Direct paranoia or consumer confidence?

Direct paranoia or consumer confidence?

One of the most satisfying aspects of owning or working in a SME reseller operation must be the feedback you receive from customers who genuinely appreciate good service. After all, if you're not making people happy, you don't have a business.

I'm sure you'll be aware that one of the golden rules of marketing is to create loyal customers. But in saying loyal, I'm not talking about someone who feels they `must' visit your shopfront or Web site, but someone who had a positive interaction with your company and feels confident of finding a similar level of service again. To use marketing-speak, the ideal is to create `winners'.

So let's assume you've managed to foster a large community of winners who believe your company is the ants pants of IT reselling. Just how much is that group of people worth to you? You might be able to make accurate revenue predictions and argue `they bring me $2 million in revenue a year'.

But what about the cost of acquiring and maintaining each individual customer? To use an example, one of the biggest problems facing Australia's telecommunications and ISP markets is the high level of customer churn, which escalates the cost of doing business.

So from the reseller's viewpoint, paranoia over direct vendors appears to be no less prevalent this year than during 1999.

Last week, our lead story (page 1) about MYOB's decision to relinquish control over product upgrades is a classic example of the concerns you live with each day. I imagine the thought of losing a customer to an accountant - no matter how `qualified' he/she is as a reseller - is like a stab in the back.

The other story we ran last week was a missive (page 64) from our (in)famous Tabloid correspondent, a.k.a. Sandy Cremorne, regarding concerns over Network Associates' treatment of resellers. The bottom line is some resellers are worried NAI has the ability to `steal' customer sales on software upgrades or renewals.

The interesting thing is both MYOB and NAI are extremely vocal in their support of resellers. Both vendors have large, broad-based channels to move what is mostly shrink-wrapped, off-the-shelf software.

In my opinion, the channel structures of both companies lend themselves perfectly to the direct model. No wonder you are nervous.

While visiting MYOB execs last week, I asked what is stopping them dumping the reseller channel. With all due respect to MYOB, the answer was a hand-on-heart statement of loyalty to the people who have helped them build the company. Resellers also bring value through partnership opportunities, they added.

But sadly, the cold reality for a listed company like MYOB is shareholders don't give a damn about loyalty. Investor return is king - end of story.

Now I'm not implying for a moment MYOB is about to go direct, but the growth of e-business activity and fierce competition is a real worry for vendors with huge sales targets. Just ask Compaq.

So what are you going to do about it?

Firstly, contact us to voice your concerns because vendors also read ARN and will respond faster than you can say `I love the Dell model'.

Secondly, remind vendors at their next reseller event just how difficult it is to acquire and maintain customers. If they think customers are so fickle that they will always chase the best deal from a vendor-hosted Web site, its time for them to go back to marketing school.

Mark Jones is editor of Australian Reseller News. Reach him at

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