It all seemed so much easier for resellers in the early days of the contact centre market. With a focus on shifting boxes and marking up margins by a few percent, hey presto, you had a sustainable business model.
Most vendor partner programmes were rudimentary at best. The main focus was on volume. Vendors concentrated on recruiting as many resellers and distributors as they could into their programmes. The quality of the service their partner could deliver to end customers was often a secondary consideration.
The only trouble is that in this new age of transparency, this model no longer cuts the mustard. It’s bad news for traditional backward-looking resellers who are facing a double-whammy.
With economic conditions remaining uncertain, vendors are choosing to focus on cutting costs and protecting their own service skills by carrying out more professional services work in-house and putting less through the channel. At the same time, globally structured end customers increasingly expect only the best service and price as they have greater international price awareness and will buy in the lowest priced region they can.
Areas of strength
To retain and grow market share in the future, resellers will need to clearly differentiate themselves by demonstrating a genuine ability to add value to their end customers. Delivering the same old purely margin-focused sale day in day out will no longer be enough to make the grade, as like for like price pressure makes it harder and harder to compete.
Instead, channel players will need to prove that they can add value to a product sale, rather than merely acting as the ‘middle man’ for a solution, which can either be bought directly or more cheaply from a larger business.
To achieve this goal and take advantages of growing opportunities available to them, channel partners are increasingly concentrating on developing their horizontal capability by bundling solutions and products into packaged solutions; adding consultancy services to their portfolio and building domain and vertical expertise in specific ‘sweet spots’.
Resellers can reap the rewards of delivering an optimum service in areas where they have domain expertise. If they have a strong footprint in a particular vertical they can build stronger, more lasting customer relationships by providing not just the requisite software, first line support and end solution but also the necessary level of consultancy and domain understanding to back this offering up. Alternatively, they could look to become a specialist in a particular area of expertise – providing a managed service by gluing two or three different solutions together; or becoming experts in specific kind of systems integration or customising a solution to meet the specific needs of local government, or the healthcare sectors, for example.
The cloud effect
The good news for channel players is that the emergence of digital and cloud-based IT environments has created a host of opportunities which are making this business transformation easier to achieve. Thanks to the advent of cloud, there are fewer barriers of entry today to channel players wanting to create new propositions, business models and pricing. The downside though is that the speed and frequency of change has increased and accelerated. So it’s much easier for channel players to be outmanoeuvred or to find that their market has rapidly been eroded.
That’s why it is critical that channel players are increasingly reviewing their business models. We are seeing some channel partners across the space increasingly migrating away from the traditional capex business models towards more of a subscription-based opex approach, where their end customers ‘try before they buy’ and typically pay only for what they actually use on a consumption or interaction basis.
If for example, you are continuing to try to sell a product on perpetual licence basis in a market that has moved to transactional or subscription-based pricing, you are likely to find that the traditional capex model has died. Unless, you quickly uncover a way of delivering opex models and pricing, your customers will start to leave. So most channel players are today becoming more sophisticated, focused on offering more value and having to work harder to earn their money.
That’s where contact centre vendors can have a key role to play, developing partner programmes, and through engaging with partners; investing in them and giving them access to R&D and advanced technology input. But channel players need to make the right choice of partner. They need to work with vendors whose solutions are genuinely channel-ready, designed and developed from the ground up with the channel go-to-market model in mind. Resellers and distributors ideally need to be working with vendors with a breadth and depth of channel ready products and the technical expertise to enable them to create compelling new propositions.
In today’s contact centre market, channel players are increasingly focused on offering solutions based around cloud-based platforms, notably including Hosted Lync.
As Lance Grogan, alliance director at Telefónica UK, puts it: “We are focused on providing customers with hosted voice and enterprise capability around Microsoft Lync. The Enghouse Interactive contact centre offering is ideally suited to this market and now forms a key element of our offering. It works well with Lync and helps ensure that we are delivering a competitive offering to customers. We are seeing our business pipeline growing and expect the same from our relationship with Enghouse Interactive over time.”
Vendors that are certified with the major platforms but yet platform agnostic have a significant advantage in today’s contact centre arena. They can help to facilitate migration strategies from platform to platform, adding flexibility to infrastructure by enabling channel players to ‘take their customers on a journey’ using a modular approach rather than feeling constricted to just a single platform.
Of course, those channel partners that fail to look to the future and think more creatively are likely to get marginalised. All they will then be left to compete on is price and the large enterprise players in the space are always going to win that conversation.
Instead resellers need to be looking for opportunities to add value; openings where they can offer managed services and consultancy, not just products, and to focus on developing sustainable long-term business relationships. Channel players who achieve all this will be ideally placed to drive profitability and deliver competitive edge. But they shouldn’t look to do this alone. By partnering organisations that have a true channel focus, channel-ready products and a real understanding of the challenges faced by the channel in developing compelling propositions they will have a much greater chance of success.