Channel Partners Prefer Strong Vendor Partners

While many small business buy direct, most all of them at some point turn to a technology consultant for help. These critical influencers prefer to recommend Microsoft, Intel and Symantec to their SMB customers.
According to Access Marketing International the U.S. SMB channel is a $117 billion industry. In a crowded SMB market, where numerous vendors such as IBM, Cisco, HP, Microsoft, SAP, Intel and Symantec are all seeking to become undisputed leaders, the channel is integral to reaching and selling into the 6.3 million geographically dispersed SMBs. AMI’s research shows that the top three vendors whose products/services SMB channel partners sell are Microsoft, Intel and Symantec.
There are an estimated 44,327 channel partners (there are over 100,000 in total, but the 44,327 are those that derive the BULK of their revenue from SMBs) that sell to SMBs in the U.S. Channel partners have a strong business outlook for 2005 and expect annual revenues to increase by 23%, year over year. This optimism is spurred by the anticipated 9% rise in U.S. SMB IT spending, to US$163 billion in 2005. In order to capitalize on this opportunity, vendors must partner with the channel to deliver technology solutions that address the needs of SMB customers.
Further highlights (U.S.-only data presented) from AMI-Partners’ new global SMB channel study reveal:
ï Vendor penetration: Microsoft (84%), Intel (66%), Symantec (62%), HP (54%), 3Com (50%) and Cisco (45%) are the top vendors whose products/services are sold by SMB channel partners.
ï Brand influence: The channel strongly influences which brand(s) of products/services SMB customers decide to purchase. Sixty percent of the channel influences customers’ brand selection in networking hardware/software and computing hardware categories. Fifty percent indicate that they cast influence in their customers’ choice of software brand.
With many disruptive technologies in the SMB market – such as Linux, software-as-service and IP telephony – the channel is challenged to keep current. In this rapidly evolving marketplace, vendors must stay in tune with changing channel dynamics and refine their programs to help channel partners succeed. “Recently, most leading vendors like Intel, Cisco, and Microsoft have reorganized their businesses to strengthen their channel efforts,” said Helen Chan, Manager, SMB Strategies and Consulting at AMI-Partners. “Today, the channel knows it’s not good enough just to push products. Partners need to constantly update their skills, develop a keen understanding of their customers, and sell solutions that squarely address customer needs. Vendors play a big role in helping the channel make these transitions.”
Three Main Themes in Vendor Selection
Partnering with a vendor is a significant investment for the SMB channel partner because of the time, resources, training, and costs involved. So when it comes to selecting a vendor, the channel is particularly discriminating. AMI’s research shows that the channel chooses its vendors based on:
ï Customer satisfaction: The channel selects vendors based on their ability to deliver quality products (90%) and competency in providing post-sale support (73%). Product compatibility (70%) is another key factor. The channel partners with vendors that can help them deliver a positive end-to-end customer experience.
ï Long-term viability/profitability: Channel partners are pragmatic and invest in vendor partnerships that help them make money in the long- and short-term. They value attractive gross margins (60%) and they partner with vendors who are visionary in thinking and produce cutting-edge products (57%). They favor vendors who can deliver current and future products/services for which there is and will be a strong SMB customer demand.
ï Ease of doing business: Since SMB channel partners are mainly SMBs themselves, they value working with vendors with whom it is easy to do business. Partner like vendors that allow them to test products/services (70%) before they sell them to customers. They also value vendors’ attention and welcome personal account contact (52%) and referrals for new business.
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