Archive for April, 2010

29
Apr
10

Reseller’s services margins may not be what they seem

Resellers, VARs, Solution Providers, and Channel Managers – this is an important lesson on the profitability of services.  While your (or your partner’s) services may be very profitable, they may not be as profitable as they seem.  As the market has commoditized, I’m seeing far more short product/install contracts…less consultative, long term engagements.  This is particularly  true in the mid and smaller markets. What is the result.

Listen and see how calculations on profit, gross profit, and net profit are sometimes confusing.  To the sales rep, all GP is good – you get paid, right?  To the person with P&L responsibility, the numbers don’t always add up…I frequently run into people who initially think they have strong services margin.  When I show them how to calculate it, we find profits to be much lower apart from the product sales.

© David Stelzl, 2010

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28
Apr
10

Who’s in charge of JMF and Marketing/Training funds?

What happens when the people in charge don’t get it?  The value solution providers (VARs, Resellers, Consultants, etc.) bring to their clients has more to do with the business advantage they bring and less to do with the features…yet I am hearing the disturbing message this is being sacrificed in the name of budget constraints.  Here is what I am hearing from the field:

1. When distributors bring together their clients (generally mid market and SMB resellers), the attendees need to hear from industry experts, receive business building strategies, and be challenged by new ideas.  Thousands will be spent on the travel, accommodations, and food, not to mention opportunity cost.  Why would those in charge allow free speakers from the manufacturer to dominate these sessions with product information?  It’s all available online and it’s all commodity stuff…I’ve heard numerous comments this year along the lines of, “waste of time.”

2. When “Vendor” sponsored training is forced on the reseller (forced may be a strong word – but this is the way I receive the message from resellers I work with), why is it so product centric with “speeds and feeds”, when what is needed is a message that resonates with senior managers, negotiation skills, and marketing insight.  It’s rare to find people making these decisions who understand the reseller business, financial model, and competitive pressures, so bring in someone who knows.

3. I recently learned of a major reseller who went through several days of sales training with HP specifically on building their message. After attending my Mastering Board Room Presentations (where we were going to focus on delivering  their new message) they told me, “Our message stinks.”

4. When marketing dollars are available (which they always are if you sell enough product), why do the people managing these budgets insist that it be spent on golf outings, call blitzes, and product specials?  These programs are proven failures…I’m told by sales people and VAR business owners, “We’d gladly sacrifice the outings for outstanding content and training.”

5. “Stop telling me there’s no money available.  Instead, give me the criteria for getting the money I see others getting.”  It’s no secret, money is being spent on marketing and  training…if it’s not, the channel is dead. But who will get it and who dictates who it will be spent?  The criteria needs to be clear, and the reseller’s choice of partners should take this into consideration.  There’s no sense in trying to build this business alone – channel partners are needed, great channel managers are needed, and resllers who think they can build a business without the product are wrong.  When synergy exists between the two, a winning combination is formed.  But this requires an understanding of how to invest and partner in a way that produces profit.

© David Stelzl 2010

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26
Apr
10

Risk assessments sell every kind of product and service!

How are resellers showing an ROI on managed services deals in order to sell them?  (If you are in channels, I’d be interested in hearing what you are seeing from your partners as well).  Here are some observations along with a White Paper I have written on using assessments to accelerate sales cycles by providing justification to the buyer through risk.

WHITE PAPER: (click and download the Assessment document)

  1. Differentiation and closing the deal seems to have little bearing on the platform; Nable, Zenith, LPI, Kaseya,…some are  better than others technically, but none are great.  The differentiation seems to be in the offering and services provided locally more than the platform.  The better implementations are largely customized and target only small and mid-market opportunities.  After that it’s custom or OEM’d.
  2. Companies that try to show an ROI simply invite an audit of past service calls.  This leads to long sales cycles.
  3. The initial offering may look promising, however once the reseller’s current customer base has been exhausted, sales plateau.  New customers are needed…but hard to find.
  4. Small businesses won’t sign up for monitoring unless the seller can show some kind of justification.  Often they can not.
  5. Reporting is poor among most platforms – the client doesn’t receive much value here.  Trying to creating quarterly value is often a struggle leading to resellers putting their SE’s on site to demonstrate value.  This is done without an accurate counting of the opportunity cost, and is often the thing that makes the monthly contract unprofitable (something generally hidden in the financials.)

Personally I have found that assessments work as deal accelerators (when they focus on risk analysis) – we’ve done them in every sized account; some complementary, others for a fee.  The deal is closed when justified by demonstrating a high likelihood of loss.  What are you seeing?  I’d love to hear your comments on this and the white paper!  If it’s helpful, feel free to pass it on.

© David Stelzl, 2010

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23
Apr
10

Master of the Board Room Presentation

Here is my star performer – Timmy!

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22
Apr
10

Seth Godin

I just finished reading Seth Godin’s latest book, Linchpin, and I find myself quoting some of his thought provoking comments as I am encouraging sales people to be proactive in their businesses.  There is an urgent need refocus on learning and studying the business, the market, and the trends that are driving our industry.  He has some great thoughts here on what differentiates the average from the spectacular “linchpin” employee.  This audio link came in this morning with Godin’s permission to pass it on – it’s Seth talking about the Linchpin.  I hope you find this helpful as you build your business…

http://www.feedblitz.com/t2.asp?/198516/6203348/3827409/http://sethgodin.typepad.com/files/linchpinsessionsethgodinapril.mp3

21
Apr
10

New Rules of Marketing

If you resell technology, stop wasting joint marketing funds provided by your partners.  Over a billion dollars in unspent funds are reported each year, meaning there is money available, however, dysfunctional marketing campaigns are destroying the channel’s ability to access this money.  Use this money with a well planned marketing strategy and show a return – earn the right to more than your share.  Companies like HP, Cisco, Oracle, Sonicwall, etc. all have funds to support these types of activities.  The goal should be to choose your partners based partly on technology and partly on their willingness and ability to support you as a reseller.  From there, it’s up to you to demonstrate your ability to bring incremental business to the table.  But be careful…

Marketing is different now!  You can’t run an event and advertise “storge UC/Voip, Data Center, or Network Security” and expect decision makers to show up, and you can’t have your local vendor or internal SE be your featured lunch-and-learn speaker.  However, events are a great way to attract higher level audiences if you present the right things in the right way.  Educational based marketing is powerful, and between social media and properly planned events, resellers can demonstrate tremendous value.  This video provides a few minutes of insight on this important subject!

© David Stelzl 2010

20
Apr
10

Google Attack Update & the Wonders of Cloud Computing

More on Cloud Computing and Google in today’s WSJ:  These sound bites are relevant when selling against cloud computing giants that threaten to take over your business:

1. Google apps = Cloud computing.  Let’s not mix words here…this is cloud computing. This is not about Google – it’s about any major online target that causes someone outside the company to want or need something inside.

2. China is not happy with Google – this could be anyone not happy with a company you are dealing with such as customer dissatisfaction issues.

3.”gained access to computer code for the software that authenticates users of Google’s email, calendar and other online programs,…”  Simply put, online programs means Google applications that may contain personal or business related content.  Google hosts email for businesses and individuals, as well as a number of online apps that are used in both cases.

4. Hundreds of companies…it’s spreading:  Quote from the Journal…

“But some security experts suspect a group of attackers that has penetrated hundreds more companies since Google went public with its attacks in January. “The exact same group has been exceptionally active,” said one person familiar with the attacks Google announced.

The group, which is believed to be Chinese and has been identified by investigators by its attack methods, has broadened its victims to include law firms and utility companies, this person said. It’s been penetrating companies at a rate of at least 20-50 new companies a week, this person added.”

Also note my video comments following a recent talk I did on protecting assets to Tampa based business leaders: http://davidstelzl.com/2010/03/30/tampa-event-post-interview-part-ii-cloud-computing/

© David Stelzl, 2010

20
Apr
10

I reallocated!

Great messaging demands reallocation not budget.  Why did I spend a significant amount of unbudgeted money yesterday!  Here’s why…(this same goes for your prospects)

Here’s how a dentist I didn’t know made a sale to someone who rarely spends money on unbudgeted items or services:

1. This dentist invested time in research and began educating people like my wife (someone with a keen interest in health issues) on the detrimental effects of mercury in fillings.  Education is the key word here – notice I did not say, “blasted us with marketing, advertising, and spam.”  He used sound bites, attraction stories, and trends to create the credibility required to move to the next step of “Buyer permission.”

2. He then offers an assessment.  In his case there is a cost, however he willingly provided some  complementary phone consultation to validate his educational process.  The fee for assessment was low, but the deliverable very informative.  Through the process of examination, photos, x-ray, and inspection he determines the condition of the original fillings, the dangers in leaving things as they are, and the side effects of mercury toxicity to show how it may be effecting the patient (in this case me).  This is all done in a non-technical way, directly with the asset owner – the person with the teeth.

3. Options…clients like options vs. “take it or leave it” recommendations.  This puts the buyer in control at some level, without losing control of the sale.  At the end of this process I did not choose the most expensive option, however I did opt to do more than the minimum.  Why?  Because I felt like  I was receiving honest, informative advisement.  So in the end, my adviser didn’t recommend the most expensive option, he just offered it.  He directed me to an affordable option that covered the most important issues.

4. Closing the deal…once I understood the options, he gained verbal commitment based on prices and services we had agreed on.  An agreement was presented and I signed.

This is a near perfect example of educational marketing – the kind of marketing today’s businesses demand if they are to part with their money.  Even budgeted money is not an easy sale; it still requires justification and buyer level approval before it can be spent.  If you’re in sales, you are also in the educational marketing and advisory business.  If you’re not, your selling days are limited.  Find out more about educational marketing and what I am doing to help sales people master this at http://www.stelzl.us/sales_development_marketing.asp

© David Stelzl 2010

16
Apr
10

You actually did it!

Last Saturday I attended our quarterly National Speakers Association Meeting.  While there, I had the pleasure of running into the person who originally directed me to this association seven years ago – the year I started this business.  It’s been seven years since I’ve since this person, so I was grateful to see him and expressed my gratitude for having pointed me in this career enhancing direction.  He exclaimed, “It’s rare to give someone a recommendation and then have them actually follow through – even when it’s a great idea”.  This is so true – millions of people are running around, attending training classes, listening to videos (instead of reading books), and asking for advice.  Numbers are generally down, and people’s lives  are a mess.  Yet, few ever take the counsel they receive, regardless of how wise it is.  Instead we wallow in our own failure, whining about misfortune and hard times.  Success requires putting past failures and trials behind us, noting the lessons learned, and forging ahead with wise counsel surrounding us as we take each step.  Who are your counselors and are you considering their ideas?

14
Apr
10

History of the Reseller

If you are reselling technology your business may be headed for trouble.  Don’t expect an economic recovery without taking steps to change your approach to the market…find out why in this video.  In this video I speak candidly to small and mid-sized resellers about market trends and what factors play into future growth and stability.  It’s a sobering message.




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