Know Your Customers

Vendors targeting SMB market need channel help.

Satellite radio use has increased to an estimated 5 million subscribers, and some say that number will top 8 million by years end. If that happens, adoption of the service will surpass the speed with which cell phones took off.

Consider this for a moment: Users are rushing to pay for a service—radio—that has been available for free since listeners crowded around the first crackly transmissions a century ago.

Thats because what they are paying for with satellite radio suits their tastes far better than the formulaic, one-size-fits-all fare of the corporate-controlled commercial airwaves. It is a similar story to that of television: Most households now pay for select TV services where once they had gotten basic programming for free.

There is a lesson in this for IT vendors targeting products at SMBs (small and midsize businesses). You have to know your audience. And you must tailor your products and services to that audience.

This holds true for radio, television and publishing, and it holds true for technology as well.

Vendors need to understand that reaching the SMB base effectively requires help—the kind of help they will get only from channel partners.

Vendors also need to keep in mind that the SMB market is not homogeneous. It comprises companies of vastly different cultures and sizes, in locations and communities as divergent from one another as are the businesses themselves.

No vendor can build an infrastructure to effectively address such divergent needs without a framework with channel partners as building blocks.

Attempting to reach the diverse SMB market without channel participation is, if not impossible, certainly daunting. Sure, vendors can set up online stores or team up with online sales partners to sell low-margin volume to SMBs. And thats OK, if thats all you need.

But this approach falls short of addressing fundamental business needs beyond setting up a laptop, printer and Web connection.

A local business seeking to deploy a 10-seat accounting software or back-office system, protect a small network from malicious intrusion, or deploy wireless technology will get the best service by calling a VAR.

No one understands the needs of a small customer better than the local VAR that is intimate with the customers computing environment, has serviced it and keeps it running. VARs build relationships with local businesses akin to those you may have with your mechanic or plumber.

Trust between a service provider and customer grows over the years, and when the customer has an emergency, a technician can get right to work without wasting a lot of time on discovery because that person already knows the customers environment.

When developing a channel strategy, be it around a specific product or an overall corporate program, vendors should bring channel companies into the planning process.

Consulting with key VARs, service providers, integrators and distributors will give vendors an accurate sense of SMBs needs.

The best channel programs are not created in a vacuum. By consulting with potential channel partners, vendors will avoid past practices that met with limited or no success.

Until recently, the SMB product concept among many vendors, especially software companies, was to scale down an enterprise product for smaller companies, put the SMB stamp on it and expect VARs to go sell it. This is a recipe for failure, especially for complex technology.

For starters, "small" and "midsize" are a long way apart, even though they too often get lumped together.

Larger midsize companies may operate as scaled-down versions of large enterprises with similar needs, but the smallest of small businesses are as different from one another as snowflakes.

A two- or three-person office has support needs substantially different from those of a 50- or 100-user company.

As obvious as this seems, many vendors have been slow to understand these dynamics. But the landscape is changing. Partnering consultants and channel analysts say that in the last year or two, vendors have become much better at targeting products at SMBs and building partner programs that make sense.

Vendors are being more selective about recruiting, taking pains to ensure they sign up partners with the right competencies.

Good channel programs also include such components as lead generation, targeted and interactive Web sites, systems that facilitate partnering among VARs and keep track of relationships, co-marketing efforts such as joint seminar participation and demos, and targeted advertising.

Of course, building reasonable margins into product sales always helps. And thats important to remember. Prices must be reasonable but not necessarily basement-low. After all, 8 million listeners are expected to be paying for satellite radio by the end of the year.

Vendors that build channel strategies with the necessary components understand what commercial radio owners are being forced to remember as listeners abandon them for the greater musical diversity and focus of satellite radio: Know your audience.