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Channel Strategies for IT OEMs:
Recruiting VARs in Europe

November 2001, by Zsolt Kerekes, editor STORAGEsearch etc

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Got the venture capital capital check Monday. Did the US product launch Tuesday. Wednesday we realised the available US market wasn't as big as we thought in our plan... too many new competitors out there with similar products which didn't show up at all in our expensive market research reports. Also user budgets are slashed because of the recession. So next week we're going international.

This is a quick and dirty checklist designed to help you with the "expanding into Europe thing." The IT recession in the US means that companies are doing this much earlier in their development cycle than they used to a few years ago. You can't afford to wait a year or so to get your products established in the US first. If you do, you're dead.

As a publisher I'm seeing press releases about VAR expansion into "Canada", "UK" and other countries appear more frequently than ever before. Done right, this kind of expansion can be a quick way to grow revenue and profit for most hardware manufacturers. The issues get more complicated for companies whose products are mainly software and need massive language localisation. But that's not on the menu for today's article.
make it easier for VARs to find you

VARs actively use directories like STORAGEsearch and the SPARC Product Directory to learn about new products and manufacturers. If your company makes storage or Sun compatible products make sure your company maintains high visibility in these publications by press releases, articles, and, or advertising. If you don't have visibility in these established references, your task at recruiting VARs will be much more difficult.
pro-actively search for VARs and Distis using our targeted shortlists

  • another approach is to datamine the news stories we run when OEMs sign deals with international VARs. Go to each of our home pages and type the "country" you want to target into the search box (excluding the US and UK which have their own dedicated directories). You'll be surprised how useful that can be. It's not worth our while creating lists of VARs for most countries, but they'll still flash up if they've been mentioned in news stories.
use a specialist marketing services company

From time to time, I become aware of companies which have done the "expand into Europe" thing for high tech companies in the Sun or storage markets because they've appeared in news stories I've run, or because they've contacted me to promote their clients. Here are some for you to look at. They are all experienced and proven in this process otherwise they wouldn't be listed here.
how much is internationalisation worth?

In 2001 the US IT market was in recession, while the UK was still growing. So the UK is now worth about 20% of the US. Think of adding another state like California to your US domestic revenue, and that gives you a ballpark.

Germany (an attractive market during most of the 1990's) now has its own recession, so it's not as attractive as it used to be. The German IT market is smaller than the UK, bu they are comparable in size.

France is difficult for any US company to succeed in, and should be last on your hit list. It's about #3 or #4 in size in Europe (if you count Nordic as a single region.)

The above estimates relate to the enterprise server and storage markets. For more precise data consult the market research companies.
doing the soft shoe shuffle

A traditional pre-web way of discovering potential VARs is to visit them at trade shows. You can do this in person or electronically because some trade show sites retain lists of exhibitors for months after the event has taken place.

Attendance at a trade show filters in VARs who have invested something in promotion. Although I think nowadays such events are really more effective as market research forums rather than promotion. But market research by your potential VARs is a good thing. On the other hand, you can safely filter out most B2B VARs which you see advertising in printed magazines, because you know they don't measure direct marketing outcomes effectively and will waste all of your promotion budget.
Cheaperbyte
UK VARS on
STORAGEsearch.com
Megabyte's young nephew Cheaperbyte joined the sales department in a storage reseller company after leaving college. No one ever beat him on price.
There are many databases of VARs which you can buy on disk from market research companies. I don't recommend using them to recruit your first VARs because it will take a lot of resource to contact and filter out the inactive companies. (Company size is not an indication of current business activity.) If you can't find a VAR easily from their own promotional activities, then maybe your ideal customers can't find them either.
Zsolt Kerekes - Publisher More from the editor:

Thousands of VARs today sell brands which have been directly or indirectly influenced by my company's 10 years activities as an IT publisher. In the early 1990's, before the web was invented, one of our most profitable products was selling mailing lists and databases such as our European SPARC Resller List, which in 1996 included key contacts in more than 1,450 Sun reseller organisations in Europe. I stopped counting the number of workstation, adapter card and storage manufacturers who had used our channel data products in the early 1990's when we passed 100 companies. It was also obvious from talking to the many VARs who bought our directories (which typically cost $95 a copy in those days) that their main reasons for using directories was to source hard-to-locate products. Manufacturers also used the directories to target synergistic suppliers for their own brnd labelling and systems integration needs, as well as to support their end user pre-sales desks. Those pre-web days seem so slow and leisurely now, but they gave me good insights into other uses for our market data.

Today, in 2002 the situation is a lot different with more time pressure for everyone. We end of lifed our mailing lists and related databases in 1997, a year after we switched our publications to the web. My priority now is how to grow our readership from 0.5 million unique readers/ year upto the next level (1 million) at a time when there are more competing web publications than ever before. So when OEMs and distributors approach me to ask "how can I expand my European channels in the Sun or STORAGE markets?" the approach I suggest is very different today. Most of our readers are based in the USA anyway, but the 25% in Europe are valuable targets for US companies seeking to expand their business by internationalization.

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