The Handshake Of Fidelity

Vendors have realised that without loyal partners their survival might be

at stake. This is why they are leaving no stone unturned to befriend partners

and keep them happy. But is the channel truly happy with these overtures? Is

vendor loyalty a thing of the past?

The crux of any business is profitability and so it is with the channel

business. But apart from profitability, channel also helps customers in showing

them right directions. Against that backdrop and the growing competition in the

market, channels need to partner new and emerging vendors, like many solution

providers have done in the past (finding that doing so augments growth and

increases margins).

It is also observed that adding new vendors provides building blocks to

larger new solutions. But vendors on the other hand are trimming their channels

and often replacing or dropping resellers.

It's imperative that the channel also gets its business more aligned with the

specific vendor policies. There is no doubt that a loyal partner is the ultimate

weapon the vendor has while battling competition. But are the vendors doing

their bit to ensure that their partners stand by them when it is moot?

Innovate to stay



There could be multiple reasons why a partner can shift his loyalties.

Vendors working with them should bring in the most innovative products and

technologies that creates an impact on the people, forge relationships based on

trust and understanding with the partners, bring in learning and training

initiatives and create an ecosystem that is aligned to growth for the partners.

Sharing his thoughts, Anoop G Nambiar, Country Manager-Business Partner

Organization, IBM India/South Asia said, “We do understand that a sustained and

colla­borative relationship is quinte­ssential for developing and building a

partnership which is mutually beneficial to both the partner and the vendor. IBM

has taken the initiatives like the periodic training on products, sales

incentives as well as various platforms that gives partners direct access to us.

We launched the Partner Sales Service Center in India across four regions to

provide channel partners with services specific to sales opportunities. All of

these help us connect with our

partners well.”

IBM is also focusing on factors such as partner ennoble­ment, training and

scalability. The IBM STG University is one such initiative, which has training

and certification program that enables channel partners to better understand

IBM's system portfolio and also reiterates their commitment to channel partners.

Nambiar further added, “Over the years, we have watched our partners evolve

and play a larger role than before in the overall IBM business. We have put in

place a series of initiatives that facilitate not only the partners working with

IBM, but also partners working with partners. As we go forward, success will be

about partners having to collaborate to grow and evolve.”

For effective collaboration, IBM has launched the 'value net connections',

which is part of the 'Partner World' tools for partners. There is a place to

develop a value net, right from selection of partners to deciding how to develop

a solution and go-to-market and generate demand. Initiatives comprise a number

of offerings like incentives, co-marketing funds or special benefits from IBM.

Sharing his thoughts on the issue, Kandarp Jhala, AVP-National Channels,

D-Link India noted, “While partners are loyal to one brand, they would continue

to talk to others. This is very critical for a partner's growth. Even as they

continue to build their strategies around the products and solutions of one

vendor, partners need to work with others in order to grow to the next level.

This would help them in expanding to new geographies, verticals and market

segments. We must keep in mind that partner exclusivity is only for a particular

product category most of the time rather than the whole portfolio.”

D-Link India has devised a structured empowered partner program, which gives

partners enough room to reach out to new technologies and do business while also

enabling others to reach out to new growth areas and benefit from the same.

Jhala believed that growth is a key driver for channel-vendor partnerships and

multiple vendor tie-ups would become the order of the day given that customers

look for holistic solutions.

According to S Ram Prasad, Business Manager-Consumer Product Group, Epson

India, vendor loyalty is built over a period of time because of brand image, the

product performance, quality of systems and people in the organization besides

consistency and transparency of policy. “Today we are in a customer-driven

market and partners need to provide a choice to their customers, which means

they cannot survive with just one vendor or brand. More than the shifting of

loyalties customer fulfillment is a key factor for partners to work with

multiple brands and vendors,” he said.

Alamuri Sitaramaiah, Director-Sales and Marketing, Fluke Networks, India said

that multiple factors that affect are technology, fit, price, ease of purchase

and support. According to him the channel-vendor partnership that is best able

to cater to the above and become the customer's choice consis­tently provides

the basis for channel-vendor loyalty.

“While the vendor needs to work on product, price and promotion, the channel

needs to work on the marketplace ie the customer account. This makes for a

winning combination and repeated wins create loyalty,” said Sitaramaiah.

Collaborate to win



Voicing his opinion Parag Arora, Regional Manager-Channels, Cisco India

said, “At the highest level, we redefine 'channel' to denote an ecosystem of

collaborative relationships, rather than just a one-way pipeline for products or

services. These relationships tie Cisco to its many partners, and partners to

end-customers; but they also tie partners and customers to each other.”

Through increased colla­boration with its partners, Cisco can measurably

improve both partner satisfaction and loyalty. The company has introduced the

Partner Access onLine (PAL) tool to aid tracking both customer



and partner satisfaction and loyalty. PAL, with its Partner Relationship
Assessment (PRA), helps Cisco measure partner satisfaction with Cisco channels

account teams, direct sales, service account teams and TAC, online tools, and

channels programs.

Echoing similar sentiments Sudha Jagadish, COO, Dax Networks, felt that if

partners have chosen a particular brand, then it's the brand name which comes

first because that encap­sulates their past experience with the product and

vendor. Better margins come next while a mix of commercial and technical support

to the partners follows. According to her good relation­ships are a must, as far

as partner loyalty is concerned.

“Partners work with multiple vendors since customers ask for different

brands. Partners want to offer all the brands in the marketplace. Staying with

multi-brands means more work technically, even though the partner may be able to

give greater value-add to the customer. Partners shifting loyalty when a brand

under-performs is logical. Market pressure can only result in everyone selling

the same brand at wafer-thin margins,” said Sudha.

A personal partner relationship in addition to the marketing value additions

will make the partner remain attached to the vendor, felt Sudha who added, “We

place a lot of emphasis on providing partner training. This gives them

confidence to offer solutions rather than sell products and make more money with

Dax products. We also run an incentive program called 'Dax Drona', to motivate

the partner marketing and sales team.”

What clicks?



According to Durganadh K Venkata, VP-Business Develop­ment and Operations,

Locuz Enterprise Solutions, loyalty is prompted by three factors-strength of the

technology/brand and the pull it enjoys with customers, an engagement process

that is truly oriented towards the sustenance and growth of the channel and the

pre-sales (technology ennoble­ment) and post-sales support (help in escalation

and trouble shooting in case of customer issues) provided by the vendor to the

channel.

He felt that occasionally if a brand is not well accepted in the market a

shift in loyalties can happen. “The channel, waits for the vendor to resuscitate

the brand. However, if over a period of time there is distinct erosion in brand

value, the channel shifts to ensure that they are able to continue to meet

customer needs,” Venkata said.

When vendors start to approach customers directly, build solutions directly

and get involved in aspects like pricing directly, the partners feel encroached

and lose value before customers and in such a situation the partners' role get

limited. Hence the partners may want to opt for more vendors, as this will at

least give them more topline and hence more absolute bottomline, Venkata noted.

The value-add that Locuz has got from its vendors according to Venkata is the

ability to provide post-sales support on the technologies, which has helped them

learn as an organization. It has also provided additional profitability and

build deeper customer relationships.

The incentive for performance, which vendors offer especially in technology

areas of interest, which directly helps the profitability of the partner, is

another value-add. Lastly, vendors have included Locuz as part of their

marketing communication for doing joint customer events, or joint use of logos

in sponsoring television programs thus helping building the brand.

Sharing his thoughts, T Asokan, VP and Head of Business Operations, Accel

Frontline said, “Better margin and support offered are some of the keys for

choosing a vendor. Partnering with a single vendor may not be very advisable

today given the changing market dynamics. While quality and commitments are the

key things that Accel looks for in its vendors, a consistency in quality and

business ethics have been some of the value adds that our vendors have given

us.”

Meanwhile E Manikandan, CEO, Vitage Systems felt that a mix of brand name,

better margins, support offered, and personal relationships prompt vendor

loyalty although the emphasis is higher on the reliability and commitment of the

partnership.

Indicating a possible risk to partners with one vendor, Manikandan said that

the risk would be higher if that brand does not do well. However, if the partner

is able to take position on the technology/ expertise of the product or service

offered, it may help to hedge the risk to some extent. “Partnering with multiple

vendors is largely driven by market pressure for risk mitigation and value add,”

added Manikandan who indicated that a shift of loyalties happen due to change in

a partners approach to business or change in market segment unless it is a lack

of vendor support.

Comfort zone



Jayessh Mehta, CEO, Future Businesstech felt that it is the vendor's attitude
towards the channel, which is the major factor that forges relationships.

Support offered, margins and personal relationships come later. “I think

business is about stake/risk and it could work both ways. What if the vendor

gains the marketshare? Or if the vendor loses marketshare then the channel

partner might have a temporary setback but might not sink. As a trader, a

channel partner can adopt to the change quickly and as a value added partner he

can balance product portfolio effectively and overcome the situation,” said

Mehta who felt market dynamics drive partnerships.

“A single vendor cannot have too many dedicated partners and so some will

have to work with multiple vendors. I don't think anybody needs multiple vendors

for survival. Product portfolio along with the brand pull are the biggest value

adds that we have got from our vendor that has prompted us to work with them,”

he noted.

Sharing his thoughts, RS Shanbhag, Director, Value Point Systems said, “The

comfort in doing business is very crucial for channel-vendor partnerships. When

you are loyal to single vendor, you are just an extended arm of the vendor in

all respects and you work transparently. You grow together with lot of

interdependency which will make the binding tighter for a longer time.”

Commenting on the likely risks of such an association Shanbhag added that the

situation differs from region to region and vendor to vendor. For example,

channels down South are predominantly loyal to a single brand where as the rest

of India, one sees most partners tying up with multi-brand vendors.

Off late one has seen large MNCs getting very aggressive in the marketplace,

especially SMB, government and education segments. This has put tremen­dous

pressure on PC, notebook and server vendors across India. As they excel in

operations, delivery and prices besides latest specs, it is an additional

opportunity for partners to tie-up with them and capture the business where they

are not present.

Shanbhag further noted, “In the SMB market and upcountry locations, there is

tremendous pressure to work with multiple brands and it is definitely a question

of survival for the small to mid-sized channel.”

His reasons for shift in loyalties with a vendor include continuous and

consistent loses in few deals by sticking to one brand, deterioration of

relation­ship both at professional and personal level, bad management of channel

conflicts, no clear differential for loyal and multi-brand partners, frequent

change at vendors team, relationship limited to transactions only (pressure

tactics during end of the month/quarter/year), delay in receiving claims and

back-end incentives, delay in deliveries, frequent change of product specs

without notice, opera­tional challenges, favoritism to another channel partners

of the same vendor, no growth or value addition and inconsistent channel policy,

no loyalty bonus, taking loyal partners for granted and poaching people from

partners.

The biggest value adds he has got form his vendors include mutual growth,

recognition in the marketplace both at domestic and international levels,

sustained business which helped to diversify and earn handsome gains, higher

services revenue and bottomlines and technology refresh and faster adoption.

Creating value adds



According to Ravi Verdes, Director, Frontier Business Systems, understanding

how or why a sense of vendor loyalty develops in customers remains one of the

crucial management issues today. “We feel it is a behavioral intention to fall

back on the same vendor for more business and recommend it to others. As a

result, increased customer loyalty typically leads to increased profit and

growth. Many a time it may not be the name of a particular brand that influences

a customer to make his decision but other factors like after-sales service,

warranty, and personal relationships do matter to an extent. The key to

retaining the customers, and thus having to show a profit, is improved service

quality,” said Verdes.

He further added, ”Service quality, is important for creating loyal customers

across industries. We strongly feel that the deciding factors for vendor loyalty

are better margins, with good support levels including the personal

relationships. Brand name really does not matter most of the time as

end-customers would not really worry about who is the shipping source for us.”

Increased margins on every transaction, faster deliveries, excellent

logistics coupled with good understanding of business by vendors are a key to

vendor loyalty believed Verdes who said, ”Referring us to niche custo­mers,

where we can cross sell multiple solutions, presence of good pre-sales

resources, and committed relationships are the biggest value adds that prompt us

to work with our vendor partners.”

S Girish, CEO, Quadsel Systems, a loyal HP partner stated that a product

portfolio that is broad and spread across segments helps partners work better

with a vendor. Additionally, a focused partner and customer approach helps

improve marketshare. The other reason that has prompted him to stick to his

vendor is service offerings and support besides products and solutions.

“Relationship with the vendor is very crucial. If one is looking for

multiple-vendors it is better to choose non-competing brands. Our vendor goes

big on solutions, which incidentally is our focus area. The vendor also builds

its people capabilities as well as ours on technology and gives us regular

training. This gets us good projects and helps us grow better.”

Alamuri Sitaramaiah Director-Sales and Marketing, Fluke Networks, India The channel-vendor partnership is best able to cater to multiple factors that affect business like technology, fit, price, ease of purchase and support. While the vendor needs to work on product, price and promotion, the channel needs to work on the marketplace ie the customer account, for a winning combination and repeated wins that create loyalty	Parag Arora Regional Manager-Channels, Cisco India At the highest level, we redefine 'channel' to denote an ecosystem of collaborative relationships, rather than just a one-way pipeline for products or services. These relationships tie Cisco to its many partners, and partners to end-customers; but they also tie partners and customers to each other	Sudha Jagadish COO, Dax Networks If partners have chosen a particular brand, then it's the brand name which comes first because that encapsulates their past experience with the product and vendor. Better margins come next while a mix of commercial and technical support to the partners follows	Jayessh Mehta Director, Future BusinessTech Business is about stake/risk and it could work both ways. If the vendor loses marketshare then the channel partner might have a temporary setback but might not sink	RS Shanbhag Director, Value Point Systems The comfort in doing business is very crucial for channel-vendor partnerships. When you are loyal to single vendor, you are just an extended arm of the vendor in all respects and you work transparently. You grow together with lot of interdependency which will make the binding tighter for a longer time

Aniruddha Shrotriya MD, Shro Systems, an HP partner said, “Brand becomes

important along with the portfolio of products it offers. A vendor like HP gives

us a big basket of solution offerings. This helps us grow exponentially, focus

on one brand and benefit from it. Personal relationships too improve between

us.”

Multi-vendor partnerships help as long as they are not competing products.

Choosing complimentary vendors helps offer comprehensive solutions and grow

better. Partnering with multiple vendors according to Shrotriya is based on the

need to innovate oneself and add new solution portfolios to grow bigger.

“Good brand acceptance and wide portfolio and support have been the biggest

value adds we have got from our vendor which gives us a sense of overall

development,” he said while adding, “The partner also should be aggressive to

demand best from the vendor. That helps accelerate growth.”

Sharing his thoughts on the issue, Harish Shetty, CEO, Binary systems said,

“Trends today have shifted from vendor-centric to customer-centric loyalties.

The need of the hour for partners is to work with vendors who can help them

provide customers with holistic solutions that completely meet their needs.

Towards that end, partners look to tie-up with more than one vendor and while

doing so they choose vendors who can offer good support to help them grow. It is

not so much about the brand name or marketshare but rather the kind of solution

and technology that a vendor can provide that draws us to partner him.”

The picture that emerges from the above said is that technologies and

solutions that a vendor offers are crucial for partner tie-ups. However,

sustaining partners is largely dependent on personal rapport as well as the

vendor support and capability offered to provide customers with holistic

solutions.

SUBBALAKSHMI BM



subbalakshmibm@cybermedia.co.in