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Study: Nation's Technology Vendors Need Diverse Marketing Strategy to Succeed

13 Jul, 2004

Study: Nation's Technology Vendors Need Diverse Marketing Strategy to Succeed

Technology equipment vendors serving the nation's 25 million small to medium-sized businesses (SMBs) need a multi-pronged sales approach to be successful, advised the Information Technology Solution Providers Alliance (ITSPA), a national, non-profit alliance that helps SMBs understand how technology and local technology providers can help them succeed.

Citing a June Yankee Group study on SMB purchasing criteria, ITSPA President Russell Morgan stated: "There is no one channel to reach the SMB market and any equipment vendor that is solely dependent on one means to the market faces many challenges."

Morgan added that the SMB market's large size and geographical dispersion "hampers most vendors' ability to sell to their clients and provide service solely using a direct model. For this reason, the complex dynamics of the SMB market require a thorough vendor multi-channel strategy."

SMB Purchasing Criteria

Rather than rely on complicated return on investment tools, SMB decision makers "rely on common sense" and ask four critical questions before making technology purchases, according to the Yankee Group study:

-- How will a product or service help my business save money?

-- How will the product or service improve employee productivity?

-- How will the product or service increase competitive advantage?

-- How quickly and easily can the product or service be implemented?

"The Yankee Group believes that equipment vendors need a vast array of distribution channels to serve effectively the SMB market," said Mike Lauricella, program manager of the Yankee Group's Small & Medium Business Strategies Advisory Service and a member of ITSPA's Advisory Board. "Our study indicates many SMBs choose to select products and services from multiple equipment vendors. Perhaps due to past purchases an SMB may feel locked into a particular solution, lack the desire to learn a new technology, identify a particular vendor as best of breed, or simply believe that vendor diversification is important to limit dependence on any one vendor and improve its negotiating position.

"With this in mind, equipment vendors are cautioned against attempts to be all things to all people and should instead focus on areas of core competency, where maximum value can be delivered," Lauricella added. "For products that SMBs are familiar with such as PCs, printers and Ethernet switches, the direct route is the best. However, channel partners such as IT solution providers are most crucial when delivering more complicated or new technology that solves challenging business needs."

What SMBs Look For In Channel Partners

The Yankee Group study also pointed out that price is not a top concern when SMBs select a channel partner.

"SMBs most value a channel partner's technical competence, long-term business relationship and responsiveness, in that order," said Lauricella.

The study made several recommendations designed to help channel partners, whether they represent direct or indirect sales, better serve SMBs, including the following:

-- Improve partner profitability by providing tools. This includes providing good margins, sales support, solution selling training, e-learning, capital leasing options and customized collateral.

-- Show commitment to the channel, establish rules of engagement and set expectations. Undermining trust by going direct or fighting over commissions or plum sales leads is detrimental. Building a quality channel program by imposing tougher partner certifications will help build healthier relationships with and high satisfaction among partners and customers.

-- Develop compelling real world case studies. SMBs want to hear case studies of similar companies that have successfully implemented a new technology. These case studies should exemplify what a typical business can expect. Vendors should avoid extreme examples that aren't relevant to SMBs.

-- Offset the partner's education, training and certification costs. Partners need to keep up with technology but are constrained by a tight-fisted spending market. Companies such as HP and Cisco offer e-learning capabilities that help partners reduce considerably the cost of HR development.

-- Stimulate end-user demand for new solutions. The time partners spend on educating the customer is time taken away from making the sale. Vendors' national and local marketing efforts to generate awareness of solutions will ease the education burden on partners, which will help them sell more effectively.

-- Help the channel establish a clear and focused business direction. Channel partners should determine which technologies and products they want to build solutions around. They also must decide whether they should specialize in a particular vertical industry and/or a particular business function, or target general businesses. Partners' existing business and technology knowledge, executive team and staff experience are deciding factors here.

-- Understand the SMB market is heterogeneous and so are SMBs' pain points. Not all SMBs confront the same set of challenges. Align each SMB segment with the appropriate solutions and messaging. The number of employees or industry can define segments.

-- Position technology solutions as business enablers. Not all SMBs view technology as strategic to their business. Help them recognize technology can provide the flexible infrastructure they need to cost-effectively manage the changes in their business such as deploying a mobile workforce or complying with customer demands and expectations.

More information is available at http://www.yankeegroup.com or at http://www.itspa.net.

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