ITP’s CHANNEL Middle East latest feature from Editor Sarah Rizvi looked at “Growing Channel Sales” and took time to listen to VAD’s General Manager Mario M. Veljovic to better understand the VAD’s views.
In an increasingly digital era, channel partners need to adapt the way they interact and sell to customers. Industry leaders highlight how distributors and resellers need to transform to increase sales activity and drive new revenues and customers to capture opportunities.
There has been a paradigm shift in the way channel business has been conducted over the years. What used to be a simple product selling and box moving business has turned into a service oriented and value based model. While this should ideally translate into better business, resellers are finding it difficult to increase their sales and maintain a profitable business due to increasing competition, competitive prices and reducing margins.
Further, a challenging financial climate, weak cash flows and tough financial terms to importers by banks and financial firms have led to long payment cycles with contractors. Add to this the lack of product or technology knowledge and you have a full blown crisis in hand. Although these challenges have attracted a number of newcomers with commercially attractive options to the market, they only add to the number of contenders craving a bigger share of the pie.
Partners need to view these challenges as an opportunity to differentiate themselves by providing services as part of their portfolio and offering customers better returns on their investments. Adding value by providing professional services means developing talent and skill sets, meeting the demands of new and emerging technologies, and dedicating enough time and resources to meet customer demands.
Many resellers have historically focused on fast-moving, high-demand products that are commoditised today, explains Avinash Advani, CEO, Spire Solutions. “This is why there is significant competition at both technology and reseller levels, making it difficult to stand out and achieve healthy profitability. And as customers try to fit multiple projects into the same budget, price dilution and competition keep increasing.”
This essentially means that partners not only need to reassess their existing capabilities and gaps, but also modify their go-to-market strategy to stay on top of the changes that emerging technologies are making to customer demands. They need to evolve with the market by investing in resources that understand digital transformation, as well as, service delivery, advisory capabilities and unique portfolio offerings.
According to IDC research director, Stuart Wilson, the slowdown in GDP growth in the Middle East has impacted budgets and is a driver for customers to try and do more for less. “As many organisations try to leverage their existing infrastructure and systems, this scenario also presents an opportunity for partners to frame customer conversations that respond to their challenges.”
“Channel partners need to reframe their proposition and focus on positive business outcomes – be it growth, improved profitability or cost reduction. Geopolitical considerations and global economic issues can create reluctance from some customers to commit to projects and investment. As such, partners need to demonstrate empathy, while clearly articulating the multiple benefits, positive outcomes and competitive business advantages of their offerings,” explains Wilson.
From an IoT sales perspective, a high level of expertise is needed to make IoT solutions more attractive and understandable by organisations using traditional IT solutions, adds Wisam Yaghmour, director of sales, Middle East, Africa and Pakistan, HID Global.
“Partners need to enlist the help of inbound marketing experts who can understand the customer’s pain points and are laser-focused on optimisation strategy to be better equipped to meet these challenges head-on. Partners can help firms in determining the best use case, calculate the impact of the solutions, conduct mini proof of concepts and create a robust IoT foundation,” explains Yaghmour.
Highlighting the vendor’s point of view, Zacky Vaz, senior regional channel and distribution manager, Fortinet says that vendors prefer partners that can deliver with commitment and focus on solution selling rather than box moving. “Vendors expect partners to offer deployment and support services through proper and dedicated channels. Partners must have an understanding of how to get the most out of the solutions they are selling and be able to transfer that knowledge to their customers. Besides, offering valuable after-sale services is a must to be a value-driven partner.”
Mario M. Veljovic, general manager, VAD Technologies adds that partners need to focus on selling outcome-based IT, rather than just supply IT products. “This means getting deeply involved in the customer’s business and understanding their desired outcome from their IT investments and related KPIs (key performance indicators). Resellers should look at disruptive solutions that ensure lower total cost of ownership and faster return on investments to be successful in wining new customers and, maybe even more importantly, retaining existing ones.”
Another constraint remains reduced customer budgets that have not sprung back since the crash of oil prices. Although these prices have cycled since then, budgets are still not what they used to be. These budgets often get lost in keeping the business up and running, rather than on increasing the capacity to spend on new products.
Understandably, in order to successfully transition into value based selling, resellers should invest in pre-sales advisory and consulting practices, post-sales implementation and support capabilities with a strong focus on customer satisfaction. Investing in technical excellence and customer satisfaction are critical to offering value-add in the sales lifecycle.
Distributors play a very important role in enabling partners to overcome challenges, especially in minimising the impact of the credit crunch that the industry is facing. By offering extensive training programs and organising workshops and seminars, distribution partners can help resellers gain the expertise to deliver solution and services efficiently. Further, distributors and their partners need to develop their niche and become specialised in specific domains, thereby improving their profitability and margins.
The responsibility first lies with the vendors to equip their distributors with the tools to help partners grow their business and make a profit, says Vaz. “This will allow the distributors to support partners financially to help close big deals, assist with deal registration and roll out vendor training and various marketing-related campaigns.”
In turn, regular workshops conducted by distributors can help partners better understand and scrutinise customer needs and then effectively design the best solutions.
K.S. Parag, managing director, FVC emphasises the distributor’s role in providing partners with the right levels of training and certification for the sales and technical team, based on their competency levels. This will help the partner to be more efficient and grow the sales in the tier 2 model.
IDC’s Wilson adds that vendors and distributors should play a pivotal role in driving partner-to-partner collaboration. “This not only helps their channel partners develop and thrive, it also cements the position of vendors and distributors at the heart of these new channel ecosystems. As channel partners move to ‘as-a-service’, they may also require financial assistance as they make the transition to a model based on recurring revenues.”
Wisam Yaghmour, director of sales, MEA and Pakistan, HID Global says, "Partners need to enlist the help of inbound marketing experts who can understand the customers’ pain points and are laser-focused on optimisation strategy to be better equipped to meet these challenges head-on."
Further, vendors and distributors must demonstrate awareness of the current business models employed by their channel partners and provide clear development paths. They must simultaneously evolve their existing channel customer base while also reaching out to new channel partners – especially the ‘born-in-the-cloud’ channel partners that are not constrained by their need to evolve legacy business models.
This will allow the resellers to function as an extended arm of the vendor that is well versed in the vendor’s operations across the sales lifecycle, including handholding, shadowing and coaching techniques.
“We work closely with our top partners to understand what their challenges and requirements are. Accordingly, we put forward a monthly plan to not only help them achieve their goals but also stay profitable. We also ensure that their competency and certification levels are of the highest standards, so that they are very much aligned with the vendor and can drive their businesses,” adds Parag.
“Vendors, distributors and resellers need to work hand in hand to successfully convert leads into profitable business. This will help partners grow their business and the vendor’s market share,” adds Veljovic.
Adding another dimension to the discussion, Motasim Hamdan, channel & alliances director – Gulf and Levant, Software AG says that better quality of service and customer experience will retain the customer base and create an opportunity to increase sales. “There are plenty of new technologies which if leveraged in customer servicing, allow the customer to feel up to date and loyal to the brand/reseller. The progress of IoT, AI, robotics, chatbots and self-service are all ramping up the game for resellers, and for customers to take advantage of improved services. While all these are important considerations to stay with the present vendor/reseller, an authentic and trustworthy association is most imperative for this association to stay and grow.”
Most industry experts agree that cloud, digital transformation and cybersecurity are the key areas that channel partners need to focus on to grow their sales, business and client base. Channel partners must work on developing unique capabilities around topics that fuel market interest and spending such as cloud, security, IoT digital transformation, or aligning with technologies that complement these domains.
Research analysts at IDC predict investment in digital transformation technologies to hit $1.97 trillion by 2022 which indicates that technologies related to digital transformation will take centre-stage in the years leading up to 2022. Digital transformation projects typically involve a broad ecosystem of participants – multiple vendors, other partners, startups and even independent developers. As companies look to digitally transform their businesses, channel partners need to do the same. They have to look into their customers and prospects to find out their key goals, objectives and what they are trying to achieve. Are their goals aligned with the vendor? Do we have the required skills for a successful implementation? By answering questions such as these, they will be able to identify where their focus should be.
To optimise sales, channel partners should be ready to lead these projects and have systems and structures in place to bring in additional expertise through partner-to-partner collaboration where necessary. “There is always a risk in these projects never moving beyond a proof-of-concept stage, meaning investment upfront by the partner for limited guaranteed return from the customer. Balancing this is a key priority. Channel partners need to understand the skills they have available internally for specific projects, but also have a clear plan for how they can bring in additional skills and resources as required,” adds Wilson.
Parag adds that cloud will play an important role in how businesses will transform in this region. “Distributors and resellers alike will need to adopt a cloud strategy and should be able to provide cloud offerings, while cloud services will be key for IT distribution in the region. I also foresee rapid adoption of smart collaboration solutions as organisations focus on reducing OPEX while enhancing their communication abilities and productivity,” states Parag.
Wilson adds that IDC’s research has consistently shown that high growth partners are investing in next generation solutions and services, investing in specialisation, have an open approach towards collaboration and deploy modern marketing techniques. These behaviours feed directly into a channel partner’s ability to develop its own intellectual property, which provides a foundation for continued sales growth and improved profitability.
Most of the SMB and enterprise customers are going through some serious challenges concerning IT resources and budgets. Channel partners need to rethink their strategies to meet customer expectations in this fast-paced, demanding and challenging environment.
However, it is ultimately the resellers’ responsibility to revamp its business strategy to optimise processes, evolve the product portfolio and build an effective team. A refined vision focused on value-add, good leadership to execute strategies, investment in high-performance sales and technical resources, effective training, a solid understanding of digital marketing, and a differentiated product and services portfolio will go a long way in enabling reseller partners to build a profitable business.
The full Feature and the September 2019 Edition of Channel Middle East English can be found online here: