When $25 billion Ingram Micro (NYSE: IM) acquired a reseller service network as part of its Intelligent Electronics purchase in 1997, the marketing team discovered the sometimes-unhappy realities of classic channel marketing.
“We knew it was a value-add,” says Ingram Micro Channel Marketing VP Justin Crotty, “we just didn’t fully understand its significance at first.”
Turns out small and mid-sized value added resellers (VARs) had three marketing problems that few channel marketers had ever tried to help them with:
Problem #1. Due to limited resources, VARs usually cannot offer a full line of technological capabilities. Adding new capabilities requires huge dollars. Hence, smaller and regional VARs are at a significant disadvantage when it comes to competing against larger integrators and service providers for enterprise clients and contracts.
Problem #2. Because they can’t scale up on the fly, VARs have a very hard time meeting the needs of enterprise companies that need service contracts that span the U.S. and/or Canada.
Problem #3. VARs compete with and are highly distrustful of one other. If one does approach another reseller who has the capabilities he lacks, he opens himself to that reseller possibly stealing his client. So, they’re unlikely to partner to cover each other’s weaknesses.
First, Ingram’s marketing team rebranded the value-add network, ‘Ingram Micro Service Network.’ Then, they decided they’d help resellers to accomplish three – seemingly impossible – things: o Expand geographical reach o Deploy a full line of technological capabilities and solutions o Grow their partner networkCAMPAIGN
Crotty and his team realized the core advantage of the Service Network was that it gave VARs the ability to partner with each other despite geographical limitations. However, working out contractual lingo, acquiring advanced skill sets, and developing QA processes took a few years.
Step #1. Offer advanced skill sets in hundreds more geographic areas
Initially, the Network consisted of 200 service providers who provided “break and fix” services in 100 U.S. metro areas. “We knew that in order for our resellers to grow their businesses and compete against the larger integrators, we really had to offer them advanced capabilities such as system architecture, network design and implementation, and professional services.”
Instead of advertising the Service Network using print or other traditional methods, Ingram Micro asked its reps to identify “best of breed” partners in areas across the U.S. and Canada. “We had a real ‘feet on the street’ recruitment campaign – in fact, it’s still how we recruit potential Network partners.”
Step #2. Define contractual language; eliminate partner distrust
Ingram Micro worked to eliminate partner distrust by continually improving their SLA or “Service Level Agreement” language. In the beginning, SLA contracts were “pretty basic.” Ingram Micro refined the language, pricing, and legal commitments based on reseller feedback and hard-learned experience.
Step #3. Measuring partner quality and service
Ingram Micro also had to ensure its partners met a high standard in terms of quality, customer service and technological capabilities – otherwise, partners would cease to use the Network.
A decision was made early on that partners would be presented as “business class” Service Providers. Freelancers or independent service technicians could not be part of the Network. Says Crotty, “These types of people are what’s known as ‘trunk slammers.’ They aren’t channel focused and they aren’t good for our Partners’ businesses.”
So, in order to be admitted into the Network, resellers had to meet specific technological competencies, provide in-warranty services for several leading manufacturers, and carry certain certifications.
Then, to maintain the quality and instill partner trust, Ingram Micro developed a two-part QA process:
Part A - At the conclusion of each transaction, an Ingram Micro case manager called the end-user to ask a number of questions regarding the partners’ professionalism, knowledge, etc. The Partner was then given a score between 1 and 5.
Each score was then rolled into a Service Provider Satisfaction Rating aggregate. Each partner was required to maintain a minimum rating of 4.5 or lose eligibility to make calls as a partner.
“Yes,” says Crotty, “we do lose service providers who can’t deliver the quality we demand. We do try and coach them back up to 4.5. Sometimes they’ve simply lost a certification or need a technical capability. And of course, we have resellers who just don’t ‘get it’ when it comes to quality assurance. They are dropped. Overall though, our partners are very motivated to stay at the highest level of capability.”
Part B - Ingram Micro also benchmarked itself against other industry players such as Banktech and DecisionOne. To do this, Ingram Micro had a third party company take a sample of the monthly calls to end-users and resurvey them. The results were then compared to Ingram Micro’s results.
“We made this extra effort,” says Crotty, “because we wanted to be the industry standard in all categories, including customer service, technological competency and professionalism.”
Since 1997, Ingram Micro has achieved the following:
- Tripled the number of Service Providers – from 200 to 700 today.
- Moved into 800 U.S. and Canadian metro areas – up from 100 U.S. areas.
- Built out a full line card of technological capabilities to Network Service Providers, including VoIP, migration services, system architecture, security solution, assessment and development, and wireless communication services, to name a few.
- Eliminated partner distrust by aggressively managing complex partner agreements across the channel.
Explains Crotty, “If a Partner #1 calls on the Network for a specific service, we take care of everything surrounding the SLA. The partner who is called into the job then contracts with Ingram Micro to provide a predefined scope of service based on pre-defined pricing. Partner #2 is bound by contract not to compete with Partner #1. Nothing is left to guess or chance and there are no gray areas. The providers know exactly what they are getting every time.”
PMV Technologies, based in Troy, MI, is a good example of how Ingram Micro is able to manage complex agreements. PMV is able to provide service level guarantees for over 2500 bank branches and other sites across 40 states for two large national banks. Any time equipment in a branch is not performing, a Network Partner is there to fix it in a guaranteed amount of time, seven days a week.
Says PMV President Scott Goemmel, “PMV owns the service contracts, and we are the ones accountable. However, the IMSN Partners are my ‘feet on the street.’ IMSN lets me manage this entire process without having to add new employees, equipment or offices.”
Bernie Bourgeois, Chairman of Alberta, Canada-based CompuVision Systems, Inc. agrees. Because of IMSN, he is able to deliver a complete maintenance contract to his client, a large chemical manufacturer with offices in the U.S. and Canada. CompuVision provide services to the client’s 14 large chemical sites and 130 micro office (2-3 people) locations. Bourgeois’ company maintains 55,000 computers in 145 locations for this one client.
Sums up Bourgeois, “IMSN is a global network that allows you to form partnerships with businesses you wouldn’t otherwise consider. Here we all are, competitors with each other, but when we get together as Partners, we share our business vision and industry knowledge. We all know what is at stake in this industry. IMSN enables us to proactively meet industry expectations and grow our businesses – every day.”Useful links related to this article:
PMV Technologies http://www.pmvtech.com
CompuVision Systems, Inc. http://www.compuvision.biz
Past MarketingSherpa article, ‘B-to-B Channel Marketing in Crisis – Top Three Pain Points’: http://library.marketingsherpa.com/sample.cfm?contentID=308
Ingram Micro http://www.ingrammicro.com