Mike,
I think you summed it up pretty well.
I think the problem is that there is an identity crisis in the
Distribution/VAR/Manufacturer businesses.
I don't think its the fault of the vendors, but just the nature of a
competitive industry. Everyone's looking for a way to cut some costs to be
more competitive.
Everyone thinks they can do better than the other guy. When something is
working or not working, somebody is always trying to find a better way.
As a result everyone tries to be everything to everyone, or tries to
replicate what someone else is doing that appeared to be working. Then
somebody always tries to cut someone out of the loop, so the person cut out
of the loop then tries to fight back and cut someone else out of the loop.
Everyone wants to get as close to the manufacturer as possible, every one
wants to get as close to the client as possible. Then support comes to play,
and then everyone realizes why they want to hide and get as far away from
the customer as possible. Then finance, availabilty, or lack of competition
to effect change comes to play, and everyone learns why they need to get as
far away as possible from the manufacturer. Its vicious cycle that
constantly changes and goes around in circles. It would be OK, if everyone
learned from the mistakes, but what usually happens is that history repeats
itself and the cycle goes around and around in circles. But thats not the
vendor's fault, times change, and what worked in the past may not still work
later down the road. And peoples business change, and sometimes jsut want to
do something new, or capitolize on the talents of a new asset or staff
member. This creates the identity crisis.
I think the most successful vendors (distributors/VARs/Manufacturer) are the
ones that solve this identity crisis and are clear on exactly what it is
that they want to be, and the roile they need to play, and the advantage of
what they offer.
For distribution its simple: availabilty and finance. Get gear to people
quicker, consolidate shipping costs nationwide to lower end cost of to
delivery locally quicker. Thats what a distributor does. And the distributer
that does it best will have the abilty to acheive lowest cost and the most
clients. But I do not think that distribution necessarilly has to limit
target client base or deliver lowest price. That is another issue realted
to margin. I think the mistakes distributors make is that they confuse
needing margin with adding value. Margin is tied to the type of client
and the cost to support them. You charge more margin if the customer will be
more headache such as lower volume purchases or less loyal in its buying
patterns, or typically pays 30 days late. Charging higher margin allows a
distributor to keep those difficult client and still ahve financial gain,
effectively increasing volume and profits. Where the problem comes in is
adding value, what everyone typically wants to do to increase margins.
But by adding value often the end result is the distributor crosses the line
of their role, and often gains an identity crisis of what they are. A
distributor adding value is really a Mega-VAR. Their is nothing wrong with
that, but its a good way to alienate a VAR channel. And the Mega-VAR should
expect a certain amount of the VAR channel to reciprocate and try to go
around them. So I think a distributor needs to be careful about what value
it is that they add, meaning adding value to make them a better distriubtor
compared to adding value that someone else lower in the food chain already
offers.
But the big secret is realizing the core essential value a company uniquely
offers. I've had difficulty with this in my own business. For example, a
WISP can't be both the best distributor and the best ISP, they are two
different businesses with contradicting demand. In our case even deciding
what message goes on marketing mailers. What is it exactly that WISPs
provide?
We learned some of our core unique benefits were
Broadband is already in the building - quick guaranteed availability.
If your business lost Broadband for a day, what would it cost you? - 2 hr
repair time, true diverse path redundancy, again optimizing availabilty to
broadband.
These are things that we can uniquely offer that are worth paying for.
I can attempt to sell 99.99% reliabilty, lower price, better service, faster
speed, until I am blue in the face, and deliver those features in many
cases, or possibly the best compromise of all three. But the truth is,
everyone else also can offer those messages in some shape or form. If you
look long enough, there will always be someone faster or someone cheaper.
I'm more effective selling availabilty, my unique asset to my targeted
prospects. (Why I can offer availabilty better, is another discussion).
If it all boils down to one core thing, availabilty, why do we bother with
any other messages?
I think the same
