Don't Underestimate The Power Of Marketing
Consider two companies: Nike and LA Gear. Both specialize in athletic footwear and apparel, yet the first enjoys a dominating 36% of the total available market share, while the second is usually clustered in the “other” category on most market analysis pie charts. This is not to suggest that Nike delivers a superior product to LA Gear. Many other factors, such as company size, capital resources, and market penetration, contribute to this discrepancy. Perhaps most instrumental in shaping each company has been marketing. For example, while you can probably easily rank your top five Nike ad campaigns of all time, you’d probably have a hard time recalling one LA Gear campaign or even be able to paint a mental picture of the company’s logotype.
Marketing can have a profound impact on the success of a business, yet it is a tool most VARs underutilize. This fact was made clear to me when reviewing the 2005 State of the Document Management Service Provider Industry survey conducted by AIIM — The ECM (enterprise content management) Association. The survey polled executives from 240 ECM channel companies, including VARs, systems integrators, and consultants, to get an overview of industry growth and profitability. According to the survey, ECM channel companies spend between 5% and 13% of revenue on marketing. Overall, this range isn’t bad, but according to AIIM President John Mancini, the research suggests that stronger-performing companies spend a significantly higher portion of their revenue on marketing, while weaker-performing companies spend more on sales activities.
Investing significantly more in sales than marketing is a common practice in the channel, because many VARs feel they can make only a nominal marketing impact given their limited budgets and regional presence. For this reason, much of the channel’s marketing spending goes toward sales-oriented activities, such as telemarketing programs (44.2% of survey respondents spend a portion of their marketing budgets on telemarketing). While telemarketing serves a purpose, it may not be the best use of your marketing dollars. A separate AIIM survey, entitled the State of the ECM Industry, polled more than 1,200 end users and found that most prospective customers get information on ECM technology providers through four primary sources: search engines, magazines, company and association Web sites, and word of mouth. It may be a wise decision to dedicate more of your marketing budget to promoting your business through these channels — where companies are already interested in the products and services you have to offer — rather than telemarketing to companies that may or may not have a need for your services.
I’m not saying VARs should start advertising in national trade publications. Obviously, this would not be a fiscally responsible or targeted course of action for a regional VAR. However, many industry associations and online industry resources have sections of their Web sites dedicated to helping end users find local technology solution providers. Ensuring you are included in these resource pools can be a big advantage. You can also work with your vendor partners to gain coverage in trade publications, a presence on vendor Web sites, and exposure in national industry trade shows. For example, at this year’s AIIM Expo, several ECM hardware and software vendors had portions of their booth space set aside for their VAR partners. This allowed VARs to market their services and custom products used in conjunction with a vendor product to a wider audience. This exercise also benefited the vendors because someone other than a vendor employee was pitching their wares.
Finally, you can work independently or with your vendor partners to gain more exposure on a regional level. Direct mail and local newspaper, television, and radio advertising are all ways to gain recognition, but perhaps the most successful is having a strong presence in regional, vertically focused trade shows. According to ECM channel companies surveyed by AIIM, these shows were the most effective at creating awareness among an interested target audience and an excellent source for new business leads.