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By Chris Angelini |
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The SALES AND MARKETING ORGANIZATIONS of U.S. companies constantly debate which is better: acquiring new customers or retaining existing ones. To be really effective, firms need a balanced approach. In striking that balance, an obvious but overlooked solution is to generate new business by cultivating the existing customer base. Evidence of this exists in the hardware IT channel, where system builders and solution providers are finding that the path to new customers may lead through a loyal and happy client base. Best practices include customer events and face-to-face meetings, built-in software applications, acquiring new partners and markets, and adding new services. In all cases, it boils down to great customer service delivered in a variety of ways. Develop a "raving client base" "We've defined customer retention as a raving client base," says Chris Thorsen, VP of Product Development for Paragon Development Systems, a system and solution provider in Oconomowoc, WI. "We don't lose clients. We have great retention of clients. They see the value of what we're doing". One of the keys to customer retention is recognizing when it's a good time to deepen your client relationships versus go after new ones. "The channel for solution providers or system builders that focus on hardware systems is consolidating," says Joe Toste, VP of Marketing at volume system producer Equus Computer Systems. "In this environment, it is really important to focus on retention and solidifying your relationship with your customers. In a mature market, the single largest contributor to share shifting is when buyers are disgruntled with their current vendor." Great service can mean different things to different customers. "High touch," is how Steve Bohman, Product Manager of Columbus Micro Systems, describes CMS' customer service philosophy. "Whether that means delivery, stop by and pick something up, or whether it means high quality." It also means Bohman will go the extra mile, literally. "If I have to get in my car and drive a part over to you, then that's what it means."
"Our claim to fame is our approach to customer support. We don't charge for support," says Pat Taylor, president and co-founder of Proactive Technologies, a print and publishing industry solution provider in Carrollton, TX. "The print industry is support conscious but support poor." So Proactive includes round-the-clock technical support as part of the deal when customers buy their specialized systems, creating a satisfied customer. Professional services, however, are additional. Stay in front of your customers Quarterly or frequent customer events are great venues for deepening customer relationships in a one-to-many, personal, and face-to-face method. PDS hosts an annual Tech Conference for its customers every fall. "It allows us to touch all our clients in one big venue," notes Thorsen. Joe Toste agrees. "Local events are really important…anyone can push a bunch of PowerPoint slides over the Internet but customers really value face-to-face events." "Face-to-face events have been very lucrative for us," says Sam Sanchez, VP of Marketing for Coastline Micro, located in Irvine, CA. In addition to these hosted gatherings, they also visit customer sites in the area to speak about new solutions based on upcoming vendor technology. Hit the road Columbus Micro Systems, a mid-size builder in Ohio, hosts events but also attends key venues as well. "Trade shows are great for existing customers—really great," says Bohman. "But we've also found that it's difficult to get potential customers to come to those events." So Bohman and the CMS team blanket the floors of the major industry events because that's where their customers and prospects will be. Utilizing this tactic has enabled CMS to maintain constant contact with its constituency, and the rewards have proved well worth the attendance.
Get Vertical Proactive has built its niche in the print and publishing industry. "We got into the vertical because they use a lot of storage," says Taylor. "Storage was our expertise". CMS targets the education market. "It's been our biggest market by far for the last five to six years," Bohman says. "Mostly K-12 and some higher education. It's a good business to support. Even though it's not the highest margins, it's repetitive." Bohman and his team work with major vendors like Intel and Microsoft at one key educational event held in Columbus, OH where CMS is located. "We'll bring Intel and Microsoft, and by having them in our booth it presents the image that we're connected." Equus relies on its reseller customers to reach new markets. The company has become the hardware solution for a number of ISVs (Independent Software Vendors) who provide software solutions to different vertical markets. "What we're seeing in the marketplace is that the standard hardware solution provider is not doing as well as a vendor with a vertical focus," says Equus' Toste. "The horizontal reseller is not doing as well. That end-user market is under attack by Dell and CDW." Coastline Micro also works with ISVs in the medical, healthcare, and manufacturing verticals. They have found that some ISV expertise lies exclusively in the software, and that means Coastline not only delivers the hardware platform but also installation, setup, and cabling services. "A lot of ISVs don't want to do any of that," says Sanchez. Develop and Deliver New Services The best new service offerings can be the ones that are driven by customer demand. That's how Columbus Micro landed in the PC recycling business. "Our existing customers were saying, ‘Hey, we're buying a bunch of new computers from you. We want you to take care of the old ones,'" Bohman recalls. "In order to secure the new business from a particular school, we had to take away the existing equipment." CMS evaluated the recycling business and decided to invest. Other companies learned of this recycling service and became customers. "We have spent a lot of time and effort in the recycling business," Bohman says. "We're taking an active role in recycling, and by ramping up our recycling business we've gotten the attention of new customers." Thorsen and PDS have developed selling teams around healthcare, education, government, and financial markets, to name a few. Teams include specialized account directors and project managers. Companies within the vertical markets are also looking for IT support. "We've become the IT organization for the mid- to large-size companies," says Thorsen. "Growth is in the mid-market IT segment. IT is strapped and looking to augment." PDS offers these companies engagement managers and suites of products and services, helping them choose options that match their needs. PDS collaborates with its vendors, identifying ideal client profiles, key parameters, and best fits for the products within PDS' solutions. Offer Managed Services The hot topic and fast-growing service segment is managed services, where the solution provider manages its customers' networks and devices remotely for a recurring fee, usually monthly. For Proactive Technologies, the venture into managed services has occurred at the system level. Proactive is utilizing onboard hardware in the system with a software suite for remote monitoring and management. Their customers subscribe to this service and pay a setup charge and a monthly fee based on the number of hardware devices (servers, storage, desktops) that are under Proactive's control. "The physical structure in use to support our managed services customers consists of two components: the support center in our facility in Dallas and the hardware at the customer's site," says Taylor. "The support center is pretty standard: lots of servers, fault-tolerant storage and backup, and 24x7 monitoring of systems nationwide." The hardware onsite is Intel-based, leveraging Intel Server Management (IMS) and a software suite to enable remote monitoring and management. Build New Channels Many builders rely on reseller channels to cover large geographies and crack new markets. Coastline's Sanchez says, "We have to focus on reseller/VARs. We want to grow our reseller/VAR channel by 10%." Equus strives to cultivate its VAR community to deliver solutions throughout the country's midsection. Proactive's Taylor, however, realized his company needed a channel. "We needed a way to expand our sales capabilities, so we built a channel." Instead of hiring sales people throughout the country, the company identified other companies that were already selling to and servicing the print and publishing industry. They recruited these companies to become Proactive channel partners and ended up with two national and a handful of regional providers. Utilize Vendors Effectively
Effective vendor utilization is a key success factor for these channel partners. In communicating new technologies and product roadmaps to customers and potential clients, the channel partners count on the vendors. "If it's a new product, we'll rely on them to manage the pitch," Paragon's Thorsen says, "but we also have our own subject matter experts for our solution offerings." Proactive's Taylor urges vendors to participate in sales calls, but he has strict rules of engagement. He asks everyone involved in the call to meet beforehand to prepare diligently. Roles and responsibilities are assigned, and everyone, including the vendor rep, is expected to stick to the script. This helps to project an atmosphere of competence and trust. One common way to engage vendors with customers is on a conference call. "We'll get vendors on conference calls," says Coastline's Sanchez. "Or we'll create direct contact with the vendor if necessary." Efficient utilization of vendors also means choosing what not to do. Vendors frequently offer programs designed to move product and introduce new technology. Savvy channel partners carefully pick through these programs in order to maintain focus on their businesses and customers.
As long as the vendor program aligns with company strategy, it can be effective. Otherwise, "only about 25% of these programs matter," says Equus' Toste. Coastlines' Sanchez adds, "A lot of these vendors require us to do a lot of work on the back end, managing rebates. That kind of stuff doesn't interest us." Get Noticed These system and solution providers rely on their own marketing, advertising, PR, and word-of-mouth to create awareness around their brands and offerings. Equus frequently advertises to the trade, and PDS has been aggressively marketing to its user markets. Word-of-mouth has been effective for Columbus Micro.
"Our most successful method is customer referrals," says Bohman. "A lot of our new customers come from our existing customers. Beyond that, our most effective method is trade shows." Proactive's Taylor creatively markets to his vertical industry. "It's all guerilla marketing." He writes articles and speaks at seminars. Instead of merely exhibiting in trade shows, he provides his hardware solutions to multiple exhibitors, gaining multiple exposures that can be leveraged over time. Create Built-in Value A key best practice for top tier players in the system builder market has been the inclusion of software applications that add real value for their customers. An example of this is software for PC system recovery. Installation of this type of application during the manufacturing process produces a fully recoverable software system feature. As long as the hard drive has not died, resellers or their customers can restore the Windows OS, applications, and other data back to the original image, or in some cases a restore point prior to a system failure. Featuring this type of software application on systems is considered a critical differentiator and customer satisfaction driver. "If you don't have a recovery offering on your system today, you're hosed," says Doug Phillips, senior director of emerging technologies, Seneca Data, Inc., North Syracuse, NY. Richard Shyu, VP of sales and marketing for Mirus Innovations, LLC, agrees. "For me, the recovery solution is critical. It helps sell the box. All my competition has it, and the most important thing is the reduction in technical support cost." These builders have found that great customer service and managing the associated costs does not mean offering less. "One value to the customer is they have a seamless way to take their system back to a pre-negative event if necessary," explains Rick Rentz, CTO of Viscom Technology Group Inc., Chaska, MN. "We've got the ability to take everything back to the way it was at factory." David Williamson, founder of Powergistic Systems, Inc. in Wichita, KS, claims the recovery solution is really valued by his resellers. "What they get is a recovery solution that allows them to recover a PC remotely. If they have a customer that needs to restore their original settings, they're able to do that over the phone." City of Industry-based Mirus Innovations sells to consumers. "Reloading everything is very difficult, way too difficult for most retail customers," observes Richard Shyu. The built-in recovery solution eliminates that onerous task and helps the customer get back to computing. "Number one, the recovery solution reduces the length of the tech support call by half or more. A shorter call means a happier customer." Shorter tech support resolutions are good for business and satisfying for customers. "We were able to cut our software issues 80% on whole unit returns," says Seneca Data's Phillips. "And that's a significant savings. That was one of our goals by implementing the recovery solution." Viscom's Rentz concurs. "The value to distributors and manufacturers is very, very large. Heretofore the amount of time a technician spent on the telephone was excessive. With the recovery solution we dramatically decreased technician time and increased customer satisfaction." |
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