Issue #165 | Oct. 10, 2008 | by Andy Kowl

On average, 35% of revenues earned by IT channel partners come from relationships with other VARs, according to Bruce Stuart, a specialist in helping VARs grow their business.

With thousands of IT services companies in the marketplace, telling competitors from potential partners without a scorecard sounds like a formidable task. In a keynote presentation to hundreds of channel partners at VARTECH 2008 a couple of weeks ago, Mr. Stuart made it clear that finding the right partners from that maze of VARs could be a key to sales growth.

20-30% of revenue
Stuart reported 70-80% of VARs are partnering with other solution providers. He points to revenue opportunities selling new technologies as a driver of this trend. These partnering activities account for 20-30% of the revenue for these system integrators and other service providers.

Pursuing new markets consumes an outsized cash investment for any one company. In a detailed presentation of his company's research, Stuart showed the investment needed to reach profitability with a new technology is many multiples of sticking with what you know. Despite the appeal of not making such major, new investments – this advice was given as the current economic meltdown barely began – there is a dark side to not investing.

"Doing nothing is a slow liquidation strategy" when it comes to taking on new markets, said Stuart, president of ChannelCorp, a channel strategy consulting firm based in Vancouver. Nonetheless he pointed out there is nothing easy about it; and profits don't come "unless you engage your organization in new technologies. . . (and it even) might require changes in your compensation system – the 'control wire' of any sales organization.

"Some of the same salespeople who have been selling your existing business may not be up for what it takes to sell new markets," he added. (www.channelcorp.com)

VAR partnering as a growth strategy
One reason solution providers find success in sales and service partnering relationships is the significant savings in upfront capital investments and organization upheaval.

By teaming with a provider that already has the necessary expertise – or by finding other VARs who can take advantage of your company's sweet spot – both companies win. Saving the expense of a new infrastructure is "why travel agents don't own airplanes," remarked Stuart.

Discussions with solution providers attending VARTECH from throughout the Western Hemisphere looking for growth opportunities, confirmed they value partnering and are open to more such relationships whenever the synergy is clear. Just in these past two weeks, the value proposition of partnering vs. investing capital seems to have become even more compelling.

The Orlando VARTECH was the second I attended, a conference Bluestar presents for their channel partner customers and supported by the major IT manufacturers that this scrappy, Kentucky-based "solutions distributor" represents. They put on quite an affair, with a tip of our hats to sponsors of the lavishly appointed networking events.

More VARs finding RFID success
Like last year in Nashville, the RFID sessions were SRO – the most popular tracks there, it appeared. This year I ran into more of the VARs in attendance selling RFID. Some were still feeling their way, to be sure. But I also met a handful this time who were having such great success with RFID sales, they have moved it into the forefront of their services, making RFID solutions their company's leading growth driver. Friends of ours from the burgeoning RFID presence at VARTECH included Motorola, epcSoluions, Alien, OTA Training, Feig and others.

Consistent with last year's show, there was close to universal interest in learning how RFID solutions could profit the attendees. Stale RFID knowledge, though, was still widespread (see Walmart RFID Litmus Test), though hopefully lessened by Bluestar's continuing efforts to overcome this roadblock.

And of never-ending surprise to us, there was the continuing phenomenon of VARs who had done their homework; who had customers interested in buying; and still had trouble finding meaningful support from manufacturer/suppliers. (see Resellers Receive Tepid Welcome.)

Help on the way
We at RFID Switchboard, and sister portal RFID Trade Mart, are about to change the way all sellers, and potential sellers, of emerging technologies communicate with each other. At VARTECH, we took the opportunity to "pre-introduce" the upcoming VAR Biz Exchange (VBX).

If you are reading this far, chances are VBX applies to you. It will be the most dynamic communication tool you can – maybe can't – imagine. One nice twist is you will find business opportunities coming your way, free of charge, virtually every day. Let me be more clear: you will find potential buyers, and the kind of partners we are talking about in this article – companies who can contribute to your bottom line.

Free business: sounds too good to be true, right? If you read this column, you know we tell it like it is. So join a couple of thousand other IT solution providers who have already signed up for our launch. Sign in here, and be the first to learn more soon on how to bring in more partnering revenues. IT Sales Matchmaker