Why going direct ruins relationships and alienates partners

Why going direct ruins relationships and alienates partners

ARN’s partners inside the industry lift the lid on the real world of the channel

After spending 19 years building a trusted relationship with my customer, and convincing them at every refresh to buy a specific PC vendor’s product, I was cut out.

Removed from the sales process, this certain vendor went directly to my customer with their own special price offer, which was considerably lower than what I could quote.

And it hurt. Not just financially, but reputation-wise. All my hard work and dedication in providing the customer with the best possible value quote in an extremely competitive market, went out of the window.

It completely shattered my trust in the vendor, a vendor that is often spruiking the usual lines of “channel friendliness”, we’ve all heard the “we’re 100 per cent channel” lines that are wheeled out to the press.

No, you’re not, and as I’ve witnessed, the reality is quite different.

I’m fully aware that a lot of vendors do take their large business and government customers direct, but I certainly didn’t see them coming after my mid-sized customer, particularly since I’ve been their trusted IT advisor for almost two decades.

While we miss out on a $300,000 combined hardware and services deal with the customer, which may not seem like much to the PC vendor, it certainly deals a brutal blow to our business.

Since the very start, I’ve often taken the channel manager from this PC vendor into my customer’s office without hesitation or a second thought that they would undercut me.

And why would they? They certainly can’t do anything more than represent the brand and spout about the newest products that have been plonked on the customer’s desk to ogle, prod and try out.

Following such an exchange, they usually go for the full refresh upgrade - hardware, software and all the associated refreshes, such as security and back-up services, that also follow suit.

It may appear to have been a much better deal coming directly from the vendor per unit, but even the vendor’s channel manager admitted the fact that “it wouldn’t even be able to offer the full gamut of services that we, as an IT reseller, offered the customer in the first place, so we’ll still get some portion of their business.”

A portion, but not the entire end- to-end deal.

Naturally, the customer is still willing to deal with us in a services capacity, but it won’t be anywhere near that $300,000 quoted price tag.

This doesn’t spell financial disaster for our business however, because we’ve got an army of customers that keep us chugging along just fine.

But I couldn’t even begin to imagine what shape our business would be in, if we rested ourselves entirely on this long-standing customer.

As I interrogated the vendor’s channel manager as to why they did this, his response was they heard the customer was about sign with a direct competitor and needed to act quickly through a much better price.

I knew the customer well enough and they openly admitted they were shopping around for other deals, which is within their right, but after assessing all the options, the customer was still satisfied with our offering and assured me that they were still going to choose us ahead of anyone else in the market.

But this channel manager didn’t believe any of this and went above and beyond to nab the deal directly.

In hindsight, I do think it was a foolish move by the vendor to sign the deal direct, and in part the customer, who could potentially face a far greater cost in the end. So much for saving a few cents.

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