Thursday, October 30, 2003

MODEL: Wi-Fi ISPs -- Free will trump subscription

Posted from Tokyo

I'm glad public Wi-Fi access points are finally becoming more common. Many of the airports in Europe coffee shops in America and hotels in Asia are installing 80211.b networks. Internet access is getting much easier. Since I have had this in my home since 1995, I impatiently look forward to the day when universal, transparent access is available.

Unfortunately, the business model is all out of whack. Let's say I subscribe to T Mobile's service (which I do) for a couple hundred a year because I am constantly on the road. However, when I go to the airport, it has Wi-Fi (and Centrino signs everywhere), but they are called Waypoints, not run by T Mobile. In other words, to use it, you have to pay another onerous fee and go through another registration process.

Two paths are likely for Wi-Fi coverage models: free or subscription. If I believed the economics supported it, I might predict cross billing, roaming and universal coverage ala the cellular model. But since there is very little cost to deploying such networks (a computer and a few access points and $50 a month for a DSL line) I am betting on a lot of free sites from businesses looking to attract traffic.

Don't expect Wi-Fi ISPs to be a vibrant, profitable channel.  

Tuesday, October 21, 2003

TACTIC: Look deeper for real value-add

In a sales training last week we got into a discussion of ‘Value Add.’ Simply put, ‘value-add’ is what customers are willing to pay extra for. We use to joke that if a VAR could not defend its margin in the market it was just an added reseller, and of little use to a vendors channel program.

CAMs create value add only by linking the sale of a vendors products to partner performance. Low value-add discussions are about product and road map. These conversations bore the ablest resellers and do almost nothing to create sales. Medium value-add discussions are program and problem oriented. However, both parties can be worn down if every exchange is an emergency. High value-add discussions are centered on specific business issues.

Many vendors need to ask the question about the value add of their programs and field sales personnel. Instead of blaming the channel partners for their inability to recognize the value of your marcom, consider rebuilding the program with a true value added perspective. 

Tuesday, October 14, 2003

TACTIC: Positioning versus Branding

Posted from London

I recently listened to a common type of miscommunication between channel partners and a vendor about branding. The partners told their vendors that they wanted branding. The vendor obliged by creating a marcom campaign that none of the partners use. Since both wanted the same thing, how come the results were so poor?

The problem is that although they use the same words, vendors and partners mean different things when they talk about business development. Often when channel providers say ‘Branding’ they mean ‘Marketing.’ When they say ‘Demand Creation’ they mean ‘Joint Sales.’ When they say ‘Promotion’ they mean ‘Leads.’

Channel companies, by definition, are much more tactical in their view of marketing activities. Few have large budgets for esoteric image branding. Even if they budget a high level of funding for marketing, e.g. 5%, the average $1M partner would have only $50K to spend annually on marketing (excluding vendor co-op.) Every penny spent on marketing must bring in measurable results.

Most partners are looking for three things out of their vendor when it comes to marketing: legitimacy, professionalism and market demand. If they are not using your campaigns, your marketing is not delivering on these needs. 

Friday, October 10, 2003

MODEL: A Tale of Two Retailers

Posted from Rotterdam

When you think of retail you think of inventory. Shelves full of product. Pyramids of products in a large POS display. End caps that prompt the consumer to impulsively add another item to their basket. However, this is not the only model. An Intel Premier Provider in The Netherlands recently contrasted his approach with the model of the typical storefront.

Touring a competitor's site with at least 50 display laptops, kiosks, shelves and staff, he asked me what I thought. I liked the variety of products but no one from the store greeted us. No one asked us if we needed help. No one noticed as we left without buying a single thing.

In my associate's store, as soon as you walk in, you are greeted. Layout is open and office like with a few limited product displays. Sit down at a desk and the sales rep will help design a system for you. No idle staff.

Both are consumer and small business retail, but they are two very different models.

One model is a self serve cafeteria and the other is a corner deli. Less headcount reduces sales expense, less inventory reduces required working capital, fewer returns lower G&A, and less square footage lowers rent and lease overhead. The financials are very different too, with high inventory turns, high margins and low SG&A.

Success in the traditional model is driven by traffic, conversion rates and average order size. Computer retailers struggle most with conversion rates; that is, turning traffic into customers. Unlike great retailers like Wal Mart and Costco who convert 99% of traffic into buying customers, computer stores struggle to maintain even 50% conversion rates.

Success in the customer service retail model is driven by market awareness, targeted traffic and customer service. Marketing efforts need to be directed at bringing active consumers into the store. The sales message is "When you are ready to buy, we will help you get exactly what you need." With active traffic, conversion rates above 90% are achievable. Customer satisfaction, interaction and support will add value by increasing loyalty and targeted traffic.

The Netherlands businessman is proud that he has remained in business while his larger traditional competitors have failed. (However there are always new ones to take their place.)

Posted from Rotterdam

Sunday, October 05, 2003

ARTICLE: Ten Key Elements of Successful Channel Programs

Excerpt from an Article on the Channel Ventures web site.

Market Assessment: A clear understanding of the ecosystem is critical to finding a solid strategy. Important consideration include: market size, competition, demand, trends, threats, and timing. Investors (be they external or executives) expect market experts.

That's one key element. Want to see the rest? Read the complete article. 

Thursday, October 02, 2003

MANAGEMENT: CAM Skill Development

Having taught strategic sales to over 10,000 CAMs, I am forming some strong opinions about field sales personnel. Below are the five leading management challenges facing channel professionals today.

1. CAMs are not prepared for business discussions with their accounts. While knowledge about vendor logistics, products and pricing are high skills and comfort in other critical areas ranging from general business acumen to demand creation are lacking. An honest skills assessment is the required first step to change.

2. CAM training is not effective in changing a CAM’s skills. Training fails not because the content is wrong, but because after training they go right back into the same unproductive habits. No matter how well trained a CAM is, the tools and the process limit effectiveness. The environment, not training drives change.

3. CAMs are not respected and do not have Equal Business Stature. Channel customers do not have respect for CAMs as business people and advisors. By definition, a rep is someone who tells you about their products. Data and insight are the quickest ways to change that perception.

4. Channel programs not successful in meeting provider needs. Programs historically are centered on support needs instead of demand creation. Vendors need to automate support issues and free up CAMs to address channel provider business concerns.

5. Product collateral fails to communicate. Communication between CAMs and providers is poor. ‘One size fits all’ materials and promotions actually fit none of the partners. Message, vehicle and timing all need improvement.

My articles and posts over the next few weeks will address each of these key issues in further depth.

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