…the channel is rapidly outgrowing these legacy incentive structures. A ccording to research from industry analyst firm SiriusDecisions, the result is that many vendor programs only meet the needs of 10 or 20 percent of channel sales teams, the ‘superstar’ partners that often have full-time staff dedicated to navigating the nuances of complex programs. As the traditional channel gives way to a crowded ecosystem of new partner types, OEM programs need to evolve in order to service each type of partner.
According to a CRN Channel Chief Roundtable one thing differentiating winning , profitable resellers from losers – recurring revenue. The article implies that it can be the different between a valuation of 8 to 10 times earnings and a valuation that provides a reseller with a marginally higher paying job for a few years.
Do you have prospective customers who find you on the Internet and call asking all sorts of free “quick questions”? These are often people who’ve dropped maintenance, dropped their consultant and are moving to another solution – but have one quick question.
Do they want the bottom of the barrel service level with no pre-planning yet they keep sending questions outside of the scope of what they’ve requested.
I found a 100% foolproof method to get around this. I call this the Schulz Qualifying System (SQS) for short.
Send them a proposal with an invoice. You’ll never hear from them again. Works every time for me.
An interesting Cloud Partner Profitability Guide from Microsoft. Pay especially close attention to page 10 as it nicely summarizes the current state of the VAR marketplace and the changes needed to remain profitable. Although technically I don’t believe all these changes are brought on solely by cloud use. In most cases they’re a symptom of a mature ERP market with users who are no longer afraid of technology.
In essence when most of us started as VARS we sold to the first generation technology user. Afraid of technology. Wanting to pay someone to install, train and take care of this strange new ERP technology.
Fast forward to 2014 and we’re now selling to the sons and daughters of the original customers. This new generation doesn’t have the apprehension about technology which was present when most VAR practices were founded. This means change is needed in order to maintain the same (or greater) level of VAR profitability.
With respect to the installed base orphan market I think we will see partners stop one-off consulting and quotes unless the orphan is on a support plan with the partner and has gone through a pre-paid review process.
There are far too many orphans who are marginal/poor quality and it is not profitable to chase them for one-off work that requires 4-6 hours to quote, 4-6 hours to project manage and then 25% (or worse) chances of “winning” the work.
Increasingly the orphans that I’ve seen are on outdated (unsupported) versions of ERP software, have no real idea what they’re running and often have one more quotes that they ask you to bid against. In some cases the orphans have even provided the competing quote detailed work plan.
There are always going to be sole proprietor consultants working from home who offer one-off consulting at hourly rates that are no higher than what they charged in 1986. Don’t base your business on the poor practices of other consultants unless you want to wind up like them.
Orphans on versions outside of the Sage support window should also be subject to a higher fee schedule.
Never be lulled into thinking that an orphaned user who “found you in Google” is going to become a loyal paying customer for years to come. Most pure “Google Search” inquiries are from users opposed to paying for support, maintenance, consulting or quotes. Ask yourself – what opportunity do these types of inquiries offer? Answer: Generally none.
There needs to be a greater willingness on the part of all VARS to walk away from low quality prospects. There’s always going to be a VAR in this market who will think these types of rules don’t apply to them — I say enjoy making $40/net an hour pursuing low quality and extremely non-loyal orphan work.
TL;DR: If an existing user of Sage (or any) software won’t pay to go on a recurring annual support plan with your company – walk away.