Wednesday, December 15, 2004

Channel Marcom: Product Centric Ads Still Common

OK. I know I just said ads were at least giving token mention of customers in partner advertising. I was wrong.

Samsung is marketing its printers on product features alone. See page 23 of the 12/6/04 CRN. Not even a nod to the channel partner, let alone his or her business. Not a mention of channels at all.

Perhaps they saved money just running the end user ad in the channel trade magazine.

The Channel Pro

Channel Tactic: Channel Value Propositions

Good channel value propositions need to be about the channel partner's business, not the product. The product is proof of the proposition, not the value. Why? Because the channel partner is not using the product. Its features are of no value to the channel unless they help address a business issue such as sales, gross margin, operating costs, asset utilization, inventory, etc. As we teach at Executive Conversation, if it is not in the financials, it is not an executive business issue.

Thumbing through CRN this week (12/6/04), most of the ads were still user and product centric. However, the message is getting through to some of the vendors. Symantec's pitch on page 43 gets to the heart of partners number one issue, sales. "Increase the odds of closing a sale by 500%. " Proving it could be harder though. Having five products does not necessarily increase the sales. Symantec channel reps will need to show evidence of impact on the close rate, not just product specs.

Channel Ventures has a five step process for building solid channel marcom.

  1. Identify the business issue
  2. Learn the customer's metric for the issue
  3. Address the business issue directly
  4. Link your solution to the business issue
  5. Demonstrate your product's impact

This is difficult for most vendors. Having created the products, they fall in love with themselves. But products themselves have little lasting differentiation. Ditto for programs. Kyocera, on page 38, says it is partner friendly. Why? Products, programs and support. Any bets HP can credibly make the same claim? Obviously this ad gives Kyocera no added differentiation.

How channel relevant is your marcom?

The Channel Pro


Tuesday, December 14, 2004

Channel Trend: Consolidation Reshaping Channel

Consolidation is the biggest trend in the channel in 2005. With no killer apps on the market, even a recovering economy will not slow the consolidation of channel partners. Even in emerging markets, declining margins on core products will be the primary issues between vendors and partners.

Although it happens every day in the channel, it is not news until it hits the big boys. IBM's decision to sell the PC, laptop and notebook business to Lenovo (nee Legend) is just the most visible part of the iceberg. I was in Brazil leading an Executive Conversation workshop for a major networking company when the news came out. Just the day before, we had examined the financial statement of IBM. The account rep had commented that IBM ad a real issue with hardware margins and that this was a core business issue for the executives at IBM. When the Lenovo news broke the following day, the whole class was amazed at how well financials for companies identified the main business issues. IBM sold its PC business because it had to increase performance on corporate margins.

Conflict between previously content channel segments will rise. Margin driven consolidation will impact not only the partners, but also the distributors and vendors. Already large OEM, retail and mail order customers are growing rapidly at Tech Data and other distributors to the dismay of second tier partners who lament the further erosion of margin and differentiation.

"How can the traditional integrator survive?" I hear from both partners and vendors. The answer is that many of yesterday's partners will not survive. Further, some of the ones that do survive in the short term will be marginal performers. Think about the examples of IBM and Dell. If IBM gets out of the PC business with its huge economies of scale, what hope is there for an undifferentiated VAR? If Dell is buying from Tech Data at better prices and selling on a Wallmart like cost driven business model, what margin is left for the system builder?

Consolidation is inevitable. The question is how will vendors change their channel strategies and programs to ensure continued channel performance?

The Channel Pro


This page is powered by Blogger. Isn't yours?