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by William Van Winkle |
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EVERy BACHELOR WITH matrimony in his eyes has heard the phrase "If you're getting the milk for free, why would you buy the cow?" (And every one of those bachelors who went on to get divorced no doubt asked himself why on Earth he made the purchase, too.) But here's the funny thing about cows and marriage: You'll be richer if you buy the cow and keep it happy. Ladies in the audience—my wife in particular—please. This is a metaphor, not some crude joke about weight, so bear with me. Ohio State University researcher Jay Zagorsky recently published a study that tracked over 9,000 individuals from 1985 to 2000. It turns out that couples who stay married realize a 93% gain in wealth, or net assets, versus the wealth of a single person. Conversely, a divorce decimated personal wealth by 77% compared to those who stayed single. This corresponds closely to data presented by Thomas J. Stanley in his The Millionaire Next Door and The Millionaire Mind books, which are dry reads but factually fascinating. No one is precisely sure why a stable marriage promotes wealth gathering, but one of the leading explanations centers around efficiency. A stable couple can divide household tasks more efficiently and live more cheaply than separate individuals. And anyone who really remembers all of the stresses and expenses of dating knows that you never really get the milk for free. Nothing is free. In the end, if you're good at picking cows, you always win. With that in mind, let's talk about demo units. Many companies offer demo units—occasional product samples available for steep discounts. So many resellers bring in demo units and immediately sell them, pocketing the extra profit, that it's not even funny. Easy margin. This is getting the milk for free. When you buy the cow, you pass up this fleeting profit. That demo unit is yours to keep, for richer or poorer, until obsolescence do you part. But like good milk cows, demo units will keep on giving back throughout their useful life if you manage them smartly. This idea started brewing in our office during a discussion about Microsoft's Action Pack, the $295 binder full of Microsoft applications we've mentioned numerous times in RAM. "It's too bad everybody can't offer Action Packs of their products," we mused. And then came the following thought: "Well, maybe they do." Take Adaptec. Like most medium- to large-size vendors, Adaptec has a respectable channel reseller program called Connect (connect.adaptec.com). The Connect site exists primarily as an educational vehicle for reseller product information and updates, but it's also the gateway to incentive programs, tech support, marketing and sales collateral, and technical education. Within the Connect program, Adaptec occasionally mounts transition initiatives targeted at appropriate resellers, the most recent of which was the SAS package. "In the SAS transition," says Adaptec's Jason Blosil, portfolio manager for branded products, "we recognized the need for educating and supporting our customers with a new technology, and the best way to do that was to provide them hands-on experience with it. They could learn the technology from a manageability standpoint, performance characteristics, interoperability, and usability. We partnered with Maxtor and delivered to a select group of our top resellers worldwide kits that included disk drives, enclosures, cables, controllers, and software to provide them an all-inclusive and controlled experience of SAS. We found this to be very effective, because in transitions like U320 or Fibre Channel, interoperability became a primary roadblock for adopting technology. By helping give resellers an all-in-one experience of SAS technology they can just plug into a server and experiment with, we removed a lot of those prior problems." Adaptec remains a bit skittish about giving discount specifics on eval kits. So depending on the reseller, the size of the eval kit, the clients involved, and other factors, the discount rate can apparently move from a few points off dealer cost to free. Adaptec also offers Connect-registered resellers the ability to buy NFR demo units of new SKUs following launch. Partners can get one of any product at 50% off list price. Whether it's SAS, SATA, SCSI, or some emerging drive interface technology, Adaptec is always one of the first out of the gate with solutions. And storage is one of those categories that impacts every niche and demographic. Even if your business is primarily consumer, a segment of those clients will be interested in the performance gains found in a discrete hardware RAID controller versus a software controller integrated into the motherboard. But if you don't get the demo units, if you don't set them up and find out for yourself what those gains really are, you'll never be able to convincingly sell that product angle, and you'll lose out on all that upsell revenue. Similarly, let's look at NEC monitors. No secret here: NEC units are not cheap. Uninitiated customers used to buying Sceptre and Dell may cringe at NEC pricing—unless they can see the difference side-by-side. Here's a thought. Rather than subsidize yet another advertisement, why not take some MDF and use it to buy a Dell screen? Take a dual-output notebook along with both screens to your prospective customer's site, set everything up, and just let the client look. Dell is cheap, certainly, but look at the brightness uniformity, the viewing angles, the jitter caused by inadequate autosync, the ghosting. Beyond that, examine features such as the on-screen controls and remote manageability. But not even the best Dell LCDs can match NEC's breadth of features for corporate needs, all of which inevitably boil down to increasing return on customer investment. For example, some NEC models can have their on-screen controls adjusted with a mouse in a GUI rather than a clutch of inscrutable buttons. Higher component quality means increased unit longevity. Nobody beats NEC's simple management application for multiple display tiling on a wall. Listed out in black and white, these may not be overly persuasive. Put in action before your customer's face, you'll make bank. NEC offers both evaluation and demo units. Eval displays are meant for delivering straight into a customer site, because nothing is going to sell monitors as well as getting attached to them for free. The no-charge trial period lasts for 21 days, and NEC pays the shipping both ways. Hard to say no to that. Demo units are meant to stay in the reseller's hands and are made available for 30% off of dealer cost. Each reseller is limited to three demo units per quarter, and there is no limit to the number of evaluation units available. Unlike some vendors, NEC doesn't stipulate whether or when resellers can sell off their demo units. "We're not hard and fast on these things," says Tim Dreyer, press relations manager for NEC Display Solutions of America. "We're not sending out secret police to make sure demo units are actually getting used for demonstrations. It's a trust thing. Resellers can sell them, but they only get three per quarter, and if it keeps happening consistently there might be a flag raised." There almost seems to be a command-ment stating that thou shalt not have access to samples unless enrolled in a channel partner program. However, Seagate takes a different view, perhaps stemming from the belief that one of the best ways to win converts to your product line is to let them take the goods for a spin. Seagate's stated goal for its eval program is to help resellers in their qualification and design process, but in reality the real objective is to help build demand for the drives. "We focus on our strategic product initiatives, the products that we are pushing and promoting in the marketplace," says Desa Zraick, Seagate's director of global channel programs and operations. "We'll provide a demo. In some cases, we'll do a very focused offer, where resellers get a free unit within a certain time window and to resellers with the right profile. Profile may mean they're a certain size and shape and they haven't been buying our products before. We want them to be able to test our products." Other vendors would do well to take notes on Seagate's approach. Rather than just leave one eval unit floating out in the void, as it were, the company follows the one-off evaluation with a 30- to 60-day window through which the reseller can obtain an additional demo unit through distribution. Following this, Seagate swoops in with an offer to purchase through the distributor for 20% to 25% off of regular dealer cost on a quantity order of five or more of the SKU in question. Seagate hopes that by the time you chew through those units, you'll be sold for good. Note that this is a stand-alone demand generation program, not part of the regular Seagate Partner Program (SPP), which offers many additional benefits. And not all eval efforts focus on single drives. Seagate will often create bundled demo kits with partners such as Intel and Adaptec for a 2% to 10% discount. Of course, the big question is whether or not such eval efforts actually work to bring in new business or if existing reseller customers are simply grabbing the free milk."In the Americas, we've got about 150 new customers through our most recent eval efforts," says Zraick, "61 of which are new to SPP. We're trying to get people to not only try Seagate but join our SPP program, because once they're a member, they can capture those entitlements, as well. Sixty-eight of the 150 were prior Seagate desktop customers but not high cap. Sixteen were entirely new to Seagate—never purchased a product from us before. And then 10 were new to our desktop products." Looking at quarter-to-quarter numbers—a pre-promotion quarter followed by the promotional quarter followed by another non-promotional quarter—Seagate has repeatedly seen that its eval and subsequent demand generation efforts on targeted SKUs do increase sales. This mirrors an overall rise the company is seeing throughout its reseller program, with co-op and similar claims rising from a former average of 40% to 60% to 80% following the SPP's overhaul and much improved communications from Seagate to its program members. So demo units work, both for the vendor and for the reseller, when used intelligently. They're doubly essential if you're trying to find a product niche in which to thrive. What if you're building a custom media center machine with dual HD tuners. Can it encode two HD shows while simultaneously transcoding into DivX and playing a DVD? What happens to the thermals and acoustics when you try it? Is there any bandwidth left for running another application? To get answers while minimizing the impact to your bottom line, you need vendors with healthy evaluation programs. "I think it's very valuable for resellers to participate in such programs," says Adaptec's Blosil, "although there obviously are budget constraints when several vendors make lots of product available. You can only buy so much, even discounted, for testing and learning. But it's especially important that resellers understand new technologies before their customers ask them about it. Because if the customer knows more about the technology than they do, that customer may go find someone more educated." |
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