
Question: Are the manufacturing vendors in the Unified Communication (UC) market sufficiently tuned-in to have an affect the sales performance of their indirect sales channel?
My answer is: For the most part, no, not really. Of course the vendors should be in the driver seat when it comes to driving sales performance of their indirect sales channel. However, the economic downturn has accelerated the disruption and evolution of the UC market and the vendors haven’t kept up. Unfortunately some UC vendors have turned inward to sort out their own problems, while their VAR’s are at the epicenter of the economic downturn, experiencing severe problems with shrinking margins, poor cash-flow and limited access to new capital.
Assertion: Sales performance of a UC vendor’s indirect channel is the product of the VAR’s Capabilities and relative Loyalty to the vendor.
- Capability is defined here as the reseller’s knowledge and ability to sell, install and service UC solutions (directly or indirectly), with satisfied customers.
- Loyalty is defined here as a reseller’s enthusiasm and focus on the UC market and commitment to the technology set from the particular vendor.
Based on the assertion above, UC vendors need to find ways to have meaningful impact on their VAR’s capabilities and loyalty (the loyalty aspect will be discussed in a later blog post). However, with the sheer volume of VAR’s, many vendors are struggling to drive incremental, yet meaningful impact of the channel’s capabilities.
Invest in Sales Capabilities
Of course we need to recognize that much has changed since the start of the economic downturn. The business imperatives addressed by UC before the decline embarked on strategic aspects such as driving growth, innovation, speed and flexibility. Vendors pushing this agenda today will find themselves struggling. Our collective logic which justified the business value of UC just 12 months ago is now being heavily scrutinized. Today, the business imperatives and purchasing behavior have shifted to a more balanced and refined criteria, driven by operational economics, such as ROI and TCO. Having said that, it’s almost like some of the vendors haven’t noticed that the market has changed or are waiting for the market to come back to what it once was. We all know it will not. In fact I commented on some marketing messages pushed by leading UC vendors, in a previous post: Who is speaking the language of the customer?
Some VAR’s are struggling with the shift in purchasing behavior and have resorted to compete on price, stripping the solution of most value beyond the intrinsic product value. In order to maintain the focus on value and avoid technology commoditization, vendors need to ensure their sales channels are trained how to sell solutions that deliver measurable business results, not just how the technology works and is installed. The vendor’s success or failure depends on this. The name of the game: Consultative Solution Selling.
To have a chance at driving positive impact on the sales performance, vendors need to take ownership of the sales education beyond traditional product training:
- Consultative selling of UC solutions
- Analyze and calculate solution ROI and TCO
- Selling solutions through leasing or financing options
- Selling UC solutions as a service (Cloud or Saas)
I would also claim that the large volume of VAR’s typically have negative impact on the channel and thus on the sales performance. Since the majority of VAR’s in the channel typically only produce insignificant sales results, vendors should be bolder and drop or de-authorize VAR’s that don’t produce or only sell the vendor’s products when the customer demands it?
Interested in your comments….