Mistakes VARS Make

By Dave Eagle for POS for Kounta

In the early part of the 21st century, during a decade I like to refer to as the Uh-Oh’s, my life looked very different than it does now. For starters, I worked for two different VARs over an eight-year period which may sound like a shocking revelation — but it is. The idea of me putting on a light blue dress shirt with a pair of khakis to discuss the value proposition of bleeding edge technologies is a pretty hilarious one, if you know me.

I got out of the game well after the point when hardware and software sales were no longer profitable enough for a medium sized VAR to stay afloat. Managed Services were where it was at, building relationships with customers, one monthly payment at a time, and the company I was working for restructured its entire business around this new model.

That’s a nice way of saying they laid me off, but before that happened I took part in a crash course in How Not To Transition From Products To Services. I don’t want this to sound like I’m picking on my former company — truth be told it was heavy in technical talent and I was clearly uninterested in keeping my job — these are common mistakes anyone would make. The lessons imprint quicker when you witness them first hand though.

1. The big sale is a thing of the past. That doesn’t just mean a shift in attitude, but also big changes to your comp plan. A lot of VARs make the mistake of leaving the terms of Hardware and Software sales commissions unchanged, and then add in more opportunities for income by way of selling services. But it’s not enough to incentivize additional sales; if hardware and software are to play lesser roles in your offerings, the comp plan should reflect that. Simply put: don’t make it worth your sales force’s time to chase big hardware sales. Even if margins are slim on the surface, there’s always someone at the distributor or vendor who’s willing to offer better pricing if it means more revenue. If your salespeople are chasing better deals on hardware, they’re not spending time with your customers building the trust required for the kinds of long-term relationships at the heart of monthly support and service contracts. And so long as they focus on the value of acquiring hardware, they’re doing so at the expense of the new services you provide.
    
2. Waiting too long to adjust marketing/sales strategies. VARs have the nasty habit of waiting until everything else is in place before taking a glance at their outreach strategies. Resellers with a stable of happy customers tend to view them as obvious opportunities for their new offerings, as if they’re just waiting to be presented with the next big thing, eager to sign on the line that is dotted just because a salesperson showed up. But how good is the Samaritan who doesn’t make sure the old lady wanted to cross the street before shuttling her to the other side? You may have gotten them a good deal on software a few years back, but that doesn’t automatically mean they want you to monitor their back-office backups remotely. Even if you put in the due diligence of reviewing your customer rolls for specific opportunities, you shouldn’t avoid the untapped pool of people you’ve never worked with before. Find the ones who fit your target audience, then figure out a way to reach them.
    
3. Peer-pressure pricing. If you’ve never heard of this term, that’s because I made it up. If you have heard this term before, that’s because someone stole it from me and my team of lawyers may have a few follow up questions for you. In any event, peer-pressure pricing is when a business owner places a value on her products and services as a direct response to her competitors. Maybe that means charging $100 a month for phone support because that’s what the guy across the street is charging. But what if it costs you $100 a month just to provide the service? It’s OK to charge more, if you’re providing something more. Your pricing has to be in line with what YOU are offering, and so long as you can make a good case why your service is worth the price it shouldn’t matter what your competitor is charging.
    
4. Not offering 24/7 support. Many POS resellers, when they start offering support services of their own, shy away from 24/7 offerings. The rationale is that many of their customers aren’t 24/7 operations themselves, so that kind of availability is overkill. But technical issues can happen at any time, and given the mobility of cloud-based systems, it’s not out of the question that an owner is making changes to the pricelist at 3 a.m. on Sunday when something goes terribly wrong. And it’s not like you have to staff a call-center. A couple of employees on call can handle anything from anywhere with a smartphone. A business owner who doesn’t think she’ll ever need 24-hour help will still choose the 24-hour support option, all things being equal.
    
5. Not bundling in even the most basic of training to any solution. You’ve done the installation, configured the software, created the inventory, and defined best practices for using the system. You’ve nailed down a 24-hour, seven-day-a-week support contract, and everyone is satisfied the system is intuitive and easy to use so no one’s worried the client decided not to purchase the training session you offered. Wait: purchased? Why did you not just train them on the basics, for free? A two-hour tour of the interface that introduces the basics of use goes a very long way towards getting everyone up to speed. But it also increases the value of your support contract. The less they call you for help, the more return you’re getting on it. But more importantly, people who know how to use their software get more out of it. It’s just like how I was able to go much longer distances behind the wheel of a car once I learned how to drive. The more value they see in their investment, the happier they are as customers — and once you’ve made the move to services, happy customers become even more important to your business.

Dave Eagle is a writer and photographer, but necessarily not in that order. For the past few years, he’s been writing about POS for Kounta. He lives in Vermont, USA, but has prose in different area codes.