Use Your Distributor To Help Grow Your Business
Do you feel powerful? In demand? As a VAR or systems integrator, you should, especially when it comes to distributors. Unlike when you're out there every day knocking on doors trying to drum up business, with a distributor, you're the star — or at least you should be. Distributors should be trying to earn your business, because their markets are highly competitive. That's why you need to pay close attention to the distributors that you use and those that you don't. It's a constantly changing market. Distributor-specific rebates, spiffs, MDFs (marketing development funds), and discounts come and go, so don't let an opportunity pass you by. After all, while you may like your distributor rep, the knowledge the rep provides, and the distributor's line card, it's likely the main reason you purchase from that company is price.
After price, there are plenty of other factors for determining which distributor to use. How fast do they ship (because your customers need their products yesterday)? How about product support? Is their presales support as good as their postsales support? Can they help with operations functions like marketing support? How can they help your business grow? For instance, do they offer cross-selling recommendations based upon your current product mix, or are they simply order takers? Are they notifying you of additions to their channel community that may be good partners for upcoming projects? The answers to these types of questions will determine whether you're dealing with just a distributor or a VAD (value-added distributor). Guys like Tom Bojarski can tell the difference. He's the president of EchoStone, an ECM (electronic content management) VAR featured in the October 2007 issue of Business Solutions. EchoStone uses Cranel Imaging as its VAD. "Cranel has a history of bringing new technologies to our attention," says Bojarski. "Plus, the VAD doesn't just inform us about these technologies, it educates us in the form of seminars and Webinars. These sessions provide us with insight on the technology itself, as well as tips on how we can be successful selling these products. There have been several products that I would have never added to EchoStone's line card if it weren't for Cranel Imaging."
Use Financing To Maximize Your Cash Flow
Ask almost any VAR why it chose a particular distributor, and you'll probably get an answer like, "They're easy to do business with." But what does that mean? If you ask for more specifics on this answer, you may discover that "ease of doing business" often has a lot to do with the company's prices and financing plans and terms. The latter is important, considering this is one of the key tactics distributors use to earn your business. Surprisingly, though, industry statistics indicate that at most, 30% of VARs rely on distributor financing to pay for orders. Many have been shifting to enticing credit card offers from companies like MasterCard and American Express that offer cash back or some type of reward for spending. The downside of using credit cards is that you need to have enough cash on hand to pay the interest in case your customer doesn't pay you in time — which is almost always a certainty. Sure, the same is true to a degree when financing through a distributor, but who's more likely to understand your cash flow issues, the distributor who deals with the products you purchased or a credit card company that doesn't know the difference between a router and a server?
Another way distributors make doing business easy is by developing and selling technology bundles. By offering multivendor bundles designed for specific applications, the distributor has removed much of the legwork VARs have to go through to develop their own solutions. Indeed, providing packaged hardware, software, and service solutions makes it easy for VARs and integrators to offer competitive pricing while keeping profitable margins.
Don't make the mistake of underestimating the value of a distributor. And remember, you're in demand, so make sure your distributor offers you enough opportunites for advancing your company's goals.