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Value of Branding the Reseller Rep
#1
Where should I spend my money?  The value of branding the reseller rep—a case study.

In 1988, Alan Hall was the president of one of Ray Norda’s (former CEO of Novel) companies and had tried traditional methods of promoting his product (ads, pr, trade shows, etc.) but met with limited success. He was running promotions to inform and brand prospects who would then try to purchase his product from their local reseller.

Unfortunately, many of the resellers were not aware of his product benefits, and, not wanting to lose the sale, would switch the prospects to a product they were already familiar with. In desperation, Alan hired a group of college students to train the resellers and get them to personally use his product. He figured that resellers would use what they knew, and recommend what they use—he was right. To his surprise, resellers started using it, recommending it and his product and company took off (and was soon acquired).

Alan…had discovered the value of branding the reseller reps.

Later, he formed a company called TempReps to help other companies increase the “recommendation rate” of resellers. This company grew to thousands of employees within just a few years while helping to launch over 400 high-tech products for over 150 companies (including Microsoft, Lotus, Autodesk, Corel, Intel, Sony, IBM, Canon, WordPerfect, Novel, Citrix, and more). I was one of the original 15 employees and the first VP of Sales and Marketing for this new company.

At TempReps, through market research, we learned that 67% of prospects would ask a reseller for their recommendation, and 97% would follow it. That meant that 61% of the products sold were determined by the reseller. Of course, this percentage would change up or down throughout the years and according to the product type and whether the reseller was a retailer or a VAR, but the fact remained that branding the reseller was critical.

At this time in the industry (with the introduction of CompUSA and “shopping carts”), many large corporations were hiring consumer marketing professionals from companies like P&G. Unfortunately, these folks came from a “self-serve” retail fulfillment-only environment and did not recognize the reseller's full influence (certainly not 61%!). As a result, they would spend hundreds of thousands (and millions) of dollars using “tried and true” consumer demand-creation branding techniques. Unfortunately, they forgot to brand the reseller and their prospects were all too often switched to another product by the reseller on site.

Later, I was recruited away from TempReps, into the 5th largest software company at the time to help turnaround a failing product line. One of the first things my team did was to test the “reseller recommendation rate.” We determined our baseline by blindly calling 150 resellers and asking which product they would recommend. We discovered that only 17% of resellers were recommending our product, while 76% were recommending our primary competitor. We then initiated our campaigns to brand the resellers (another article), contacted the same resellers after our 90-day campaign (caught about 100 of the original 150 reps) and ended up with 71% of the resellers recommending our product and only 13% recommending our competitors. As a result, we diverted more money to brand resellers and were able to reduce our end-user promotions and overall budget by hundreds of thousands of dollars—while increasing sales. Our competitors, not knowing why their sales were dropping increased their promotion spending—effectively driving more consumers into accounts that we effectively owned. Recognizing the value of branding the reseller and increasing our recommendation rate helped us achieve 290% growth that year, in a market that only grew by 10%.

This crucial information has proved invaluable throughout the years, as applicable while launching Netscape Navigator, to setting up a new reseller channel (and branding the reps from scratch) for a new post 911 start-up.
_________________
Ted Finch, CEO
Chanimal, Inc
512-263-9618

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