Friday, September 4, 2009

Distribution’s Role in Success

This is the third blog post based on the keynote I delivered at the SMB Alliance event hosted by Ingram the end of August in Charlotte. The topic of this post is focused around the importance of distribution in the success of a VAR in the IT channel. This is based on our experiences in growing HTS and watching other successful VARs build their companies.

Distribution Was a Key Factor

At SCCI, my original company and parent organization today, we made a strategic decision to go deep with Ingram. Our purchasing is almost all done through this relationship, and our participation is primarily with their programs and resources. This decision was not about price. While their prices are competitive with the market, they are not necessarily the cheapest place to source products and services. On any given day you can call around and get better prices, that is if time is not of any value. The decision was based on value and the exact same fundamentals we preach to our clients every day. Don’t make decisions on price (if you do you probably won’t buy from us) but make decisions based on the value that we bring to the party. That is how we need to approach our distribution relationship. Focused on value.

So What Value Does a Distributor Bring?

For us it was based around four key areas:
1. Resources available
2. Investments made
3. Programs offered
4. People involved

There is no doubt that our “all in” decision has been a huge success factor. We have grown from less than $500K in 1990 when the relationship began to over $16M today and Ingram has been a key success factor in our growth. There is no doubt that we would be nowhere close to our current situation without that critical decision.

So How Have We Put the Pieces Together

Not only do we consolidate our purchasing, which gives us pricing but more important relationship, we take advantage of as many of the services and resources available to us as possible. Here are some that we leverage and have used to fuel growth:

1. Tech Support – our sales model leverages Ingram tech support to quote all our solutions or complex products. Every quote goes through tech support for solution validation. This gives us the ability to return product if it does not meet the customer needs. RMAs are down over 1.5% which is huge given our volume. No more long nights listing open box products on Ebay.

2. Solution Center – Our sales teams have made over a dozen trips to Buffalo or Santa Ana to leverage this resource. Every visit results in immediate and long term sales that are significant. You have the opportunity to expose your prospect or clients to a vast array of technologies in an offsite and highly focused environment and good things happen there.

3. Technology Assessment Program (TAP) – a mid market assessment tool that helps probe for opportunities. We have used this tool with over 50 of our clients and it always generates a long term strategy that leads to significant opportunities. It is the gift that keeps on giving.

4. IMSN – the Ingram Micro Service Network provides a mechanism to expand our service delivery. Both by receiving service tickets that drive revenue, and leveraging skill sets or engineering talent that we are not able to afford or don’t have available. They handle the transactional activity and we just do the work.

5. Communities – Ingram offers a number of these, most notably VTN and SMBA. Our company has grown significantly because of our involvement in these groups. They provide the opportunity to connect with peers and industry executives.

6. Agency Express and CAP funding – Ingram has great resources to help grow our company leveraging marketing investments made by vendors. These programs allow us to expand marketing resources and they work with us to create our own marketing plan. It is valuable and enables us to reach into the market with quality information and campaigns.

7. People – this is definitely the greatest value Ingram brings to the table. They have great people all over their organization that understand the channel and how to help us succeed. We leverage them for help with strategy and planning, procurement and marketing, sales and technical issues. They help us make things happen every day.

Far too many VARs get stuck on pricing and split their purchasing all over the place based on the deal of the day. My advice is to find a distributor you can partner with and go deep. Go all out. Make them part of your team and include them in your day to day business. They really can help you succeed. HTS and HTG are where we are today because of the deep investment we have made in Ingram Micro, and the equally deep investment they have made in us. We have many relationships that go 10 or more years deep and truly bring value that cannot be measured in dollars. So take a hard look at how you are doing business with your distribution partners. Are you really getting all you can from them? Or do you need to pick one and go deep?


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theritzman said...


Excellent point & well written, too. I agree. As an IBM Premier Business Partner, we sell a lot of IBM stuff.

We buy the vast majority of that IBM stuff from AVNET Technology Solutions. Our co-marketing dollars are delivering 35 prospective customers to an IBM Internet Security Solutions seminar next week. This event is hosted at a local steak house and includes lunch and a free iPod nano.

Cost to us: nothing.

Yes, strong distributor partnerships yield more than gross dollar margin on each transaction.


Michael Ritsema
i3 Business Solutions, LLC