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Management clinic: Mid-market potential

Management clinic: Mid-market potential

As we move into the new millennium, vendors and resellers alike are grappling with the next untapped growth opportunity - "the mid-market". This segment is the fastest growing of the Australian market (forecasts have been anywhere from 25 to 35 per cent plus growth for the coming two years). What is the mid-market? Do we have a definition? IDC define mid-market as medium-sized corporations with 50 to 500 employees. However, a leading global ISV defines Australia's mid-market as comprising 513 companies producing less than $100 million in revenues. Loosely speaking, it is any account that is not deemed to be enterprise.

It's not just stellar growth in this segment that gets IT vendors drooling - mid-market customers are predisposed to buying all IT solutions from one vendor. They simply don't have the economies of scale to support large IT departments managing multiple contractors.

Ask SAP, Oracle, Cisco and Sun Microsystems what excitement is felt with regards to this market space.

So, not only do we have an untapped segment, growing rapidly, where it is possible to establish strong account influence, but also, this segment is devoid of competition. IT vendors and resellers today primarily target the enterprise customers. Why? Because it's easier, because enterprise customers are extremely accessible.

Many IT vendors have tried to get mid-market initiatives off the ground without any success. Others are still creating PowerPoint presentations defining the opportunity. Success in the mid- market can be achieved and failures can be prevented. Selecting and recruiting direct sales people to fill the role of territory or market manager is being redefined as a corporate critical success factor. The job is usually filled by redefining or expanding the responsibilities of field sales people. Familiar with one-on-one direct selling, they must now engage in one-on-many influencing. It is about creating "pull" in the market.

The skills required of a successful territory manager are those commonly seen in marketeers. Can they effectively implement a push/pull strategy? Are they primarily farmers (selling to installed-base customers), or are they capable of "hunting" (selling existing and new products and services to new markets)? In our experience, many territory managers spend 80 per cent of their time "farming", especially those who have a large account selling background. Many vendors pass the high risk/high cost "hunting" activities to their reseller partners.

This approach neither generates loyalty or a sense of shared rewards in the reseller communities. A better approach is to give the "farming" activities to the reseller partner and for the vendor to engage in "hunting" or creating demand. Once the lead is identified, the partner can then be engaged to move the opportunity forward. We call this approach "teeing up and turning over", a key skill required in territory managers today.

What marketing resources are available for this segment? Many vendors have tried to capture the mid-market with T-shirts and hats! Unfortunately, this approach is not enough to guarantee success. Vendors and resellers alike must develop programmatic activities (activities that have leverage) to create demand. The market is too big and time is too short and cost is too high to generate demand with the "face to face" sales call. (Once again a favoured tactic for the salesperson with a large account selling background.)Do you and the vendor have a reusable solutions program in place? Packaging product, services and expertise into easy to order, easy to market, predetermined services components is critical when selling volume solutions to a volume market. Both SAP and Oracle have identified that this capability is a key component of success in the mid-market and are developing relationships with platform providers, network partners and servers deployers.

The opportunities for vendors and resellers are significant. Resellers who see that they are being dis-intermediated from the enterprise segment by their vendors (ARN June 23, page 56) can redefine their value and participate aggressively in mid-market growth together with their IT vendor partners. However, the success of both hinges on the clarity about the vendor's role, the recruitment and development of the right partners, effective corporate channel and product marketing programs, and how well resources can be used in the targeted markets.

Carol Johnson is principal consultant for channels and alliance practice Pelorus International. Reach them at: www.pelorusintl.com.au


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