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Slide 1 - Mac Virtual Machines and Virtual PC. Automation and ...

  1. 1. “… The most convenient imaging software we’ve seen to date” CNET
  2. 2. Selling Over the Phone <ul><li>Software or service must be downloadable or serviced over the internet </li></ul><ul><li>Download size should be under 200MB </li></ul><ul><li>Registration must be achievable both before and after download or trial </li></ul><ul><li>Product must solve one problem for individual contributor </li></ul><ul><li>Product must be able to be installed without interaction from support 98% of the time </li></ul><ul><li>Product must be able to be installed in less than 15 minutes </li></ul><ul><li>Products that are sold by server or device work better than products sold per user </li></ul><ul><li>Product should have a large competitor </li></ul><ul><li>Product should be able to be tied into or complementary to other brand name products </li></ul><ul><li>Product value has to be definable in less then three sentences </li></ul><ul><li>Product must have a direct competitor </li></ul><ul><li>End user must be definable by title </li></ul><ul><li>Product must have large market appeal </li></ul><ul><li>Solution to the customer cannot require the company to change its internal processes </li></ul><ul><li>End users must have common communication mediums </li></ul><ul><li>Entry price should be under $3,000 </li></ul><ul><li>Product needs to be able to be reviewed by editors </li></ul><ul><li>Product needs to have at least 10 words / phrases that can be used in paid search </li></ul><ul><li>Pricing needs to be simple and have very few options </li></ul><ul><li>Software install cannot require multiple people install </li></ul>
  3. 3. Office Space <ul><li>Phone System </li></ul><ul><ul><li>Voice mail </li></ul></ul><ul><ul><li>Monitoring </li></ul></ul><ul><ul><li>Listen In </li></ul></ul><ul><ul><li>Conferencing </li></ul></ul><ul><ul><li>IP phones for cost of under $.04 per minute for local and long distance </li></ul></ul><ul><li>Office Space </li></ul><ul><ul><li>Parking - 4+ Per 1000 Square Feet </li></ul></ul><ul><ul><li>Access to food - delivery </li></ul></ul><ul><ul><li>Thermostat controls in key offices </li></ul></ul><ul><ul><li>Natural Light is more important then you might think </li></ul></ul><ul><ul><li>Separate AC unit for server room </li></ul></ul><ul><ul><li>Separate breaker for server room </li></ul></ul><ul><ul><li>Access to building - 7X24 </li></ul></ul><ul><ul><li>Lighting to parking area </li></ul></ul><ul><ul><li>Entrance badges </li></ul></ul><ul><ul><li>Proximity to public transportation </li></ul></ul><ul><ul><li>Market with greater than 500K people </li></ul></ul>
  4. 4. Office Space <ul><li>Lease </li></ul><ul><ul><li>Never more than 3 years with option to extend </li></ul></ul><ul><ul><li>Empty adjacent space if possible </li></ul></ul><ul><ul><li>Open Layout – 1 office for every 8 cubes </li></ul></ul><ul><ul><li>Common area multiple can have a big impact on costs </li></ul></ul><ul><ul><li>Validate condition of communications to building </li></ul></ul><ul><ul><li>Always ask for a few months few rent </li></ul></ul><ul><ul><li>Cost per square foot in Burlington $12.00 </li></ul></ul><ul><ul><li>Office keys should be included </li></ul></ul><ul><ul><li>Heating and cooling options after business hours </li></ul></ul><ul><ul><li>Build out should include refrigerator & dish washer </li></ul></ul><ul><li>Heads per Square Foot </li></ul><ul><ul><li>Nice – 5.5 per 1000 square feet </li></ul></ul><ul><ul><li>Good – 7 per 1000 square feet </li></ul></ul><ul><ul><li>Tight - 8 per 1000 square feet </li></ul></ul><ul><ul><li>Possible 9.5 per 1000 square feet </li></ul></ul><ul><ul><li>1 Conference room is enough to support 70 heads </li></ul></ul><ul><ul><li>Little need for reception area </li></ul></ul><ul><ul><li>Storage Area - Loading Doc </li></ul></ul>
  5. 5. Office Space <ul><li>Assets </li></ul><ul><ul><li>PC vs. laptop computer – recommend desktop </li></ul></ul><ul><ul><li>Server room </li></ul></ul><ul><ul><ul><li>Router (Use Brand Name) </li></ul></ul></ul><ul><ul><ul><li>Firewall </li></ul></ul></ul><ul><ul><ul><li>Terminal Server </li></ul></ul></ul><ul><ul><ul><li>Two Servers </li></ul></ul></ul><ul><ul><ul><ul><li>Email </li></ul></ul></ul></ul><ul><ul><ul><ul><li>File server </li></ul></ul></ul></ul><ul><ul><ul><li>VPN – Part of firewall </li></ul></ul></ul><ul><ul><ul><li>Backup software – Acronis </li></ul></ul></ul><ul><ul><ul><li>Backup power supply </li></ul></ul></ul><ul><ul><ul><li>Microsoft Partner Program and reduce software costs </li></ul></ul></ul><ul><ul><li>Furniture </li></ul></ul><ul><ul><ul><li>Plug and Play is worth $1.50 per square foot </li></ul></ul></ul><ul><ul><ul><li>Used is always better - $800 per cube set up, $85 per chair </li></ul></ul></ul>
  6. 6. Hiring <ul><li>Sources </li></ul><ul><ul><li>Online Sources </li></ul></ul><ul><ul><ul><li>Corporate Website </li></ul></ul></ul><ul><ul><ul><li>Hotjobs </li></ul></ul></ul><ul><ul><ul><li>Dice </li></ul></ul></ul><ul><ul><ul><li>Monster </li></ul></ul></ul><ul><ul><ul><li>Sales Ladder </li></ul></ul></ul><ul><ul><li>Military Job Services </li></ul></ul><ul><ul><li>Colleges </li></ul></ul><ul><ul><ul><li>Interns </li></ul></ul></ul><ul><ul><ul><li>Recent Grades </li></ul></ul></ul><ul><ul><li>Internal Referral Program </li></ul></ul>
  7. 7. Management <ul><li>One Manager to 10 Reps </li></ul><ul><ul><li>Up to 20 with team leads </li></ul></ul><ul><ul><li>Focus on process </li></ul></ul><ul><ul><li>No discounting without management approval </li></ul></ul><ul><ul><li>Task manager </li></ul></ul><ul><ul><li>Recommend to hire after 90 Days </li></ul></ul><ul><ul><li>Recommend the manager keep 3 accounts </li></ul></ul><ul><ul><li>MUST LEAD BY EXAMPLE </li></ul></ul><ul><li>Monitoring in Critical – Hawthorne Studies (1933) </li></ul><ul><ul><li>Phone </li></ul></ul><ul><ul><li>Opportunities </li></ul></ul><ul><ul><li>Quotes </li></ul></ul><ul><ul><li>Leads </li></ul></ul><ul><ul><li>Number of transactions in the pipeline </li></ul></ul><ul><ul><li>Emails </li></ul></ul><ul><ul><li>Hours in the office - HR Laws </li></ul></ul>
  8. 8. Metrics for Success <ul><li>Cost Per Lead Should not be greater than (ASP * Conversation Ratio * .33) </li></ul><ul><li>Sales Reps need 3 warm leads per day </li></ul><ul><li>20% of Sales Rep time focus on cold calling </li></ul><ul><li>20% of Sales Rep time focus on install base </li></ul><ul><li>25 non run rate transactions in monthly pipeline </li></ul><ul><li>Goal of 10% warm lead conversion </li></ul><ul><li>30% of sales should come from customers that have purchased in the last 3 months </li></ul><ul><li>ASP should be 2X for existing customers </li></ul><ul><li>60% of leads should be contactable </li></ul>
  9. 9. Lead Generation by Market <ul><li>US is estimated at 37% of world IT spending. Do forget about ROW </li></ul>Country PC's Shipped Servers Shipped Printers Shipped % of Total USA 45,938,828 1,507,158 19,965,832 37.3% Japan 12,121,708 402,623 6,724,106 10.0% China 11,025,424 263,353 5,378,127 6.5% Germany 6,664,133 225,331 5,519,422 5.6% UK 6,235,034 222,035 3,726,541 5.5% France 4,808,142 167,289 2,913,711 4.1% Canada 2,954,901 116,036 1,868,963 2.9% Italy 2,990,243 106,701 2,514,308 2.6% Australia 2,106,625 68,038 1,035,042 1.7% South Korea 3,525,762 67,810 2,338,884 1.7% Netherlands 1,553,093 62,713 724,715 1.6% Russia 2,095,432 59,285 1,886,868 1.5% Spain 1,810,517 52,734 1,363,084 1.3% Taiwan 1,181,706 50,411 1,095,514 1.2% Switzerland 945,753 47,906 280,282 1.2% Brazil 3,060,580 45,461 1,702,872 1.1% Sweden 1,122,157 44,788 423,565 1.1% Belgium 669,729 36,682 529,394 0.9% India 2,190,195 34,794 946,633 0.9% Thailand 766,199 33,848 740,830 0.8% Denmark 563,080 32,542 388,018 0.8% Mexico 2,296,915 29,193 1,486,989 0.7% Hong Kong 561,458 28,344 333,312 0.7% Austria 630,308 27,575 280,282 0.7% Norway 527,886 25,420 284,236 0.6% Israel 451,041 24,747 272,946 0.6% Finland 473,739 21,869 222,483 0.5% Poland 997,818 20,851 925,104 0.5% Indonesia 642,550 19,152 605,627 0.5% Singapore 442,853 19,109 299,707 0.5%
  10. 10. Compensation <ul><li>Total Compensation = (Salary + ((Average Deal Size * Average Commission Rate) * (# of Calls Per Day * Hit Ratio * Close Ratio * Sales Days Per Year) </li></ul><ul><li>Base salary should be between $32K and $52K depending on skill set </li></ul><ul><li>Salary & Variable compensation should be 50% / 50% </li></ul><ul><li>Sliding Commission Rates </li></ul><ul><ul><li>Less expensive for reps that don’t make it. </li></ul></ul><ul><ul><li>Less turn-over at year end </li></ul></ul><ul><ul><li>Reps at 100% make significantly more than reps at 80% </li></ul></ul><ul><li>Quota should be no greater than 25 times ASP </li></ul>
  11. 11. Compensation <ul><li>Bonus Programs </li></ul><ul><ul><li>Ego can be more valuable than cash </li></ul></ul><ul><ul><li>Help build resumes and careers </li></ul></ul><ul><li>Example Rewards </li></ul><ul><ul><li>Building Blocks </li></ul></ul><ul><ul><li>Night on the Town </li></ul></ul><ul><ul><li>$100K in One </li></ul></ul><ul><ul><li>Top Rep gets Dual Monitors or Nicer Chair </li></ul></ul><ul><li>Career Path </li></ul><ul><ul><li>Telemarketing </li></ul></ul><ul><ul><li>Customer Retention Rep </li></ul></ul><ul><ul><li>Associate Rep </li></ul></ul><ul><ul><li>Inside Sales Rep </li></ul></ul><ul><ul><li>Senior Inside Sales Rep </li></ul></ul>
  12. 12. Interview <ul><li>Set Correct Expectations </li></ul><ul><ul><li>70 Dials </li></ul></ul><ul><ul><li>20+ Hits </li></ul></ul><ul><ul><li>2 Hours on the Phone </li></ul></ul><ul><ul><li>Office Hours equals territory hours </li></ul></ul><ul><li>People fail for 1 of 4 Reasons </li></ul><ul><ul><li>Lazy </li></ul></ul><ul><ul><li>Stupid </li></ul></ul><ul><ul><li>Lack of Integrity </li></ul></ul><ul><ul><li>Motivation </li></ul></ul>
  13. 13. Interview <ul><li>Questions / Test for: </li></ul><ul><ul><li>Excel </li></ul></ul><ul><ul><li>Basic math skills </li></ul></ul><ul><ul><li>First job to get money </li></ul></ul><ul><ul><li>College History – 4 or 5 years to complete, 3.0 GPA </li></ul></ul><ul><ul><li>Competitive nature </li></ul></ul><ul><ul><li>Family back ground </li></ul></ul><ul><ul><li>Diversity </li></ul></ul><ul><li>Good Profiles </li></ul><ul><ul><li>Photocopier reps who have sold for less than 3 years </li></ul></ul><ul><ul><li>Phone or telephone line systems </li></ul></ul><ul><ul><li>Former military </li></ul></ul><ul><ul><li>Telemarketing reps from large IT firms </li></ul></ul><ul><ul><li>Single mothers over 30 </li></ul></ul><ul><ul><li>People changing careers </li></ul></ul><ul><ul><li>Bartenders and bouncers </li></ul></ul>
  14. 14. Training <ul><li>General Knowledge </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Time Management </li></ul></ul><ul><ul><li>History of Computing </li></ul></ul><ul><ul><li>Personality Profiling </li></ul></ul><ul><ul><li>Revenue Recognition </li></ul></ul><ul><ul><li>Deep Carpet Selling </li></ul></ul><ul><ul><li>Excel Skills </li></ul></ul><ul><ul><li>Large Transactions </li></ul></ul><ul><ul><li>Negotiations </li></ul></ul><ul><ul><li>Closing </li></ul></ul><ul><ul><li>Computing Basics </li></ul></ul><ul><ul><li>Forecasting </li></ul></ul><ul><ul><li>Financial Planning </li></ul></ul><ul><ul><li>Goal Setting </li></ul></ul><ul><ul><li>Territory Management </li></ul></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Competitive </li></ul></ul><ul><ul><li>Large Software Companies </li></ul></ul>
  15. 15. Training <ul><li>Sales Methodologies </li></ul><ul><ul><li>Sadler </li></ul></ul><ul><ul><li>High Probability Selling </li></ul></ul><ul><ul><li>Spin Selling </li></ul></ul><ul><ul><li>New Strategic Selling </li></ul></ul><ul><ul><li>Red Hot Cold Call Selling </li></ul></ul>
  16. 16. Terminations <ul><li>Immediate for Lying – No exceptions </li></ul><ul><li>Force First Line Managers to terminate bottom 5% to 10% each quarter </li></ul><ul><li>Reps who have been on quota for one full quarter who are in the bottom half of performance and in the third in terms of monitored stats for effort. </li></ul><ul><li>Never do performance reviews for sales reps </li></ul>
  17. 17. Marketing <ul><li>Inside Sales Dies Without Marketing </li></ul><ul><li>Leads per Rep – Minimum of 3 Warm Leads per Day </li></ul><ul><li>Must be able to track!!! </li></ul><ul><ul><li>Lead Source </li></ul></ul><ul><ul><li>Revenue and Number of Leads by Source </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Renewal Maintenance </li></ul></ul><ul><ul><li>Cost per lead </li></ul></ul><ul><li>Marketing to Install Base </li></ul><ul><li>Read Seth Godin’s books on Viral Marketing </li></ul><ul><li>Channel marketing is just as critical as end user marketing </li></ul>
  18. 18. Territory <ul><li>Good Fences Make Good Territories </li></ul><ul><ul><li>Claw Backs </li></ul></ul><ul><ul><li>Poaching </li></ul></ul><ul><ul><li>Channel Neutral </li></ul></ul><ul><ul><li>Commission after leaving the business </li></ul></ul><ul><ul><li>Split Policy </li></ul></ul><ul><li>Territory Plan </li></ul><ul><ul><li>Up to 13 – States </li></ul></ul><ul><ul><li>Up to 52 - Area Code </li></ul></ul><ul><ul><li>Higher by Zip </li></ul></ul><ul><li>Vertical Territories </li></ul><ul><ul><li>Federal </li></ul></ul><ul><ul><li>State & Local </li></ul></ul><ul><ul><li>University </li></ul></ul><ul><ul><li>K-12 </li></ul></ul><ul><ul><li>Healthcare </li></ul></ul><ul><ul><li>Install base </li></ul></ul>
  19. 19. Sales Cycle <ul><li>Sales Cycle needs to be monitored and tracked to under 90 days </li></ul>
  20. 20. Selling to Install Base <ul><li>Important to have one senior rep to every 6 to 8 inside rep once large transactions in the install start to appear. </li></ul><ul><li>Customer that purchase 3 times are 4 times more likely to make a large purchase than someone that has only purchased once. </li></ul><ul><li>Large transaction should be considered as 25X Average Selling Price (ASP) </li></ul>
  21. 21. Sales Tools <ul><li>Sales Bible </li></ul><ul><ul><li>Data Sheets </li></ul></ul><ul><ul><li>ROI </li></ul></ul><ul><ul><li>Win Stories </li></ul></ul><ul><ul><li>Internal Reference List </li></ul></ul><ul><ul><li>Customer List </li></ul></ul><ul><ul><li>Into Emails </li></ul></ul><ul><ul><li>Product Road Map </li></ul></ul><ul><ul><li>Release History with Features </li></ul></ul><ul><ul><li>Call Scripts – Bullets </li></ul></ul><ul><ul><li>Top 50 Targeted Accounts </li></ul></ul><ul><ul><li>Territory List </li></ul></ul><ul><ul><li>Objection Listing Tracker </li></ul></ul><ul><ul><li>Business Drivers </li></ul></ul><ul><ul><li>Needs per Customer Type and Roll </li></ul></ul>
  22. 22. Sales Tools <ul><li>CRM </li></ul><ul><ul><li>Online – Salesforce or SugarCRM </li></ul></ul><ul><ul><li>Parent Child Relationships </li></ul></ul><ul><ul><li>Security by Roll </li></ul></ul><ul><ul><li>24 hour Lead transfer to Rep Time </li></ul></ul><ul><ul><li>Back end automation with Marketing </li></ul></ul><ul><ul><li>Replication </li></ul></ul><ul><ul><li>Reporting </li></ul></ul><ul><li>Data Sources </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Purchase Orders </li></ul></ul>
  23. 23. Channel Sales Discussion Points <ul><li>How software products reach the end user </li></ul><ul><li>Channel definitions </li></ul><ul><li>What can channel partners do for your company? </li></ul><ul><li>Is your company ready for the channel? Are your products? </li></ul><ul><li>The realities of the channel </li></ul><ul><li>How to engage the channel </li></ul><ul><li>Working with volume resellers / government resellers </li></ul><ul><li>Working with value added resellers (VAR) and system integrators (SI) </li></ul><ul><li>Working with working with distribution </li></ul><ul><li>Developing a channel program and recruiting partners </li></ul><ul><li>The channel sales organization </li></ul><ul><li>Channel marketing </li></ul><ul><li>Channel conflict with your direct sales organization / rules of engagement </li></ul><ul><li>Pricing and discounts (street price) </li></ul><ul><li>Q&A </li></ul>
  24. 24. Reaching the End User VARs SIs Volume Resellers End user Distributors OEM Direct Sales Online Sales Retail Republishers Software Company Reseller Portal
  25. 25. Channel Partners - Definitions VARs SIs Volume Resellers End user Distributors Software Company <ul><li>Distributors </li></ul><ul><li>Often referred to as two-tier or two step distribution </li></ul><ul><li>Buys directly from software company, sells only to resellers </li></ul><ul><li>Access to thousands of resellers, preferred way to purchase </li></ul><ul><li>Handles fulfillment between a Software company and its resellers </li></ul><ul><li>Reseller Portal </li></ul><ul><li>An online store set up to service the fulfillment needs of resellers. Typically outsourced to an e-commerce company like Digital River. </li></ul><ul><li>Handle credit card processing, provide immediate access to licenses </li></ul><ul><li>Transaction fee and percentage of sale model </li></ul><ul><li>Volume Resellers </li></ul><ul><li>National in focus. Purchases products from a distributor or directly from a Software Company. Prefers to purchase from a distributor. Sells only to End User customers. High volume / low margin model. </li></ul><ul><li>90%+ of Fortune 1000 companies and many government agencies purchase have all of their software procurement needs managed by a volume reseller. </li></ul><ul><li>Value Added Resellers and System Integrators </li></ul><ul><li>Professional Services/Consulting oriented companies focusing on specific solution set or practices. Examples: IT Security, Storage. </li></ul><ul><li>Purchases from a distributor or directly from a software company. </li></ul><ul><li>Typically regional in sales focus, some are national </li></ul><ul><li>Some have an outsourcing model where they manage the entire IT infrastructure of small companies or in the case of National SIs, large businesses or government agencies. </li></ul>Reseller Portal
  26. 26. Why Channels <ul><li>Extends your sales organization </li></ul><ul><li>Help expand the market for your products </li></ul><ul><li>Relationships with end user accounts </li></ul><ul><li>Solution sale with complementary products </li></ul><ul><li>Shorten the sales cycle…help navigate procurement </li></ul><ul><li>Enable your business to scale more rapidly and cost effectively </li></ul>
  27. 27. Is the Product Ready for the Channel? <ul><li>Is there a commitment from top management to using the channel for at least a portion of the company’s business? </li></ul><ul><li>In general, products that meet the criteria of Over the Phone (OTP) products are ideal, but the channel has additional needs. </li></ul><ul><li>Does your product solve a problem that a channel partner’s customers care about? </li></ul><ul><li>Is your product complimentary to other solutions that your potential channel partner currently offers? </li></ul><ul><li>Is there a services drag along effect from your product? If not, is it complementary to a product that does? </li></ul><ul><li>Does your company have a proven repeatable sales process? </li></ul><ul><li>Is your pricing/licensing model easy to understand? Does it make sense? </li></ul><ul><li>What is your average deal size? If your product cannot generate opportunities in excess of $10K, channel partners will lose interest. </li></ul><ul><li>Do you have good technical documentation for your products? </li></ul>
  28. 28. Realities of the Channel <ul><li>Your Channel Strategy must have support from top management, or it will fail. </li></ul><ul><li>Recruiting a channel partner is more difficult than selling directly to an end user. </li></ul><ul><ul><li>Good partners are being approached by hundreds of software companies to sell their products. </li></ul></ul><ul><li>Just signing an agreement does not mean a channel partner will sell anything for your company </li></ul><ul><ul><li>You must take responsibility for a channel partners success. </li></ul></ul><ul><ul><li>You are still responsible for creating demand </li></ul></ul><ul><ul><li>It takes a lot of work to get a channel partner ramped up and requires the alignment of all company resources to the strategy. </li></ul></ul><ul><ul><li>Mindshare is hard to get - Channel partners sell other products/services besides yours. </li></ul></ul><ul><ul><li>Getting a channel that produces significant revenue generally takes longer than you think. </li></ul></ul><ul><li>Direct Sales versus Channel Sales: a blended model using both direct and channel sales is often the best solution. </li></ul><ul><ul><li>Direct sales help a company better understand customer issues and the sales process </li></ul></ul><ul><ul><li>It is much easier to train a third party to sell/support your products, if you understand the process yourself. </li></ul></ul><ul><ul><li>Because of the above, a 100% channel model for new software companies is often a mistake. </li></ul></ul>
  29. 29. How to engage the channel <ul><li>Understand the different types of channel partners and how to work with them </li></ul><ul><li>Develop a channel program and recruiting plan </li></ul><ul><li>Treat the channel as an extension of your own sales organization </li></ul><ul><li>Support the channel </li></ul><ul><ul><li>The Channel Sales Organization </li></ul></ul><ul><ul><li>Channel Marketing </li></ul></ul><ul><ul><li>Rules of Engagement/Resolving Conflict </li></ul></ul><ul><ul><li>Set appropriate channel pricing policies </li></ul></ul>
  30. 30. Volume Resellers <ul><li>Likely the first channel partners you will run across as a new software company </li></ul><ul><li>National sales footprint, one-stop-shopping for IT products and software </li></ul><ul><li>Help shorten sales cycle…getting the PO </li></ul><ul><li>90%+ of large corporations have a software procurement contract with a volume reseller. </li></ul><ul><li>Provide access Federal GSA Schedule – required for sales to US Government </li></ul><ul><li>State contract relationships – make it easier to sell to state government entities </li></ul><ul><li>Volume Resellers won’t “sell” your product </li></ul><ul><li>Value Add is being on the right approved vendors list, state contract, and with End User procurement </li></ul><ul><li>Volume Resellers work on a high volume, extremely low margin model. </li></ul><ul><ul><li>Margins are typically less than 10% </li></ul></ul><ul><ul><li>For large customers volume resellers work on a cost-plus basis (usually 2-5%, sometimes less than 1% for large deals) </li></ul></ul><ul><li>Volume reseller discounts should be set carefully as these channels can significantly impact your street price. </li></ul>Examples:
  31. 31. Volume Resellers <ul><li>Volume Resellers reach thousands of End User customers. If your products meet the general criteria for OTP products then it may be worth some investment in the volume reseller channel </li></ul><ul><ul><li>Simple reseller agreement to start doing business </li></ul></ul><ul><ul><li>Will not commit to sales goals for smaller software companies </li></ul></ul><ul><ul><li>Transactional relationship </li></ul></ul><ul><li>Marketing Programs are available on a case by case basis for smaller Software Companies </li></ul><ul><ul><li>Sales Training/Lunch and Learn Programs </li></ul></ul><ul><ul><li>Spiffs </li></ul></ul><ul><ul><li>Sponsorship of sales conferences </li></ul></ul><ul><ul><li>Funding Catalog ads </li></ul></ul><ul><li>Volume Resellers will typically not focus on vendors doing less than $1M in annual business with them. </li></ul><ul><ul><li>Some, notably CDW may not engage with a company until volume of $500K/month is achieved. </li></ul></ul><ul><ul><li>Exceptions may be made for products in a strategic emerging market area </li></ul></ul>
  32. 32. Working with VARs and SIs <ul><li>Professional services oriented companies that put together complete solutions for their clients. </li></ul><ul><ul><li>Storage, Security, etc. </li></ul></ul><ul><li>VARs and SIs are the most difficult type channel partner to recruit. </li></ul><ul><li>As a rule the larger the VAR or SI, the more difficult it is to start a relationship. </li></ul><ul><ul><li>Expect the process to take months and up to a year for national companies </li></ul></ul><ul><li>Create a strong channel program to attract VARs and SIs serving your target market. </li></ul><ul><li>Technical People at VARs are the gatekeepers, if you can get them interested in your product you will have a much easier time getting the attention of the decision maker. </li></ul><ul><li>Approach companies that are already reselling complementary products. </li></ul><ul><li>Find out from your end user customers who the best VARs are that sell to them. </li></ul><ul><li>VARs will create demand for your products through their customer relationships </li></ul><ul><ul><li>Margin expectations are higher, as a result </li></ul></ul><ul><li>Because of greater margin requirements, VARs and SIs will not have negative impact on “street price” </li></ul><ul><li>Use NFL cities as prime locations for VAR coverage. </li></ul><ul><ul><li>At least one top level VAR in each city. </li></ul></ul>
  33. 33. Working with Distributors <ul><li>99% of Volume Resellers, VARs, and SIs do business with one or several of these distributors. </li></ul><ul><li>Most prefer to buy from distribution </li></ul><ul><li>Distribution will not “sell” your product </li></ul><ul><li>It is your responsibility to make your product easy to order from your distributor </li></ul><ul><li>If your total annual sales are less than $10M major distributors will not be interested, unless your product is a strategic complimentary fit to their business. </li></ul><ul><li>DO NOT go into distribution too early: If you fail to generate sufficient sales volume ($1.5M annually), your agreement will likely be terminated. You would then be forced to secure relationships with all of your resellers directly and lose sales momentum in the process. </li></ul><ul><li>If you can’t generate this volume and distribution still makes sense for your company, avoid major distributors in favor of a smaller distributor (Lifeboat or Alternative Technologies) </li></ul><ul><li>Pricing: Set your discount to distribution carefully </li></ul><ul><ul><li>Distribution markups are small, average 4-6% can be sub 1% for large deals </li></ul></ul><ul><ul><li>Distribution really doesn’t care what their discount is off of list price </li></ul></ul><ul><ul><ul><li>Range is 15 – 45% depending on how close list price is to street price. </li></ul></ul></ul><ul><ul><li>Can negatively impact your street price </li></ul></ul>Examples:
  34. 34. Distributors <ul><li>At a major distributor generating $1.5M in sales of your products annually, be prepared to spend $100K+: </li></ul><ul><ul><li>2% Coop, $30,000 </li></ul></ul><ul><ul><li>Market Development Funds ($15,000+) for programs not covered under coop. </li></ul></ul><ul><ul><li>2% Volume incentive rebate, $30,000 required if you want to be a focus vendor </li></ul></ul><ul><ul><li>½ of a Funded resource, $25,000 minimum required </li></ul></ul><ul><li>Spend as little as possible on their internal marketing programs </li></ul><ul><ul><li>Some spending is necessary to remain in good standing </li></ul></ul><ul><ul><li>Spiffs are a waste of money at the distributor level for most software products. </li></ul></ul><ul><li>Funding employees at the distributor </li></ul><ul><ul><li>Often a requirement ($45-100K per head) </li></ul></ul><ul><ul><li>Can be split with other vendors </li></ul></ul><ul><ul><li>Add some value </li></ul></ul><ul><ul><li>Getting things done internally at a distributor is hard without these resources </li></ul></ul><ul><li>Hire a resource from distribution to manage your distributor relationships </li></ul><ul><ul><li>Less expensive than software executives </li></ul></ul><ul><ul><li>Know the business intimately and can create shortcuts </li></ul></ul>
  35. 35. Developing a Channel <ul><li>Your Channel Program should provide the most emphasis on partners who can create demand for your product. </li></ul><ul><ul><li>VARs/SIs </li></ul></ul><ul><li>Multi-level to account for different types of partners </li></ul><ul><ul><li>3 tier is norm (i.e. silver, gold, platinum) </li></ul></ul><ul><li>Top Level offers best benefits </li></ul><ul><ul><li>Should have an annual fee </li></ul></ul><ul><ul><ul><li>Not to generate revenue, but we value something more if we actually pay for it </li></ul></ul></ul><ul><ul><ul><li>Fee is a filter that will get you working with partners who are serious about building a business </li></ul></ul></ul><ul><ul><ul><li>Build value for top partners </li></ul></ul></ul><ul><ul><ul><ul><li>Web listing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>NFR (not for resale software) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Priority Technical Support </li></ul></ul></ul></ul><ul><ul><li>Should differentiate VARs from Volume Reseller partners, as their sales models are completely different. </li></ul></ul><ul><ul><li>Lowest level is a “catch all” and creates a community of resellers that can be promoted to a higher partner level in the future. </li></ul></ul>
  36. 36. Developing a Channel <ul><li>Negotiating the agreement </li></ul><ul><ul><ul><li>Avoid exclusive agreements </li></ul></ul></ul><ul><ul><ul><li>Keep it simple </li></ul></ul></ul><ul><ul><ul><li>Flexibility to change to adapt to future business conditions </li></ul></ul></ul><ul><ul><ul><li>Keep a 30 to 60 day out </li></ul></ul></ul><ul><li>Require regular training of partner sales and technical resources </li></ul><ul><li>Require a written sales and marketing plan that includes shared revenue objectives. </li></ul><ul><ul><ul><li>Follow up and measure progress against the plan on a quarterly basis. </li></ul></ul></ul><ul><li>Opportunity registration – create an incentive through additional margin or backend rebate for channel partners share information on potential sales. </li></ul><ul><ul><ul><li>Provides a competitive advantage and protects the channel partner that did the work. </li></ul></ul></ul><ul><ul><ul><li>Paid as long as the company wins the business </li></ul></ul></ul><ul><ul><ul><li>10-15% extra margin or rebate incentive </li></ul></ul></ul><ul><ul><ul><li>A way to keep channel discounts under control </li></ul></ul></ul>
  37. 37. Channel Recruitment <ul><li>Remember: Recruiting a channel partner is more difficult than selling directly to an end user. </li></ul><ul><ul><li>Good partners are being approached by hundreds of software companies to sell their products. </li></ul></ul><ul><ul><li>The larger the partner, the longer it takes </li></ul></ul><ul><ul><li>If you haven’t won over the technical staff at a VAR, you aren’t going to be successful. They drive decisions on partnerships. </li></ul></ul><ul><li>Active Recruitment vs Passive Recruitment </li></ul><ul><ul><li>active recruitment activities are proactive outbound marketing activities designed to bring partners to Acronis. </li></ul></ul><ul><ul><li>passive recruitment activities are systems, materials, processes that are set up to ensure that potential partners who contact your company can be responded to in a quick/efficient manner. </li></ul></ul><ul><ul><li>It is easiest to recruit partners who want to work with you. Recruitment activities should be planned with this in mind. </li></ul></ul>
  38. 38. Channel Recruitment <ul><li>Active Recruiting Activities: Examples </li></ul><ul><li>Call campaigns with our distributors: utilizing distributors sales people, interested parties are passed back to the company. Examples from Acronis: </li></ul><ul><ul><li>New partner recruitment campaign for Acronis at Lifeboat Distribution targeting VMware VIP Resellers </li></ul></ul><ul><ul><li>Planned September telemarketing campaign at Tech Data targeting resellers who have sold Symantec’s LiveState recovery solution. </li></ul></ul><ul><li>Internal Call and e-marketing Campaigns with our inside channel sales team, made to a specific list of resellers </li></ul><ul><li>Partner recruitment webinars twice per month </li></ul><ul><li>PR activity in channel publications: CRN, VAR Business, Redmond Channel, etc. </li></ul><ul><li>Trade Show Participation: TechEd, LinuxWorld, VMworld, etc. </li></ul><ul><li>Passive Recruiting Activities: Examples </li></ul><ul><li>We have a dedicated group of inside channels sales representatives who are responsible for responding to all inbound partner inquiries. We receive inquires from potential channel partners from: </li></ul><ul><li>Company web site: Place a channel partner area prominently on the web site and have a convenient online inquiry form. </li></ul><ul><li>inbound calls </li></ul>
  39. 39. Channel Sales Organization <ul><li>For the small or early stage company </li></ul><ul><ul><li>Start with an individual contributor who owns channel sales </li></ul></ul><ul><ul><ul><li>Experienced in channel sales </li></ul></ul></ul><ul><ul><ul><li>Has some technical capability </li></ul></ul></ul><ul><li>For the more established or expansion stage company </li></ul><ul><ul><li>Your Channel Manager should be one of your most senior executives reporting directly to the CEO. </li></ul></ul><ul><ul><ul><li>Working relationship with VP of sales/VP of Marketing, extremely important </li></ul></ul></ul><ul><ul><li>Inside Channel Sales </li></ul></ul><ul><ul><li>Regional Channel Sales Executives </li></ul></ul><ul><ul><li>Major Account Managers </li></ul></ul><ul><ul><li>Technical Resources – Training Support </li></ul></ul>
  40. 40. Channel Marketing <ul><li>Types of Channel Marketing Activities </li></ul><ul><ul><li>Joint Seminars/webinars </li></ul></ul><ul><ul><li>Joint marketing to VAR customer base </li></ul></ul><ul><ul><li>A must to keep the sales pipeline moving </li></ul></ul><ul><li>Case by Case approval for Channel Marketing Spend </li></ul><ul><ul><li>Must be shared investment. DO NOT pay for an entire program </li></ul></ul><ul><ul><li>Coop accrual only for Volume Reseller or Distributor </li></ul></ul><ul><ul><ul><li>Usually 2-5% of sales volume </li></ul></ul></ul><ul><ul><li>Coop accrual for regional VARs would accumulate too slowly </li></ul></ul><ul><ul><ul><li>Disproportionately Invest in partners with promise </li></ul></ul></ul>
  41. 41. Channel Conflict <ul><li>“ The channel isn’t adding value” </li></ul><ul><li>“ They didn’t do any work on this deal” </li></ul><ul><li>“ They don’t know how to sell our product” </li></ul><ul><li>“ Why should I give up 30% of my sale to the channel partner” </li></ul><ul><li>“ The channel doesn’t have a sense of urgency” </li></ul><ul><li>When you hear this kind of feedback, it is a sign of misalignment between your reseller channel and your direct sales organization. </li></ul><ul><ul><li>Can signal channel training deficiencies, lack of understanding of the channel discount model, lack of a channel neutral sales compensation plan, or a lack of proper rules of engagement in general between direct sales and the channel. </li></ul></ul>
  42. 42. Rules of Engagement <ul><li>Avoid Channel Partner conflict with your direct sales organization. Taking a deal direct, when a channel partner has been involved can be a blow to a relationship. </li></ul><ul><ul><li>Word spreads like a bad restaurant </li></ul></ul><ul><li>Create a Channel Neutral Commission Plan for your Direct Sales Team </li></ul><ul><ul><li>Direct Sales should receive commission on channel sales in their territory </li></ul></ul><ul><ul><li>Ideally there should be no perceived penalty for taking a sale through the channel </li></ul></ul><ul><li>Price Quotes </li></ul><ul><ul><li>Direct Sales must follow discounting rules that do not allow them to undercut a channel partner. </li></ul></ul><ul><li>If a channel partner gets involved in a direct deal: i.e. deal goes out to bid. </li></ul><ul><ul><li>Channel partner must given an equal possibility to win. </li></ul></ul><ul><li>Sales Leads </li></ul><ul><ul><li>Distribution to channel partners by direct sales. Used as a give and take tool…reward mechanism. </li></ul></ul><ul><li>Registered Opportunities </li></ul><ul><ul><li>Guarantees a win for the partner if there is a win for the company </li></ul></ul><ul><ul><li>All partners must register opportunities to earn a preferred margin rate. </li></ul></ul><ul><ul><li>Taking a registered deal direct is grounds for termination. </li></ul></ul>
  43. 43. Pricing and Discounts <ul><li>List Price or Suggested retail price means nothing in the marketplace </li></ul><ul><li>“ street price” is the price of your product that is generally available in the marketplace. </li></ul><ul><li>Your “street price” is how you should gauge the competitiveness of your product offering in the marketplace </li></ul><ul><li>A companies “street price” is directly impacted by discounts that are available to the channel. </li></ul><ul><ul><li>Distributor and Volume Reseller customers impact “street price” the most. </li></ul></ul><ul><ul><li>VARs and SIs will tend to get full value for the product and retain margin. </li></ul></ul><ul><ul><li>Many companies leave money on the table by offering too much of a discount to the channel. “Street price” for the company’s product ends up too low. </li></ul></ul><ul><li>Discounts to the channel are a balance </li></ul><ul><ul><li>The partners need for a perceived substantial discount, a “good deal” </li></ul></ul><ul><ul><li>A company’s need to ensure that “street price” is competitive. </li></ul></ul><ul><ul><li>Set up Channel discounts so that your partners can make a their expected margin by selling at the prevailing “street price”. </li></ul></ul>
  44. 44. Pricing and Discounts <ul><li>Typical Discounts and expected margins </li></ul><ul><ul><li>Distributors: 20-45% discount from list price, 3-8% margins </li></ul></ul><ul><ul><li>Volume Resellers: 15-40% discount from list price, 2-10% margins </li></ul></ul><ul><ul><li>VAR/SI: 15-50% discount from list price, 15-40% margins </li></ul></ul><ul><li>Example: Company A - $1000 list price product </li></ul><ul><ul><li>Distributor: 35% discount from list price, sells for 5% margin </li></ul></ul><ul><ul><ul><li>Net proceeds to Company A: $650, Distributor Sells for $682.50 </li></ul></ul></ul><ul><ul><li>Volume Reseller: buys from Distributor, sells to End User for 8% margin </li></ul></ul><ul><ul><li>End User: buys from Volume Reseller for $737.10, Saving more than 26% from list price. </li></ul></ul><ul><ul><ul><li>Street price is $737.10, 26% discount from list price, is this what is desired? </li></ul></ul></ul><ul><ul><ul><li>How does this discount compare with a direct sale? </li></ul></ul></ul><ul><ul><ul><li>To make 15% minimum margin and to be competitive with the street price, a VAR/SI would have to buy Company A’s product for 626.53 or 37% discount from list price, which is less than the cost to distributor. </li></ul></ul></ul><ul><ul><ul><li>If street price is too low, fix is to reduce discount to distribution. </li></ul></ul></ul>