Resellers – Are Your Current Channel Providers The Best Solution For Your Customers? If Not, What Next?

By Norman Katz, President of Katzscan Inc.

A friend or business colleague sells you an insurance policy, promising that it is the best insurance policy out there.  Great!  You purchase the policy because you want the best.  Two years later your agent switches companies.  Your agent reaches out to you to sell you a new policy from the new company which is touted as the best policy out there.  What?  Don’t you already have the best policy on the market?  Well … you did when your agent worked for their prior company, but you don’t necessarily have the best policy right now … or do you? 

Did the agent lie to you two years ago?  Maybe the agent wasn’t as knowledgeable about the market as you were led to believe or as you thought?  Did you do enough due diligence homework yourself on available insurance policies and options, and should you have had to in trusting someone you thought was an expert with your best interest in mind?  Maybe the new policy from the new company didn’t exist two years ago.  What if your agent had not changed companies: would you even ever know about this new company’s other policy?  If you agent had not changed companies would your current policy be sufficient even if it was not the best?  Is your agent the best agent you could have? 

Confused yet?

Resellers – well … some, not all – face an interesting dilemma between their relationships with their end‑user customers and their partnerships with their channel providers. 

On one end, resellers have spent significant time and money investing in building their channel provider partnerships.  Selling more products and services helps to bring down the associated costs, yielding higher profit margins.  Resellers desire to reach vaulted status levels of partnership – bronze, silver, gold, platinum, diamond – and reap the rewards and benefits and upper-echelon levels convey upon the select few, such as more competitive pricing and special access to corporate employees, pre-sale products, and events.  Employees need training and certifications in the specific products and services being sold, not only so they know what they are doing but because these certifications matter to many clients. 

On the other end, resellers (should) want to deliver the best solutions for their end-user customers.  Not just the solutions from the companies they have partnered with, but the best solutions.  What solution will best satisfy the end-customer need at the price-point the end-customer can afford? 

So, what if a reseller is selling a solution from Company A but knows that the solution from Company B is better?  Should the reseller switch partnerships to Company B and then switch their end-customers to Company B’s products or services?

It is fair to say that this is not an easy answer, so the reseller needs to take a few things into consideration:

First, has Company A just been slipshod in their product or service upkeep and support.  If Company A has a negative track record it might be time to consider making a move.

Second, if Company B is brand new to the marketplace, it might be wise to let the proverbial dust settle a bit before making a switch.  Ensure that Company B’s executives are stable, its leadership is focused, its products or services are first-quality, and its business model is solid before jumping in the pool.

Third, in a competitive environment it is natural that on occasion a challenger will introduce a newer version with enhanced features.  Examine what those enhancements are and what incremental value they add for your clients: a little or a lot.  The reseller might want to proactively inform their clients in an upcoming newsletter, assuming the reseller does a newsletter, that while a competitor’s product or service has certain features in its new version, the reseller’s review indicates that those enhancements are not significant enough to warrant changing away from the product or service current in use and provided by the reseller.  Better the end-user hears it from the informed reseller than through the grapevine of the Internet. 

Fourth, being on the bleeding edge of technology is not always the most comfortable place to sit.  Are the enhancements to the competitor’s products stable and problem-free?  It may be prudent to wait and see before jumping on the proverbial bandwagon and implementing the newest product or service to hit the market too soon.

Fifth, the reseller should inquire as to whether its own product or service partner will be making similar – or improved – enhancements, and when.  The answer received will be a good indication of whether the reseller should stick with its current partnership or not.

Notice that nowhere in this conversation did the question of commissions or spiff fees enter into play.  The reseller should not make a decision based on the partnership deal Company A versus Company B is willing to provide.  Certainly, the reseller must consider the cost of the conversion in terms of employee retraining and recertification.  The reseller also has to sell this to its end-user customers.  I suggest – and submit – that the new partner, e.g. Company B, be tasked with providing significant discounts to help the reseller such that there is no cost to the end-user customer to make the switch, and whereas the reseller’s employee education is provided for also.

My suggestions above require a customer-focused perspective, whether the customer is the end-user or the customer is the reseller.  In the “channel-chain” the typical playbook is in just as much need of rewriting by each player involved, and like any good organization, change must start at the top.

Norman Katz is President of Katzscan Inc. (www.katzscan.com). Norman has written for various trade publications, is a national and international speaker, and is the author of two exclusive books.  Norman is an expert on ERP, EDI, supply chain vendor compliance, data analysis, business operations, and supply chain fraud.