Shaun - I work as a VAR (2-person company) for a large Manufacturer that has been in the corrosion control business for over 35 years. At current I am a one trick pony with one great solution, however, the perception of this solution isn't the greatest i.e. it is perceived as expensive, other similar products have failed in the marketplace and I take away a recurring revenue stream from Engineers and Contractors if it is implemented successfully.
My one solution is a long-term corrosion mitigation solution and although my competitors offer long-term solutions, they also offer short-term corrosion mitigation solutions. These short-term solutions are defaulted in every restoration contract and are very attractive because they are cheap. In reality they are not effective and a waste of money, but as the saying goes, perception is reality and my larger competitors have done a good job creating a lucrative market for them. My buyers are predominately the retired fixed income segment – so cheap is always attractive to this group – and considering they don’t even buy green bananas, I have to be careful of the phrase “long-term”. My job is obviously to convince the owners that the short-term solutions don’t work and to consider a second “long-term” option – a-la my solution.
With that said, the Manufacturer I am a VAR for could manufacture these short-term solutions but choose not to because their position on them is they don't work. Honorable, but considering every restoration contract has short-term corrosion solutions in them, why wouldn’t I want a piece of that pie? Even tho these are cheap solutions, they have a markup of 500% - which isn’t bad. I will always sell option two and have the cost benefit to justify why it is the right decision – but if the owner is going to make a decision based on price or a myopic way of thinking, why wouldn’t I want the opportunity to profit from that decision? No doubt, my solution is the best long-term solution and it provides more value than any other solution in the market. However, we have two battles we fight. One, the perception and reality that similar products have failed and two, short-term solutions have large companies that work in a distributive manner to promote and market their solutions as a viable corrosion mitigation solutions – albeit short-term. The large companies continue to work with Industry standards organizations to promote and position their short-term solutions as viable and credible – I do not see this effort stopping anytime soon. There is also more science and research backing up some of the short-term solution claims. Although it is honorable to say that we don’t provide short-term solutions because they don’t work – I do not feel we are going to overcome the perception and the bigger dollars the larger companies pump into their messaging and positioning of short-term solutions.
I think I have three options. One, use thought leadership, customer advocacy and demand generation to change the perception in the marketplace, however, this may not be realistic because it would take significant investment to execute on this. Two, convince my Manufacturer that they need to produce the short-term products for us to sell. Three, go find companies that sell these short-term solutions and create some type of partnership. This one would be tricky considering we are direct competitors to all of the short-term providers. What would Closer Q do?
Anonymous, thanks for all the details but I have three additional qualifying questions: Are you profitable? How many deals / how much did you sell in 2008? How does your 2009 forecast look? The reason this is so important is because you said ‘I am a one trick pony’. I am also going to assume as a VAR and being only a 2 person company that the majority of your revenue comes from your VAR relationship. Being a small company, I would first take a look at your business plan and I would make decisions based on your business plan. If you don’t have a business plan, put one together.
Withou understanding your business plan, below are my comments on your options and I have added more recommendations:
· One, use thought leadership, customer advocacy and demand generation to change the perception in the marketplace
o As a 2 person company this is going to be very challenging, I agree with your comment that this may not be realistic because it would take significant investment to execute on this. Do you have a PR firm? Are you currently speaking, writing, blogging, etc. on your vision for the market?
· Two, convince my Large Manufacturer that they need to produce the short-term products for us to sell.
o Unless you are one of their top resellers, I doubt you are going to have a loud voice individually. This will come down to your relationship with your manufacturer’s senior management team and other top resellers.
· Three, go find companies that sell these short-term solutions and create some type of partnership. This one would be tricky considering we are direct competitors to all of the short-term providers.
o Does your reseller agreement restrict you from selling competitive solutions? Additionally, your current relationship could restrict you from getting additional partnerships. Thirdly, only being a two person company, how many partners can you realistically manage and successfully resell their solutions. Have you evaluated switching?
·CloserQ Options:
o Get assistance from Manufacturer: You said the manufacturer has been in business 35 years, so unless this is a new solution for your manufacturer, I am confidently assuming other VARs are reselling the product. Get their help on why you are losing deals. Get their base line data (sales cycles, sales forecast, revenue for territory). Are you attending their conferences?
o Learn from other VARs: Contact other VARs to find out how and why they are winning and ask them how they are overcoming the objections of cheaper short term solutions
o Create Partnerships with Contractors and Engineers: You mentioned third parties are referring other solutions, can you create relationships with them too?
o Review Your Entire Sales Process: Are you qualifying your prospects early in the sale process on their price sensitivity? Are you setting the buyer criteria? Do you know your top 10 objections? Who is your ideal client? Do you know when third parties are involved? Why are you losing? Etc? And the toughest question of are you getting out sold?
Anonymous, 'Good Reselling' and winning quality business. Reader Feedback, please click the comments below to give ‘Anonymous' additional recommendations and I want your feedback on my response. Shaun Priest aka CloserQ
My one solution is a long-term corrosion mitigation solution and although my competitors offer long-term solutions, they also offer short-term corrosion mitigation solutions. These short-term solutions are defaulted in every restoration contract and are very attractive because they are cheap. In reality they are not effective and a waste of money, but as the saying goes, perception is reality and my larger competitors have done a good job creating a lucrative market for them. My buyers are predominately the retired fixed income segment – so cheap is always attractive to this group – and considering they don’t even buy green bananas, I have to be careful of the phrase “long-term”. My job is obviously to convince the owners that the short-term solutions don’t work and to consider a second “long-term” option – a-la my solution.
With that said, the Manufacturer I am a VAR for could manufacture these short-term solutions but choose not to because their position on them is they don't work. Honorable, but considering every restoration contract has short-term corrosion solutions in them, why wouldn’t I want a piece of that pie? Even tho these are cheap solutions, they have a markup of 500% - which isn’t bad. I will always sell option two and have the cost benefit to justify why it is the right decision – but if the owner is going to make a decision based on price or a myopic way of thinking, why wouldn’t I want the opportunity to profit from that decision? No doubt, my solution is the best long-term solution and it provides more value than any other solution in the market. However, we have two battles we fight. One, the perception and reality that similar products have failed and two, short-term solutions have large companies that work in a distributive manner to promote and market their solutions as a viable corrosion mitigation solutions – albeit short-term. The large companies continue to work with Industry standards organizations to promote and position their short-term solutions as viable and credible – I do not see this effort stopping anytime soon. There is also more science and research backing up some of the short-term solution claims. Although it is honorable to say that we don’t provide short-term solutions because they don’t work – I do not feel we are going to overcome the perception and the bigger dollars the larger companies pump into their messaging and positioning of short-term solutions.
I think I have three options. One, use thought leadership, customer advocacy and demand generation to change the perception in the marketplace, however, this may not be realistic because it would take significant investment to execute on this. Two, convince my Manufacturer that they need to produce the short-term products for us to sell. Three, go find companies that sell these short-term solutions and create some type of partnership. This one would be tricky considering we are direct competitors to all of the short-term providers. What would Closer Q do?
Anonymous, thanks for all the details but I have three additional qualifying questions: Are you profitable? How many deals / how much did you sell in 2008? How does your 2009 forecast look? The reason this is so important is because you said ‘I am a one trick pony’. I am also going to assume as a VAR and being only a 2 person company that the majority of your revenue comes from your VAR relationship. Being a small company, I would first take a look at your business plan and I would make decisions based on your business plan. If you don’t have a business plan, put one together.
Withou understanding your business plan, below are my comments on your options and I have added more recommendations:
· One, use thought leadership, customer advocacy and demand generation to change the perception in the marketplace
o As a 2 person company this is going to be very challenging, I agree with your comment that this may not be realistic because it would take significant investment to execute on this. Do you have a PR firm? Are you currently speaking, writing, blogging, etc. on your vision for the market?
· Two, convince my Large Manufacturer that they need to produce the short-term products for us to sell.
o Unless you are one of their top resellers, I doubt you are going to have a loud voice individually. This will come down to your relationship with your manufacturer’s senior management team and other top resellers.
· Three, go find companies that sell these short-term solutions and create some type of partnership. This one would be tricky considering we are direct competitors to all of the short-term providers.
o Does your reseller agreement restrict you from selling competitive solutions? Additionally, your current relationship could restrict you from getting additional partnerships. Thirdly, only being a two person company, how many partners can you realistically manage and successfully resell their solutions. Have you evaluated switching?
·CloserQ Options:
o Get assistance from Manufacturer: You said the manufacturer has been in business 35 years, so unless this is a new solution for your manufacturer, I am confidently assuming other VARs are reselling the product. Get their help on why you are losing deals. Get their base line data (sales cycles, sales forecast, revenue for territory). Are you attending their conferences?
o Learn from other VARs: Contact other VARs to find out how and why they are winning and ask them how they are overcoming the objections of cheaper short term solutions
o Create Partnerships with Contractors and Engineers: You mentioned third parties are referring other solutions, can you create relationships with them too?
o Review Your Entire Sales Process: Are you qualifying your prospects early in the sale process on their price sensitivity? Are you setting the buyer criteria? Do you know your top 10 objections? Who is your ideal client? Do you know when third parties are involved? Why are you losing? Etc? And the toughest question of are you getting out sold?
Anonymous, 'Good Reselling' and winning quality business. Reader Feedback, please click the comments below to give ‘Anonymous' additional recommendations and I want your feedback on my response. Shaun Priest aka CloserQ
Comments
As usual, another great response to a question. It is my firm belief that you have to constantly evaluate, modify, and change your plans to win in sales.
Will Fultz