Forging an effective sales model for hardware growth

In a recent Reseller News roundtable, Dell, distributor Simms International NZ and senior channel executives discussed an effective partnership for growth amid a difficult hardware sales climate

By Edited by Reseller News staff, Auckland | Tuesday, 18 May 2010
A combined sales model

Amanda Sachtleben: One of the major aims of this roundtable for Dell and Simms is knowing what you, as partners, would like from them. As you know, Dell has historically sold almost solely through a direct model in New Zealand, but in recent times has branched out with a real channel play. So we would like to know from your points of view how it, in conjunction with Simms as its distributor, can make a combined model of direct and indirect sales effective.

John Preisig: I think it is just going to take a bit of time for us to build that relationship. We’ve got the same thing happening with other vendors obviously - HP does exactly the same thing so it is just a case of working through that and working with Dell to find out where we fit as a channel, versus where it goes direct. It is going to take time.

Amanda Sachtleben: Bill, do you have any thoughts on the issue of online pricing and the pricing customers can find elsewhere?

Bill Hines: There is nothing worse then trying to compete against the people you’re buying from in terms of brands. You would be offering people the price of something and then they can buy it on the website at the same price. It just doesn’t sit with us in terms of the direct sales model and your distribution model.

Grant Stevens: I would agree. When I mention to people about us taking on Dell, the immediate question is, ‘how’s it going to relate to the price online?’ But what is actually behind that is their perception is that what is online has to be cheaper for them and how we get them to realise that [the price] online and [ours] can actually still be the same and they get benefits from either. But people think if they buy it online it will be cheaper and therefore they’ll go online and not even consider us.

Amanda Sachtleben: Andrew, do you have similar thoughts regarding pricing online in comparison with other pricing?

Andrew Charlesworth: Probably initially, but over time I think the market will understand the value in terms of going between online and working directly with that provider. But I think the other big thing for us is really just transparency around Dell and the existing direct accounts, so that we’re not wasting our time approaching accounts that we’re never going to get that business from. We need to agree where we’re focusing our energies and working together to win that business. If there are areas that we can’t touch, then make that as clear as possible and as transparent as possible.

Amanda Sachtleben: Robert, you mentioned you’ve been involved for some years with Dell, internationally. What has been your experience?

Robert Elcombe: Yes, I’ve been dealing with Dell now for 14 years, most of which was in the UK and that is also why I was the first Dell reseller, because as I was emigrating from the UK, Dell approached me to become one of their resellers in the UK, and I brought the invitation with me here. I don’t know how many of us can remember, but Dell has gone down this [indirect] route once before. With 30 days notice, it once withdrew the partnership arrangement and there’s no answer to this question [about the combined model] at the moment, apart from, ‘is Dell in this one for keeps now?’ Is it going to maintain the Dell reseller channel? If the company is going to withdraw it, are they going to give us more than 30 days notice the way it happened last time?

I think the answer to that question is probably to do with what has been happening with Dell in the background. From the way it has structured its manufacturing process now, I think it is stuck with us now whether the company likes it or not. Dell can’t change it.

But the second point I have is that it is very frustrating when I am given the buy price for Dell hardware and my clients approach Dell direct and get a price underneath my buy price. Now, as a reseller, surely I should be given the rock bottom prices and shouldn’t then have to negotiate, playing ping-pong with Dell.

If the reseller channel is going to be here to stay, we should have the lowest prices possible and the client should not be able to undercut our buy prices. That has happened to me on more than half a dozen occasions. I would like to know what can be put into place to prevent that.

Amanda Sachtleben: James, could you respond to Robert’s question?

James Arnold: Generally, the theme at the moment is RRP pricing versus direct pricing. Robert has been involved with us for a long time and up until we launched PartnerDirect in New Zealand, there was an unofficial SI [system integration] programme, where partners were involved in things on a case-by-case basis. There was no-one who was focused on the channel. We had a bunch of sales reps that were customer focused and if a partner was there, great, if they weren’t it did not really matter.

So now Partner Direct is here, a channel team has been formed and it is our job - and I am one of those people - to stop the issues that Robert has been running into. We’ve started first with the SMB class products, so that does not happen any more in Vostro.

As we build our channel programme further and look at the enterprise class products like Latitude, which is what Robert has been selling mainly, then we have got to figure out how we do that.

Over the course of the next 12 months there will be problems. I’m not going to hide that. We need to fix those problems as we run into them and identify them and we are starting to do it. Give me feedback when that happens. Tell me when those things happen and I’ll work with my team to try and stop them from happening again.

I think the real driver is we have now got a bunch of people who are focused on the channel. I have nothing to do with direct. I am 100 percent channel and that is where we’re hopefully going to get a lot more focus on those sort of issues.