Channel Marker

Oct 21 2008   6:36PM GMT

Dealing with large manufacturers



Posted by: StorageSwiss
Tags:
Direct reseller channel conflict
George Crump
Supplier relationship management
Vendor partner business issues

How many salespeople and sales engineers do you want your manufacturer partners to have? Before everyone yells ZERO, let’s think about that for a minute. Different manufacturers have different levels of resources in the field. We’re beginning a series of blog entries on which level makes the most sense for you, and that will vary based on the size and ability of your organization.

Clearly, the more salespeople and engineers that a manufacturer has, the more difficult it becomes for a reseller to add value. Part of the challenge is overcoming the incorrect assumption on the part of manufacturers that footprint equals value-add. Manufacturers have a perception that for a reseller to add value, you need to have four or five salespeople per city and an equal number or more engineers. But what if you have a really smart guy in an area that doesn’t need an engineer on every call, who works harder than your competitor’s five salespeople? Manufacturers would be unwise to miss this guy, but it’s common for them to ignore him.

It really gets challenging when the manufacturer has significantly more sales and engineering resources in your area. Oftentimes, in that scenario, you’ll end up excluded from very large accounts.  It might seem like the manufacturers think you’re not quite bright enough to play in that space, but of course, it’s just to keep you from competing

What manufacturers don’t get is that such an approach fosters a counter-strategy by resellers. As I have mentioned before, resellers are survivors. If Vendor A tells them they can’t sell a product into a particular type of account, the reseller won’t just walk away! They’ll sign a deal with Vendor B, and Vendor A will find themselves competing with their own partners.

This leads, of course, to the exclusivity conversation with Vendor A. Resellers, here is your answer anytime a manufacturer gets upset with you about selling someone else’s solution: “I would be glad to sign an exclusive relationship deal with you the moment you will sign one with me and sell your solutions in the area only through me.” That pretty much ends the discussion, and you can get back to business.

The other challenge with these large manufacturers is that they almost always have OEM relationships, which get in the way of things. EMC has Dell, NetApp has IBM, Hitachi has HP and Sun. Some of the other larger manufacturers don’t really make much in the way of products anymore. When you get to the point where 80% of your storage offering has been purchased or OEM’d, I don’t think you should qualify as an OEM.

The large manufacturers are not all evil, and some have good channel programs, but I find in conversations with resellers that there is a lot of overhead in the relationships, managing conflict and profits and allocating resources. The larger your organization, the more likely there is to be a fit with a big manufacturer. We’ll talk about adding value to a large manufacturer relationship in the next entry.

George Crump is president and founder of Storage Switzerland, an IT analyst firm focused on the storage and virtualization segments.

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