It is All Distribution Now

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

It is All Distribution Now

Yesterday I saw AVNET advertise 172,000 partners globally. Tech Data has mentioned 62K+. Sandler Partners said they had more than 4,000 sales partners. TCG serves more than 1500 agents.

RingCentral's channel head penned a post about the strategy to hit all the large master agencies. I see press releases every week of providers signing on with distributors, because that is what master agents are now. They even call themselves distributors. They are like a brokerage house of vendor contracts.

Agents used to get a reputation as commission shoppers, but in today's environment it is almost encouraged. The Agent Alliance was set up to help volume buy for master agents. To reduce risk by putting a lot deals through one good contract.

Masters pass through sales back and forth all the time. For example, Verizon deals typically go through one of the handful of platinum partners. Some of it has to do with quota and volume needed. Some of it has to do with the one-stop shop experience that they are portraying. Some of it has to do with programs like VZ, AT&T and Comcast needing experts to navigate the programs.

The masters look more and more like VADs such as AVNET or Tech Data. Large numbers of vendors are trying to get their SKUs in the catalog with the strategy of hope that this will be enough. That if we can just get in Jenne's catalog we will be sailing!

There is a big problem with that: sell through.

What happens after you ink the deal with the VAD?

These programs work great for a specific business. One type of business is specialty shop that offers a narrow niche of products, like Fireeye or Juniper (for people that don't want Cisco). Another is a vendor with demand created by the vendor in the buyers' realm, like IBM, Cisco, Comcast, Verizon or Microsoft.

In the case of Microsoft and IBM, software licensing for under 10K seats is a pain in the butt. Better to let a VAD handle that. It is what they are designed for. In the case of hardware like Cisco or APC, the VAD is like a warehouse and logistics partner. Microsoft and Cisco helped create demand by making a certification ecosystem that generated demand through experts who were married to that product line. (Very hard to duplicate.)

Now if you are just one of 20+ VoIP providers in a catalog, how does that help you? It is a commodity game at that rate. To a certain extent, you are hoping for name recognition. For example, if it is LSI, Panterra, RingCentral, 8x8, Vonage Business, Star2Star, Broadview, Broadvoice, ShoreTel, West, Evolve IP, Momentum and say an MSP reselling CoreDial underhis own label. How does a partner decide? Seriously. I would be curious how executives at the ITSPs think that decision tree goes.

Factors that may influence that decision include price, SPIFF, integration, feature set, the channel manager and past experience.

Most VARs have accounts with multiple VADs (TD, Ingram, D&H, Synnex), in case the gear is not in stock near the customer site. However, when moving to white-label or hosted solutions like email, backup, and even software licensing, VARs will be picking one vendor. They won't want to log into multiple systems to see the status of that client's email or license is. One portal. So now those huge numbers of VARs who would buy gear from you just shrank because they are picking a single source for hosting.

Agents don't want to become familiar with 20 provider systems and platforms. They want far less. The more familiar you are with a service and the environment around that vendor (quoting, features, ordering, support), the easier it is to sell. Less unknowns means comfort, means trust. Trust is required for sales. Remember that list of VoIP Providers? Name recognition - the brand - can convey trust.

There is an expensive and time consuming process for sell through. DSCI and TelePacific have been going through that since the merger. National road tours, webinars, numerous master agent events, expos like NextGen Cloud and Channel Partners, promotions, SPIFFs - to tell the story, to get your name in front of the partners. It isn't ink and done. It is ink, then go push that rock up the hill every single day! Hustlin' as Gary Vee says.

The other factor is sales friction. Personally, I never even consider selling cable because waiting 15 days for a site survey is total garbage, especially when the direct side gets it done in three days. There are carriers I won't work with because I have in the past and got burned. (I am not alone here.) The easier you are to do business with the better.

It is getting harder and harder to sell through channel because of a number of factors including industry consolidation; musical chairs; too many vendors not enough partners; Noise and Attention; the cost of sales acquisition during both a price war and a SPIFF war; and buyer budget constraints.

The noise of UCaas, SD-WAN, DDoS Mitigation and cyber-security are getting louder every day. To the point that it is just noise, not a resonating message, but more like when that car pulls up to you at the traffic light with the music blaring drowning out the music in your own car. So you roll up the windows to drown it out. Yeah, that's where we are.

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