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Profiting From Transformation

By Khali Henderson
October 03, 2011 - Article

In this installment of our ongoing report on the channel’s movement away from transactional models, we will take a closer look at the benefits of transformation.

“Box pusher." “Circuit slinger." “Quote shop." These are not the adjectives that channel partners use to market their businesses (though many still operate them accordingly). Instead, they use descriptors like: “Solutions provider." “Value-added reseller." “Trusted adviser." Why? Because these words imply that the partner brings value and has developed a relationship with the customer. Without that, partners are in a commodity sales business.

Tiffani Bova, vice president of research for Gartner Inc., explains: “Transactional sales provides little differentiation and loyalty from customers. Without some additional value you will risk being forced to compete on price and price alone. Transactional sales absolutely have their place; however, [it’s] not a good long-term business strategy unless you have the volume to sustain it."

The reality is that few rank-and-file channel partners fall into this category. “To accelerate and maintain revenue and sustain profitability, partners need to develop solutions that add value to their customer engagements," said Lawrence M. Walsh, president and CEO, The 2112 Group.

As noted in the kick-off to this series on transformation, the advantages of moving away from a transactional model to a solutions model can be felt throughout the customer life cycle, beginning with increased competitiveness in acquiring customers and greater success in keeping them.

Customer Acquisition Benefits

  • Greater differentiation — a consultative focus not only distinguishes you from your competitors but from the status quo
  • More revenue per customer — by selling a solution consisting of multiple products and services, your deal size will grow
  • Lower cost of acquisition — customers are more likely to re-engage your company on future opportunities if you are more than just a quote shop

Customer Retention Benefits

  • Account protection — by having a more holistic view of a customer’s needs, you will be less vulnerable to solutions-based competitors
  • Greater customer satisfaction — by selling solutions, rather than a brand or technology, customers are likely to be more loyal
  • Stickier revenue base — the more services you provide to a customer, the less likely they are to churn
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