Channel Transitions East: Why You Have To Grow To Survive In The Channel
At Channel Transitions East powered by Business Solutions magazine, keynote speaker Larry Walsh of channel strategy firm The 2112 Group said average revenue growth in the IT channel last year was 11 to 15 percent, but “5 percent of your peers are growing 100 percent per year.” He told the VARs, managed services providers (MSPs), and other solutions providers at the event on July 22 at the Hilton Boston Logan Airport that growth is necessary for survival — and exceeding market expectations is possible — but it requires a plan.
Customers’ expectations are high, their tolerance for risk is low, and competition, including direct sales, is pressuring solutions providers to sell on price, not value. According to Walsh, profitability in all categories of channel businesses declined last year.
To combat these challenges and find a way to succeed in the changing marketplace, Walsh advises solutions providers to deliberately architect their solutions. “You can’t cobble together different pieces and think it will work,” he argues. Walsh uses an example of selling a car – describing it as a collection of products designed to come together to create value and a specific experience. “It doesn’t matter what they are using, they have to enjoy the experience,” Walsh comments. “Create a want. Not just a need.” To prove this point, he asked attendees how many of them have an iPhone –after a majority of them raised their hands, Walsh reiterated the value of creating a positive user experience.
He says by building a total solution with specific value – a package that only your company offers with a unique, branded name –separates you from your competition. “No one else has it,” Walsh points out. He adds that it is the difference between selling things and selling ideas.
He also says, “You don’t want your customer to buy something from you and put it on a shelf. It’s a reflection of your value. You want it to be used.”
Walsh says another way to prevail in the market is to make planning a priority. The 2112 Group asked members of the channel if they believed they should have a growth strategy: 81 percent said yes, and, he reports with some skepticism, 53 percent say they do. “You aren’t thinking about business strategically. You’re thinking about it opportunistically. But someone else will come along and grow.”
He lists goal setting, business planning, investment, execution, accountability, and evaluation and adjustment among principles that solutions providers include in their growth strategies. He also says there has to be an emphasis on sales and marketing. “You are very good technologists, but the marketplace wants you to be salespeople first and foremost,” Walsh says.
He stresses that a strategic approach to business in the channel is not optional: “It’s a Darwinian market. Not everybody survives. Not everybody has the right to play the game. Adapt to changing market dynamics to exceed expectations. ”