Recently, I represented MarketStar in a Partner Path webinar in which we examined the solution provider prospective as it relates to profitability from their relationships with vendors. Our MarketStar Insight team worked with PartnerPath to gather and analyze input from both solution providers and vendors to identify ways each side can improve the profitability equation. You can download the full webinar recording here.
Based on my experience in supporting vendor-partner relationships, we’re really seeing a trend over the last several years in which solution providers wield much more power than they used to. They are more emboldened to trim unprofitable vendors from their line cards. To increase channel loyalty, vendors should consider the following topics we discussed in our webinar:
Front-end Margin is NOT Profitability
When working with the channel, front-end margin is easy to calculate for vendors, but it does not reflect true partner profitability. This is a much more complicated formula that takes into account commissions, overhead, capital investments, and other expenses. Solution providers will typically factor in how much opportunity the vendor offers through market demand, financial rewards, and program support, and then divide the opportunity by the amount of investment to be made through sales enablement, relationship, and the ease of doing business. If providers feel the relationship with a vendor takes more investment than the amount of opportunity they can experience, they will gravitate to other vendors. Continue reading
Wednesday, March 5th, 2014
In my last post, I explained that, in an attempt to compete with the economic engines of online retailers, brick-and-mortars have optimized their operating models for scales of efficiency. In the process, they’ve drifted away from their core value of servicing customers to processing customers. Confronted by smarter, better-educated shoppers who visit their stores less frequently and who have filled the service void with a more personalized online shopping experience, brick-and-mortars have a choice to either continue the race to be more like etailers or to seek ways to differentiate themselves from etail’s optimization machine. Those that redirect their focus back to what they do best, I strongly believe, will stand out across all retail.
Before I dive into this redirection of focus, I’d like to state that, while the fundamentals of effective retail would appear to be the fruits of common sense, they’re clearly not common practice. For that reason alone, I feel they’re worth reiterating here. Furthermore, regardless of a retailer’s choice of direction, all retailers can benefit from two pieces of information, which I’ll direct at the retailers themselves: First, no one but you cares about — buzzword alert — the “omnichannel.” Customers don’t think of you as separate entities. They don’t think about the online version of you, the in-store version of you, and the 1-800 version of you. They just think of you. So, stop thinking of yourself as separate entities. Secondly, whatever your economic engine, train your staff to care about your customers’ loyalty — not their wallet. Continue reading
Monday, March 3rd, 2014
MarketStar is proud to share our video about Connect+, a social learning and advocacy platform built to accommodate both private and public brand communities. Continue reading
Wednesday, February 19th, 2014
In my last post, I discussed the evolution of the shopper. Namely, how a growing population of smarter, better-educated consumers is replacing the brick-and-mortar shopping experience with a more personalized online shopping experience. Not only has this resulted in increasingly fewer store visits, but it’s also extended into the stores themselves, where shoppers are opting to continue that personalized experience on their devices rather than engage with a living, breathing salesperson. This behavioral shift has left retailers desperately trying to catch up. But what they must remember is that the shopper’s desire really hasn’t changed at all; rather, retailers have drifted away from their core values and true mission.
Forrester Research predicts that U.S. e-commerce will expand at a compound annual growth rate of 9% through 2017. According to ATKearney’s 2013 Global Retail E-Commerce Index, global online retail sales have increased 17% annually since 2007, the leading products in the U.S. being CE, apparel, and media. That’s a tremendous threat to current big-box retailers, who are responding in a big way. Continue reading
Wednesday, February 12th, 2014
Home and Wearable tech dominated CES and are now making a huge splash in the retail industry. As shoppers flock to stores looking for the latest in tech and product demand increases, it’s crucial for wearable and home tech companies to place their products in vital markets that deliver the highest ROI.
Using our access to geographic and retail sales data, we have created two infographics that explain where the high-spend purchases are happening, which markets are experiencing a high-demand for these products, and how to target the key buyer personas.
Friday, February 7th, 2014
CES is the land of dreams for early adopters, geeks and of course consumer electronics companies looking to ply their wares. On a side note, we learned it isn’t a comfortable environment for movie directors.
We all know that CES is a place for new, exciting, emerging products – but the question WE were curious about was how much that excitement translated over to where the magic happens: in retail stores. Sales data analysis proved largely inconclusive, beyond the lift that available SKUs featured at CES see. We thought we’d see how CES influences conversations happening in the stores. So, we asked some retail sales associates (RSAs) about it.**
Turns out, CES is coming up in conversations, a lot.
Note the chart above. This is good news for both CES itself and the brands investing millions of dollars in a presence there. If three-fourths of RSAs are talking in some form or fashion about these emerging products and technologies, this validates both the importance of the show and also that of the retail environment itself. Online forums can discuss CES and the technologies there, but that’s a different (and largely unsatisfying) conversation relative to the one you’d have with a live person showing you live products you can hold in your hand.
Friday, February 7th, 2014
Last week, MarketStar joined in a conversation led by PartnerPath, to discuss ways to maximize channel partner profitability. Solution providers face multiple hurdles including low margin on hardware, a rise in cloud delivery, and increased costs of administration, which are all factors in squeezing their profitability. If you missed the webinar, we’ll recap some of the highlights for you in this post, or you can access the full webinar recording here.
In a collaborative effort, MarketStar’s Insight team collected data from 175 solution providers and 180 vendors to discover what each side views as the key trends and challenges to their business. In the webinar, we discussed how vendors know partner profitability drives mindshare, but many vendors are not intimately aware of how their programs affect partners. Most do not know partner profitability with their product line and adjacent service opportunities, the cost of complex process and enablement requirements, and the time it takes for partners to reach an ROI.
From these findings, it’s clear the health of the relationship influences partner success. For instance, solution providers overwhelmingly listed channel conflict with vendor direct sales efforts as the primary source of tension in the relationship. Webinar panelist Tom Flink, VP of worldwide channels and market development for Citrix, says aligning business objectives for both the solution providers and the vendor is critical to minimizing conflict. He recommends setting a clear expectation upfront with partners to help them understand how to engage, what’s expected, and the return they will receive from their program investment. Continue reading
Wednesday, February 5th, 2014
In my first post, I discussed some of what I consider the highlights of CES 2014. More specifically, I noted that some of the most exciting new products point to manufacturers thinking beyond the box — creating needs that, in turn, are forcing retailers to think beyond the big-box. Before I dive into the challenges facing retailers if they want to remain relevant in today’s hyper-evolving tech space, I want to focus on the people who will, ultimately, determine if they do: hyper-evolving shoppers.
Back in 2007, when shoppers would go to malls, they would visit, on average, five stores. Today it’s down to about three stores. That begs a question: What’s going on? Well, the first thing is technology: 70% of all customers are researching products before they step foot into a store. Add to this the fact that shoppers are also getting information from their social graphs. Facebook has shared with us that if a friend in our social network likes a product, we’re 68% more likely to remember that brand. If a friend says something about that product, we’re 100% more likely to remember it . . . and 300% more likely to purchase it.
What do these numbers tell us? Simply put, we’re replacing brick-and-mortar shopping with online shopping. And by shopping I don’t mean the act of buying; I literally mean the act of shopping — learning about, and experiencing, products. We have substitutes now; we no longer have to go to stores. And that trend is only going to grow, which means we’ll be going to fewer stores in the future and looking at retailers more as a buying destination than a shopping destination. Continue reading
Wednesday, January 29th, 2014
Over the last few weeks you’ve heard a lot about the exciting new tech products coming out of CES 2014. While I want to touch on those here — because they are exciting — I also want to extend the focus to something equally important: how those products will be sold. Because I can tell you right now, they won’t be sold using age-old retail methods. Today’s tech demands a new retail experience. Or as The New York Times recently put it, “companies need to obsess not only over details of product design, but also the environment in which the products are presented to the public.” Continue reading
Tuesday, January 21st, 2014
Anticipation of the latest gadgets, newest technology, and highest innovation kicks off the new year at CES, held January 7 – January 10 in Las Vegas. While it may seem as though the 150K attendees, (from 150 countries!), are similar, … Continue reading
Friday, January 3rd, 2014