SMB has become a major market focus for many technology vendors this year and with it, a renewed channel push. In the third part of an in-depth interview with ARN's Nadia Cameron, Symantec managing director and vice-president Pacific region, David Sykes, talks about SMB as well as how it has changed his outlook on resellers and distributors.
Symantec is one of many vendors looking to build up SMB business. What approach are you taking and how is it different to other markets?
I think our approach is definitely changing. I look at my business as basically three market segments or revenue streams: at the top end we have about 200 named direct accounts. That's where we sell large complex deals, advanced technology, and it's virtually the only place where our services go. It's also where we form the market and drive our large average sale value. But even when we sell through a named account we still fulfill a lot through channel partners. And it's usually the very large, global guys like EDS, CSC, IBM.
The next level down is our value-add channel, which is the place I'm really interested in and where I see our growth opportunity. When you consider we are only taking out 200 of the top 1000 companies direct, that leaves 800 big companies which aren't SMB. And then you've got the rest. Our strategy is to align a partner business development manager with the value-add partner state-by-state and have a virtual sales force. We want to leverage those partners' relationships with customers, but we want to ensure they're adding value. In this case it's about more established products which still have quite high sales value and high sophistication, and increasingly more of the advanced tech stuff. Pushing that out and having partners add value, provide most of the services, and pack on additional products like hardware to provide the full solution for the punter, has enormous focus from us.
Then you hit what I call SMB. We cut a watermark last year and nominated transactions worth less than $20,000 as SMB. It's virtually no value-add, it's very well established and commoditised products, and it's about reaching out and driving volume business. This has traditionally been the sweet spot for Symantec but my sense of it is that we've been losing ground there and we're putting a lot more effort back into it. We have historically managed these resellers and driven business through our distributor relationships. It's worked well for us in the past, but the market has changed. I see our competitors now hiring 10-15 young, aggressive folk to meet face-to-face with thousands of resellers to talk about their company and what they're doing. They're not relying entirely upon product management and distributor touch, they're going past them to touch those resellers directly.
We have also come to the conclusion that many of the demand generation programs now need to be focused down at the coalface. Over the last year we have moved spend in front of customers - loyalty programs, supersize me, upgrades, competitive replacement pricing and so on. The demand then hits a reseller, who should have seen someone from Symantec in the past few weeks talking about a) the program; b) what it means to them; and c) the stuff to make it easy to process.
We recruited half-a-dozen associates whose job is to see five partners a day, 25 a week. I think that's a fundamental difference to how we've approached that space. The things that influence the channel the most in my view are mindshare and margin. And despite what most people think, I believe mindshare will win over margin. Who saw them last, who is servicing them best and who's responding to their needs is going to be more influential than getting 60 points off one guy and 25 off the other.
Where does that leave the disties?
Disties are still there; they are a critical part of the game. In the most broad sense, disties for us are about being a bank. They shield us and help a lot with the financial aspects, they are a quote machine, and they're a logistical operation. Sometimes it's physical [on the consumer side], other times it's electronic. What I look for from my distie relationships is to do those things really well. And again it's about making it easier for the reseller to take the demand and turn it into a transaction for Symantec. But I'm less inclined to be trying to get my distributors to invest heavily in value-add. There are places they can do that: renewals, product management. But I see that as part of licensing management and quoting. I think it's very unreasonable to expect a distributor who is looking after 20 or 30 primary vendors to have the bandwidth to run the volumes they do and engage in direct demand generation capabilities. But they'll always be there: I like to see my disties being very good at the core business, and I need a couple of them to ensure healthy competition.
Is your focus to have channel partners provide more value-adds?
I don't know if it is: I think we just better understand them. I've seen us in the past trying to ramp up a shop that just wants to do transactions. There's no point getting them worked up about big Enterprise Vault sales that require services capabilities because they don't want that. What we've spent a lot of time doing is not trying to change partners but better understand where they fit. Do they want to be in the value-add game? If so, great, we'll talk to you about that and have a different way of approaching you and going to market.
In the SMB space - and there's well over 4000 resellers doing sub-$20,000 business - some of it is the value-add guys reaching down, but a lot of it is much smaller reseller operations who make good money out of maintaining strong relationships with SMB customers. And this reflects the transactions in that space as SMBs tend not to want to buy large services. They have limited budgets and expertise and they need things fixed simply. That's why consolidated solutions, appliances and integrated packages are so attractive to them. They don't have IT shops - they just want to plug it in and know they're protected.
- For Part 1 of this interview click here
- For Part 2 of this interview click here
- For Part 4 of this interview click here