Regardless of technology, economic and societal climate or seasonality, one of the greatest challenges for distribution has always been fostering loyalty among customers. VARs are notoriously changeable, often chasing the best price, while flirting between rivals to also secure the best service or delivery times.
Historically, it was trickier for VARs to switch between distributors; everything was catalogued, trawling through to find SKUs and products was laborious and comparing multiple distributor prices and services was a few hours work at least. So most VARs limited their buying power to a limited number of distributors.
However, with the advent of online warehouses and product lists, it is quick and easy for VARs to search for the technology they require from any number of distributors; comparisons are just three or four clicks away and take minutes. This has led to a price war, a services battle and a marketing mêlée as distributors try to prove why they are better, faster or cheaper to encourage VARs to buy from them. It has also proved risky, as distributors extend credit in order to help entice repeat business.
Surprisingly, part of the answer to growing a loyal customer base may have come from the one arena deemed as most threatening to the channel: the cloud. Whether a distributor has taken the cloud aggregator route or built its own cloud platform, once a VAR is engaged, it offers a higher degree of stickiness than straightforward, pure product transactions.
For an aggregator, having all of the services grouped into best-of-breed solutions, with a common interface that VARs become familiar with will help encourage repeat buying because it saves VARs time and effort. Cloud services remain a minefield for many VARs, especially in the SMB market. Therefore, having a single portal where they can see the services bundled with the storage or hardware in a solution that they know will work is simple and convenient and more likely to drive them to return.
For distributors with a cloud platform, where data is hosted and services tailored specifically for a VAR’s end-user customer, business becomes naturally recurring and so securing repeat business from that VAR.
But cloud is not the only way to help foster loyalty. Our research has found that price is becoming less relevant. This might seem disingenuous in a world where budgets are being cut and everyone wants to negotiate, but good service and good technology solutions are a higher priority than just cheap prices. The service element we have discovered is crucial – nothing new there, but it goes beyond simply timely shipping and good phone manners.
VARs rely on distribution for technical help and often need technical questions answered immediately, or within hours, in order for them to deliver good customer service. Being able to answer those questions by having real experts on staff who know the technology intimately can be a point of differentiation for a distributor and help to ensure returning customers.
The human touch, with someone on the end of the phone who can react, help or discuss any problems is another area our research has shown as rated highly by VARs. And that’s where localisation fits in, too. Often we find that distributors have a strong loyalty base among VARs that are local to them. This isn’t just legacy, where delivery was done by van on a Friday to avoid shipping costs, but it’s also about socialising, attending seminars or technical training and an understanding of the local markets and customers serviced by a VAR.
However, loyalty should not simply be a one-way street. VARs who are beginning to get wise to the technical assistance offered for free by some distributors and are calling one for help, while buying from another, could soon be a thing of the past. Expertise costs money and therefore limiting the amount of technical help to just those who are actively purchasing is one way of securing deeper loyalty. This is already starting to happen, alongside tiered distributor programmes, where VARs are divided into loyalty tiers and support allocated accordingly, in the same way as vendors.
Loyalty will always remain a key challenge for distribution, but with cloud, good service, technical know-how and regional understanding, VARs can be encouraged to remain faithful.
Global Director Business Development Technology, GfK