|
In the previous issue of CRN, we unveiled the strategies which channel leaders were  considering to make sure that their businesses survived the tough times ahead. For this issue, K R Nambiar asked leading industry executives for their ideas to ensure the channel’s smooth sailing—and came up with this neat list.
Do not press the panic button
“My favorite quote of the season comes from our CEO, Jonathan Schwartz, and he says ‘innovation loves a crisis,’” states Sudhir Nayar, Director of Channels at Sun Microsystems India. “We believe that despite all that is going on around us, Sun is equipped to turn this crisis into an opportunity. We also believe that our partners should see this crisis the same way.”
Most channel executives and industry leaders feel that by pressing the panic button more damage is being done to the existing market turmoil. They agree that October and November were weak, and that market forces are acting against most businesses.
“To a large extent there are sentimental reasons which make consumers and even businesses spend less. There is a lot of bad news in the media because of which customers will tighten their purses. Things are not all that bad in reality,” insists Alok Bharadwaj, Senior Vice President of Canon India. “It is not the time to panic; partners need to stay focused on their business.”
Industry leaders are optimistic that this phase will last at the maximum for a year.
Shift from awareness to conversion
Increasingly, vendors are planning to spend less on awareness-related or branding-related activities while they increasingly focus on activities that will result in business. “At Canon, we call this a shift in strategy from awareness to conversion. In the coming year, we will be deploying strategies and activities which will result in business, and we urge our partners to explore similar engagements,” says Bharadwaj.
Vendors across the board are known to be thinking of better ROI on their marketing investments, and are looking for more bang for their buck.
Get closer to the customer
Here’s another strategy that is recommended by many industry pundits. “In a slowdown, partners need to go back to fundamentals. Make cold calls. Go client list by list. Do the leg-work that many partners haven’t done in the last couple of years when the demand was high, and when all that the partners had to do was go to a customer, get a PO, and deliver. It’s now time to work hard to identify latent demand and convert that,” counsels Ajay Verma, Director, Channels and Alliances, Symantec India.
Adds Bharadwaj, “I would recommend that our partners actually meet 10 customers, rather than do an event and call a few more customers.”
Maximize every sale
Know your customers’ total IT spend, and be aware of how the solution fits into the end-user’s environment. This with a view to maximizing the sale. For example, is there an opportunity for additional software, accessories, printers or PCs? Ask questions to ensure that you are maximizing your selling opportunity.
“It is important that every opportunity to sell is utilized by our partners. That is one of the reasons why we are continuing to offer more products so that resellers have more opportunities to win more business,” informs Ramprasad L, Vice President, Transactional Business, Lenovo India.
He stresses that it’s time channels looked at the new products available for sale, and cites the example of the netbooks which Lenovo had launched. “Something like the netbook is a product which you can sell as an add-on computer, or a second notebook to an existing customer.”
Work with vendors on financing
Most vendors realize that to keep the markets going they need to help end-users as well as channel partners to raise funds. There seems to be plenty of activity in this direction.
“Credit is certainly a pain-point for the Cisco ecosystem, but we have taken steps to mitigate this,” explains R Dhamodaran, the company’s Senior Vice President, Channel Operations and Commercial Strategy, India and Saarc. “In the recent past, Cisco has introduced a financing program called Zero Percent Progress Payment, whereby customers and partners need not make any payment for the first three months after purchase of Cisco’s UC (Unified Communication) solution. This is a dual-pronged financial solution that addresses the needs of partners as well as customers. Through this, Cisco Capital seeks to offer customers in the APAC region a 90-day deferred payment option when deploying the UC solution from Cisco, and at the same time extends payment to partners at the deployment milestones. This ensures that customers and partners are able to focus on the technology and its applications while Cisco takes on the credit burden for the near term.”
Says Bharadwaj of Canon, “We have tied up with Standard Chartered Bank which is now offering credit that is equivalent to the credit extended by Canon to our partners. This means that our partners are now able to get double the credit they were enjoying. Around 50 partners across the country will benefit from this.”
Almost all vendors, from HP to Sun to IBM, have increased their activities in this direction. “It is important for partners to try using the best available resources to fund their customers so that they can continue buying,” comments Nayar of Sun.
Go low on inventories
Because of target pressure, this is not what every sales person from a vendor will advise a partner. Nevertheless, industry experts agree on it. “We have advised channel partners to carry a maximum of 15 days’ inventory,” discloses Bharadwaj. “We have even become less aggressive about selling larger numbers, which we would have been in another scenario.”
Says Sandeep Naik, AMD’s Head of Channel Sales and Distribution for India, Sri Lanka, Bangladesh and Nepal, “AMD is fully committed to protecting the interest of our partners, and has been working on strategies to safeguard their interests. For example, we have been avoiding overstocking at the partners, ensuring various sales out schemes, enabling an increased number of billing cycles, and advising partners to stock fast-moving SKUs coupled with interesting SI-focused sales out schemes.” Apart from lower inventories, Naik suggests smaller stocking cycles and avoiding slow-moving parts in the inventory.
Spend on training
While vendors are advising various forms of cost-cutting, they emphasize that training partners’ technical and sales people will not slow down. On the contrary, they say that next year more funds are being allocated for this purpose.
“This is the right time to spend on training the staff,” analyzes Bharadwaj. “During a high-growth period everyone is busy closing orders and servicing customers. We are advising our partners to focus on training their staff, and are spending more next year to equip our partners with better-trained manpower.”
Sun’s Nayar agrees. “At Sun, we feel that the biggest challenge for channels is properly-trained manpower. Since the effort needed to make a sale will be greater now, we feel that trained manpower will bring down the effort needed. We are therefore launching a number of programs so that the sales force and technical teams at partners are well-equipped to handle the business.”
Symantec’s Verma shares this view. “Training and upgrading skill-sets is another aspect which we believe is key in these recessionary days. It’s a time when customers want solutions that can deliver, hence it requires partners to sell solutions that deliver value to customers. This calls for a complete re-calibration of the go-to market strategy with a lot of focus on value business. Pre-sales will be critical. For this we have beefed up our partner training program, and have launched an enhanced Symantec Partner University.”
Identify the right customers
While the vendors themselves are going after new customers and geographies by adding new product portfolios, solutions to their offerings, and new partners, their partners are being advised to go after the right customers. “There are new market segments opening up, and some of the markets have not slowed at all. The Indian government is proactive and is increasing its spending, which means the government is a good market to go after,” opines Nayar.
Some of the related ideas suggested by vendors include acquiring potential customer databases and trying to package solutions for such bases. Segments such as the government, education and telecom are expected to be healthy. “It is even more critical now that resellers penetrate new markets because large untapped potential still exists,” says Naik.
Focus on the bottomline
Partners are increasingly being advised to focus on the bottomline and not chase targets based on topline revenues. “Every organization must focus on their bottomline during the slowdown, and this is true irrespective of the business model followed,” Bharadwaj notes.
Some industry leaders feel that many partners have never adapted themselves to a bottomline-oriented business, hence it will take them some time to adjust to such a situation.
Invest in systems
“It is extremely important for partners to invest in systems,” says S Rajendran, Chief Marketing Officer, Acer India. “It gives them a very accurate idea of where their business is headed, and what needs to be done. This is even more important in a recessionary economy.”
Most partners will find that they have time in hand since business is expected to be slow, therefore it is the right time to plan and implement systems.
Leverage vendor support
Traditionally, vendors are much more adaptable and considerate during downturns, and hence will be willing to facilitate any extra business. It is good to leverage this opportunity. “We realized that selling will require a lot more effort, so we have decided to reward partners who are putting in that extra effort,” says Verma of Symantec. “For example, we have recently introduced a higher rebate program under our popular Aspire incentive program. We have doubled the rebate from the earlier 5 percent to 10 percent on any extra business, resellers bring in over and above their monthly and quarterly targets. It’s a broad-based program, and is available to any reseller anywhere in India. They simply need to register themselves with us to become part of the program.”
Most vendors have funds available for a growing business, and will be willing to part with some of the money if there is a perceivable return on investment. For instance, Sun has a Partner Growth Fund which has been set up to specifically grow the business.
“Incentivizing sales people at partner organizations is another initiative we have launched with the Real Deal program. This will motivate sales personnel to go out and dig deeper into the market to find opportunities,” says Verma.
Apart from Symantec, most channel-friendly companies are looking at programs where funding of the salaries of the partners’ employees is possible. HP is an example of a company offering such programs.
Show them the ROI
Solution providers must increasingly focus on projects where there is immediate ROI. “One needs to remember that this is a time when customers will look at IT to save costs. It is a time when customers look to technology to save them money, and look for solutions which have faster ROIs. This is what we need to address,” says Nayar of Sun. |