In recent years, I have spent a considerable amount of time working with thousands of resellers and distributors and talking with them about how they view services in their marketing and sales model. Based on this research, I have been able to develop and implement improved channel programs for manufacturers and independent services providers. Although resellers and distributors manage their businesses using many different strategies and methods, when you dig deeply enough, they all have certain things in common. They generally fall into a small number of segments that can be identified and considered in marketing strategy development for channel sales of services.

Whether the channel is a multi-tier distributor/reseller model, sales brokers, integrators, or multi-vendor manufacturers’ reps, they usually have defined their services strategy as it fits into a model that was developed originally to sell hardware, software, or solutions. Their services segment generally lacks adequate strategic intent and design to take full advantage of the opportunities in the marketplace.

However, a small number of the most progressive distributors and resellers truly understand the value of selling services and have made it a strategic part of their business model. At the same time, much of the channel still treats services as an afterthought. They consider services as an obligation that requires too much of their resources to become a significant part of their business strategy.

Keep in mind that one size does not fit all when it comes to developing channel programs. Segmenting the channel based on their levels of understanding, commitment and dedication to selling services helps the producer develop more effective strategies and programs.

Three of the primary channel segments include:

• The Full Services Channel. The full services segment of the channel truly understands the value that services bring to its revenue stream, stability, and customer loyalty. In general, this channel segment has invested in the people, processes, and training needed to position services in all of their sales effectively. They maintain dedicated contract administration staff, a level-one call center, and a depot facility to optimize customer relationships and revenue opportunities. Some in this segment have developed their own field force, but many outsource some or all of this function, as it can add considerable cost to develop adequate geographic coverage using their own staff exclusively. The full services channel is also capable of handling more complex services offerings. They have rationalized that there is adequate revenue potential in a full portfolio of services options that may include professional services.

• The Part-time Services Channel. Other segments of the channel will position services if the subject comes up, but find it challenging and would rather not complicate the sale of the hardware and software with extra costs that might make them less competitive. They tend to develop shorter-term customer relationships and move on to the next opportunity with less reliance on the full revenue potential of customers. This type of channel partner can often be converted to a more effective seller of services if the producer helps them to make services sales an uncomplicated activity. The producer’s investment in the Part-time Services Channel can create significant source of service sales potential over the long run as the channel realizes the real benefits to their business potential.

• The No-sell Services Channel. This channel segment does not sell services and does not want to sell services. It is not even on their radar screen. They would prefer to sell boxes and prepackaged or simple solutions, and they have no internal infrastructure for managing services sales. Their products tend to be priced lower, and they rely on volume rather than longer sales cycles with larger revenue potential. Although this segment would seem to be a lost cause for selling services, with proper consideration, they may be willing to take advantage of the revenue and customer loyalty opportunities that services provide. The key to this segment is to be sure that the producer is fitting their service products into the channel model, rather than trying to force them into the producer’s model. Understand and think like the channel and the service producer will go a long way in capturing this untapped segment of the marketplace services business potential.

There are certainly sub-segments between these three generalized segments, but these cover the full range of potential commitment on the part of the channel. However, keep in mind that as the channel matures, it is normal to migrate to increasing value-add that is desirable for both producers and the channel itself. Additional revenue, loyalty and less commoditization will benefit those in the sales cycle that are willing to invest in offering more to their clients.

Future issues of this column will offer additional insight as to some of the best ways to enable and optimize the performance of the various channel segments.

About Jim Payne…………………………………………………………

Jim Payne is the president of S-Market Strategies who has found that selling services through the channel is not only possible, but also highly profitable.

For more information, to sign up of the S-Market Strategies newsletter or to be notified when Jim’s new channel book is available contact Jim Payne at jimpayne@smarketstrategies.com or visit smarketstrategies.com.