About the Author
The President of ChannelCorp, Bruce Stuart is a Certified Management Consultant with experience in the computer hardware, software and telecommunications markets of more than 40 countries. He has authored in excess of 300 articles and eight books on the subjects of building channel partner business value and improving vendor channel strategy. He is a world renowned executive educator and strategic management consultant.

ChannelCorp Workshops
ChannelCorp provides Executive Education to vendor and channel partner management. Public workshops take place in Asia, North America and Europe. In-house workshops take place throughout the world. For more information, go to the Workshops section of www.ChannelCorp.com.

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2.2 Marketing Strategy and Strategic Marketing

The typical reseller is a sales-driven reactive organization that places action and “evolving plans” in front of market intelligence and business planning. Client acquisition activities are praised whereas client retention activities are starved or ignored. For the most part, the bias for action of reseller organizations is critical for success. However, even in the most turbulent markets and industries, the planning of marketing strategies, marketing programs and marketing tactics is required. The objective of this chapter is to focus on why and how successful resellers can profit from their investments in marketing.

Marketing is not selling
The selling function in the reseller organization is a key function and must always be staffed by the best people affordable. Having said that, an effective program of marketing activities will assist any salesforce in being more productive. The role of marketing in the reseller is to manufacture sufficient numbers of high quality prospects for the salesforce to meet its revenue target. Prospect quality and prospect quantity are the key measures of the success of marketing activities.

Effective marketing complements a skilled salesforce. Sales people who are backed by a strong marketing program have an easier time generating prospective clients, experience shorter overall selling cycles and experience fewer sales that fall apart “for no reason” .

Most important of all, sales people who are properly backed up experience greater success in turning competitive situations into noncompetitive situations. As a consequence, properly backed up sales people achieve higher margins and better profits.

Marketing is not selling. Marketing happens before and after the sale. Selling is but one component of an overall marketing program of a successful reseller.

Establishing a marketing strategy
The reseller channel has been very successful for computer hardware, software and telecommunications vendors in moving products. In the future, manufacturers will attempt to roll out more and more resellers, focusing on smaller and smaller niches in vertical and subvertical markets. Additionally, most vendors of hardware, software and peripherals will soon be using the volume model of reselling on a non-store and in-store basis. For those resellers currently in place, this means increased competition and a requirement to focus on the following marketing strategy issues:

need to be pro-active in the market and not solely reactive;

need for branding and clear positioning in target markets/niches;

requirement to consolidate and strengthen industry expertise, and communicate the industry expertise to the installed base and target clients;

requirement to stop “humping boxes” and market the service, support, training and consulting manufactured by the reseller (unless you dominate the assortment or the price in your market).

Pro-active
As the reseller business becomes more crowded, there will be increased pressure on resellers to clearly and convincingly present themselves to clients in ways that provide them with a demonstrable competitive advantage. This requirement for a pro-active stance in the market will require investments in client acquisition programs that lead to the creation of a pool of highly qualified prospects.

Branding and Positioning
The concepts of branding and positioning have not been widely adopted or well executed in the reseller business. As a potential customer of a reseller, it is not always clear what capabilities a reseller wishes to be known for. In an emerging market, muddy or “confused” brand positioning is not a big problem. However, when competition intent on developing strong, defendable niche markets moves in, the reseller with a muddy or confused brand and an unclear position in the market will rapidly lose market dominance and profitability.

The need for clear branding and positioning is critically linked to the need for strategic and market focus. Five years ago, concentrating on one or two verticals was seen to be the appropriate level of focus for a reseller. As more and more resellers enter a market, newcomers use the strategy of focus to differentiate themselves from the entrenched, so-called “focused resellers” , that over time expand to handle six or more unrelated vertical markets.

As verticals are added to a reseller organization, there is a natural tendency for reseller management to generalize in order to manage the complexity of the business. However, the move to a generalist orientation is the kiss of death for a reseller organization. Big resellers under market pressure need to increase the level of focus on each vertical and become multi-specialists capable of dominating each vertical they are in. Market share is not the goal. Market domination must be the goal.

Consolidation and strengthening of industry expertise
The consolidation, constant strengthening and continuous communication of industry expertise to the market is a key requirement for the development and maintenance of dominance in vertical markets. Pro-active, clearly branded, strongly positioned, appropriately focused and sufficiently knowledgeable resellers have nothing to fear as new resellers are unleashed in their geographic or market area.

Stop “humping boxes” Traditionally, because of a lack of attention to marketing strategy, resellers have resorted to price competition and box-humping behavior in highly competitive markets. If we have learned anything from the last few years, it is that you cannot survive on the level of margins that are generated from the sale of hardware alone. From a marketing strategy perspective, value model resellers must begin to market their capabilities as service organizations and stay off the price competition that results from the commodity nature of “the box.” Value model resellers must market their service, support, training and consulting capabilities, or they might as well close their doors. This is especially true in markets that are populated with or impacted by Superstores, the telesales activities of vendors, or non-store reselling

Marketing programs for successful resellers
Successful value model resellers develop and deliver marketing programs at two different levels. Corporate marketing programs are developed as a roof on the marketing program structure. The corporate programs are focused on pro-actively developing a brand and a position for the firm in the market. Corporate programs are used to get the message across about what the reseller wishes to be known for. They are tools to assist with the positioning task.

Strong vertical market marketing programs are the pillars that keep the corporate roof from collapsing. Vertical programs are focused programs that concentrate on communicating industry expertise to potential clients so that the value add will be “valued” by the client by the time the salesforce makes a call. Vertical programs acquire new prospects for the salesforce. Vertical market programs are also targeted at retaining the installed base.

Marketing programs can be separated into client acquisition, client retention, and market support programs. Client acquisition programs are typically designed to create awareness of the reseller and its capabilities. These marketing programs typically result in the generation of new leads and prospects.

Client retention programs are designed to increase selling opportunities in existing clients, and to defend existing clients from competitors. Installed base programs usually focus on the basics of informing the base about your full services, staying close to the client’s business and handling any post-sale problems before any negative word-of-mouth is generated.

Market support programs are designed to generate market data to allow reseller marketers to increase the effectiveness of their marketing activities.

One often overlooked variable is time. Experienced marketers know that by varying the marketing activities and the expenditure levels that they undertake, they can shift the elapsed time between the activity and the potential result. The reseller that never starves, but is always hungry lacks focus on activities that are oriented towards the long term.

The following marketing program inventory has been developed to assist reseller marketing strategists to generate ideas for the various marketing programs required (Figure 169).

Figure 169 - Marketing program inventory

Source: ChannelCorp Management Consultants Inc.

The focus of this chapter has been on how successful resellers use marketing to increase their profits.

Marketing is a process that requires a small amount of creativity but a large amount of consistency and discipline. If you begin the process of strengthening your marketing program tomorrow, results will not appear for six months to one year. If you delay starting for too long, it will be too late. New entrants will have overrun your markets. The next chapter outlines a four quarter plan to increase marketing and sales performance levels.

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ChannelCorp Consulting services
ChannelCorp provides strategic consulting in the areas of channel economics, channel strategy, channel marketing, channel development and channel management to hardware, software and peripherals vendors around the world. ChannelCorp is also widely recognized as one of the industry’s leading authorities in the areas of reseller and solution provider profitability improvement.

ChannelCorps’s management consulting expertise is built on a solid foundation of fifteen years of researching and analyzing the evolving business models and marketing strategies of the vendor and solution providers worldwide.

Suggested Reading
For more information on the topics covered in this article, you should consider purchasing The Channels Handbook and/or The Reseller Management Handbook. For more information, go to the Products section of www.ChannelCorp.com.

Availability
ChannelCorp can make our copyrighted materials available to your organization for inclusion in your corporate newsletters and websites.

For information on republication, contact Bruce Stuart - channelcorp@telus.net

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