VARs: Stop Giving Your Value Away
The other night, while struggling with one of my bouts of insomnia, I turned the television on to an infomercial for Hip-Hop Abs. Hip-Hop Abs is a series of fitness DVDs that uses hip-hop dance moves to target, tighten, and tone your abs, hips, thighs, and buttocks — clearly, a revolutionary idea. During the course of this infomercial, the announcer repeatedly offers a total of four free gifts (which combined are worth much more than the price of the DVDs themselves) to viewers that call and order the product within 8 minutes. Two things bothered me about this offer. First, how the heck will they know if I place a call within 8 minutes of viewing their infomercial? And second, I realized that many VARs use a similar tactic to close business.
For far too long, VARs have included consultation, system demonstration, integration, customization, end user training, and other value-added services free with the hardware and software solutions they resell. For years, it seemed like giving these services away was the only way VARs could compete with the multibillion-dollar vendors that sold directly to end users. The times have changed, but it seems like the generous nature of the VAR community is slow to evolve. It used to be that the high margins associated with straightforward hardware and software sales justified the inclusion of value-added giveaways as a means to an end. However, as these margins continue to deteriorate, too few channel companies have begun to charge for these extras as a way to sustain or increase their profitability.
SMBs Demand Consultation, IT Support
The fact of the matter is most clients will be more than willing to pay for the value-added services VARs routinely give away. This is particularly true in the booming SMB market. Think about it: Most SMBs have little or no IT resources and require expert guidance before making a technology purchase. At the same time, SMBs are leery of being misled by vendor promises regarding the capabilities and benefits of their specific product lines. Advice on the types of technologies to deploy and how to best configure a system or network to achieve specific outcomes are what SMBs are hungry for. Why undermine the value of this guidance and your role as trusted advisor by giving consultative services away for free? Likewise, in a postsales environment, limited IT resources will make end user training a valuable service that can easily be cost justified by SMBs.
Even exercises that historically were an anticipated part of the sales cycle can be molded into value-added services that customers in today's market are willing to purchase. For example, 1st Run Computer Services, Inc., a New York-based document imaging VAR, recently began charging for system demonstrations.
"Demonstrations of imaging solutions that go beyond general scanning capabilities and include bar code identification, data capture, auto indexing, and similar functionalities require a great deal of integration and testing to ensure all the applications work together correctly," says Bob Molinari, president of 1st Run Computer Services. "We only do these demonstrations as part of being locked into a particular opportunity, and we now charge for these demos as a professional service." 1st Run does offer a payback policy that credits the professional service fee for the demo back to the customer if the client decides to ultimately purchase the solution from the VAR. At the same time, if the customer decides not to purchase a solution from 1st Run, the demonstration fee ensures the VAR's time and money aren't wasted.
The message here is simple. Scrutinize every service you currently give away, and reevaluate what its monetary value is in today's market. Much like the free gifts that come with Hip-Hop Abs, you may find that these services are worth much more to your business in the long run than the solutions themselves.