Solution Providers Getting Smarter in Sales
On the surface, channel-driven sales activities are slowing down. A deeper look reveals that solution providers are getting smarter and more deliberate about the sales process and generating better results.
By Larry Walsh
Here’s something no vendor sales or channel account manager wants to hear: Solution provider sales volumes slowed considerably in 2014. The number of solution providers that closed 10 or more new accounts per month dropped from 20.8 percent in 2013 to 8.2 percent in 2014.
The trend for 2015 isn’t showing signs of improvement, and that’s not a bad thing.
According to our 2112 Channel Forecast report for 2015, solution providers continue to add new accounts at an average rate of two to three per month. The number of solution providers adding accounts at this monthly pace increased from 28.6 percent in 2013 to 37.7 percent in 2014 – most of that gain coming at the expense of the high-volume partners.
The same report found that the average number of sales proposals generated per month fell from eight to 10 in 2013 to four to seven in 2014.
And the number of active accounts fell from 76 to 100 in 2013 to 51 to 75 in 2014.
So how is all this not a bad thing?
While the sales activities metrics seem in decline, the overall revenue and profitability of solution providers is getting stronger.
For the third year in a row, the average solution provider grew gross sales and revenue at a rate of 11 percent to 15 percent. Most significant, though, is that 42 percent of solution providers are now growing at rates of 16 percent or higher.
What the data indicates is that solution providers are getting more deliberate in their sales activities. More solution providers have dedicated sales managers driving go-to-market activities. And significantly more solution providers are setting goals and expectations for their sales teams.
Conventional wisdom would say that adding dedicated sales management and plans would result in more proposals and quotes and, consequently, more sales wins. But what’s actually happening is that solution providers are focusing on consultative selling, understanding customer needs, and developing systems that meet objectives and outcome expectations.
Greater sales focus and discipline is a welcome change in the channel, as solution providers have spent the past several years fending off declining margins with increased sales volume. While more product being passed through the channel is a seemingly good thing for vendors, it’s often fleeting. Maintaining a high pace with few objectives is difficult for solution providers. The increased focus on the sales process will produce lasting results and better returns for both solution providers and vendors.
2112 has more insights into channel performance trends and performance expectations for 2015 in the Channel Forecast report. Download your copy today.