Q&A: Succeeding In The Hospitality Market

1. What should VARs look for when selecting POS (point of sale) technology for the hospitality market?

Derrell Ness, president of NSA Distribution: A successful POS solution requires hardware and software that is highly reliable as well as full featured. When selecting products, VARs should look beyond the specifications of a product and look closely at a vendor's track record and reputation in the channel.

2. What is the most common mistake you see VARs making in the hospitality market?

Ness: The biggest issue I see is VARs compromising on the quality of their technology solutions in order to meet their customers' price demands. Once the sale is complete, hospitality customers judge their suppliers on the reliability of the equipment and the level of service and support they receive. By cutting price up front, many VARs compromise their ability to provide adequate after-sale support. Getting a sale in the short run by using lower price equipment is likely to create an unhappy customer in the long run.

A related mistake VARs make is frequently switching hardware based on who has the lowest cost that week or month. It may appear in the short term that there are few costs associated with switching hardware. After time though, that reseller may have six or seven different types of hardware in the field that it has to support. It will be difficult and expensive for the reseller to service all that equipment over the life of the hardware or the service contract.

3. How can VARs resist competing on price?

Ness: This is simple, but not easy. To differentiate themselves from Internet storefronts and other low-price suppliers, VARs need to focus on the value-added part of their name. A dramatic example of this is a reseller I know that, when closing a deal with an end user, calls a vendor's software support line and leaves a message to demonstrate that the phone will ring in five minutes. The reseller will then challenge the end user to have the other vendors it is considering do the same thing. Of course, most won't, because many software companies simply can't respond that quickly. The reseller's point is, "If I get stuck, I'm reliant on the response time from my vendor and this allows me to perform for you." He uses this as a way to demonstrate his responsiveness to the end user and differentiate himself from his competitors. It's a high-risk move and an act of faith in the vendor, but it has a big impact on the end user.

4. What trends can we expect in the hospitality market in the next few years?

Ness: There is going to be continued pressure and inroads by Internet retailers that are offering just a box and a price. To compete against this, it comes back to resellers differentiating themselves by the additional value they offer. Resellers need to clearly communicate what that value is because it may not be immediately apparent to the end user.

5. What can a VAR do to protect or increase its share of the hospitality market in the future?

Ness: Resellers need to recognize some customers and prospects are not going to see beyond price. VARs should develop the willingness to let those potential customers go and only focus on the ones that value what the reseller has to offer. Some end users focus on price only. Instead of trying to change their worldview, look for prospects that recognize the value of reliability and service.

6. If there were any message you wanted to get to the VAR channel about the hospitality market, what would it be?

Ness: Resellers should think about long-term profitability. To do that, focus on selecting vendors with a reputation for quality and reliability and those that offer full service and support. Resellers will make more money over the long run by building relationships with vendors and distributors. That will allow VARs to provide the highest level of support to their end users most effectively.