Saturday, July 26, 2008

Vendor Loyalty Goes Both Ways

If you're like us, you have a standard set of products and services you offer. This is your "line card" of products.

Our standard products look something like this:

- HP hardware (servers, workstations)
- Microsoft O.S. (SBS, Server 2008, Vista)
- Symantec Backup Exec
- Trend Anti-Virus
- Diskeeper defrag
- Windows Defender
- Microsoft Office
- QuickBooks

We have a longer list of products as we move to network, wan, printers, etc. And if the client is already using something, and they're happy with it, we support that (Peach Tree, Goldmine, etc.).

In the big picture, we keep costs down and maintenance quality support by having a standard line card for our business.

But business is business. We are not wedded to any of these products "til death do us part." True, we're pretty heavily invested in some. I can see a world without Microsoft operating systems, but I don't plan to go there. Quoting something other than HP would require a good explanation to our clients, but we'd all get over it. If we switched to WordPerfect instead of MS office, no one would know the difference.

Vendors are lucky that inertia is such a powerful force. We are more likely to keep doing the same thing than we are to make changes.

I believe loyalty is one of the fundamental human traits. We find ourselves becoming loyal simply because we continue to do business with someone. We have favorite vendors, favorite distributors, and favorite products.

Are these always the best? No. They are simply our habits evolving into loyalty.

From time to time, you need to splash some cold water on your face and look at what's really going on with your vendors.

I revealed my score card for Microsoft a few days ago. We have similar analyses for other vendors (although far less detailed because we are less intertwined with them).

In choosing vendors, one of the most important criteria is quality. That is why we sell HP and Diskeeper.

But, for many products, there's a "bar" above which a product must be. And if several products are above the bar, then we have more choices -- and less loyalty. A great example here is small office switches. 3com, Linksys, D-Link. If I'm managing the traffic for 20 people and they're all within 100 feet of the equipment room, pretty much anything will do.

Now, if I have 500 people spread out across three floors, I'm not going to build a network based on a series of $80 switches.

But for that 20-person network, there are many choices.

Anti-Virus is another commodity where there's a bar. Luckily, today, every major brand is above the bar. McAfee, Symantec, Trend. All of them can be centrally managed, centrally deployed, and do a great job of stopping the bad guys.

So when we make vendor choices in such an environment, other factors become more important.

One of the key factors is vendor loyalty -- to us.

Does the vendor provide service, support, training, NFRs, spiffs, and loyalty? Are they committed to the channel, or will they compete directly with me?

About a year ago we reviewed all the major products on our line card. At that time we decided to move away from Symantec for three primary reasons.

1) Their products have become nearly impossible to make a profit on. Un-installation takes an act of Congress. Upgrades require complete removal of the old product. So the whole operation is labor intensive. And hard to justify.

2) They have resisted meaningful NFR programs and free training forever. True, they recently came around on this. But a day late. And we have no sense that they're committed to continuing vendor-friendly programs.

3) They consistently -- and aggressively -- try to sell our clients when it's time for renewals.

#3's the killer.

If you compete with me for my clients, why should I give you my money?

Why should we be loyal to a vendor who is not loyal to us?


Not a good excuse.

Symantec recently made clear that they will officially have zero loyalty to the channel. See

If you are "in the middle," you're not currently under attack. But the largest 900 accounts will be handed over to inside sales reps.

And all license renewals for small and medium-sized businesses will be moved from channel partners to Symantec's direct sales team.

We dodged a bullet. We're officially a Trend house at this point. As renewals flush through the system, we just move them over to a competitive upgrade from Trend.

- - - - -

Whether it's Symantec, Microsoft, HP, or anyone else . . . Vendors will do whatever they want. If we add $100,000 in sales for any of these products, we're still just about the smallest fish they ever deal with. They're not going to chase us to determine what their future strategy looks like.

But there are companies with a fundamental commitment to the channel. They may not be loyal to my little consulting firm, but they're committed to using the channel to maintain price, market share, and partner loyalty.

In the consumer market, you can appeal to "the masses" with a little flash and good sales price.

But in the business world, clients rely very heavily on the advice of their consultants -- internal and external. If the consultant recommends Cisco, they buy Cisco. If the consultant recommends Trend, they buy Trend.

If I started quoting WordPerfect on Monday, my clients would start buying it.

Vendors are always tempted to go with direct sales because of the higher margin. We need to get used to the fact that some direct sales will be part of most vendor strategies from now on. This is particularly true of products that are sold to both the business and consumer markets.

But, in the big picture, there are vendors loyal to the channel and vendors who are not loyal to the channel.

Dell has demonstrated twice that they are not loyal to the channel. Their third attempt may be different.

Symantec has moved away from the channel. If everyone starts selling something else, they may be back.

Microsoft is moving away from the channel. As a stock holder, I am very disappointed in this. As a reseller I am disappointed in this.

- - - - -

Emotions need to be set aside here. This is business. You need to make business decisions about the long term business strategy you'll pursue, and who your business partners are.

Vendors will do what they will do. You need to do what you need to do.

Be loyal to vendors who are loyal to the channel.

When you need to change products, make the move and be done with it.

The world keeps spinning.

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