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CHANNEL MUST KNOW WHEN TO SAY 'NO'

Written by: Andy Marken

Article Overview: Knowing when to walk away from a deal may be difficult but it can also be more profitable.

CHANNEL MUST KNOW WHEN TO SAY 'NO'

You're angry.

You're frustrated.

You feel a physical and emotional loss. It's not really a personal loss, but for most solution and system dealers and resellers, the loss of a deal or a project that has gone from bad to worse is just as difficult to rise above.

There isn't a dealer or reseller who hasn't poured time, money and effort into a deal only to see it sour before his or her eyes. With today's paper-thin margins, no firm can afford many of these "learning experiences" without becoming a casualty itself.

"After six years in the document imaging area, we had a client change the specs almost every time he turned around, Berne Grush, of MetaConcepts, a document management/workflow reseller headquartered in Toronto, commented. "Before we knew it, we had over-committed and there was no way to recover from the hole we let the client dig for us. Even though we put in twice the amount of time we billed for, the client couldn't understand why we couldn't do 'just a few more extras."

Even though MetaConcepts did what they said they would do, it took a while for the customer to be happy and the company lost most of its margin.

Been there? Done That? You're not alone.

This is especially true in the document management, imaging and storage arena, which is now becoming one of the hottest application areas in the industry.

"When we took our first step into this marketplace," Jim Bach of New Wave Automation, a Las-Vegas-based network and document management reseller recalled, "we saw it as a real opportunity for us to move away from the downward profit spiral of small network installations and move into an area where we could get a fair return for our expertise.

"Our problem was two-fold," he continued. "The customer really didn't understand what he wanted to accomplish and neither the supplier nor we had a complete understanding of how the technology really changes the way people work together and with their information.

"Something about this first deal didn't feel right and we should have gotten up from the table mid-way through the first meeting. But we wanted the business and really felt we could help them solve their problem," he added.

You may call it a gut feeling, a sixth sense or intuition; but whatever it is, it's one of the key ingredients that separate successful VARs from those who didn't quite make it.

There are other red flags that need to be observed.

Leading the list is the completely dishonest customer.

"I don't like to think of how many free proposals we wrote in our early days," says Serge Gravel, MulitProcess Computer Corp., a document management software supplier based in Connecticut. "We've probably provided 1,000 hours of free consulting and analysis and had our people do major software customization work, only to see the project not go forward."

Gravel emphasized that today, this doesn't happen because MultiProcess makes it a point to emphasize that for the project to succeed for the user, it must be a long-term partnership.

While it sounds extremely simple, MetaConcepts' Grush claims that success starts with trust.

To establish the trust and ensure expectations (for both parties) are realistic, the key is to write a very specific letter of agreement. Gravel says that there are definable stages of the relationship that need to be spelled out. These are:

pre-sale -- needs analysis, requirements definition, business process redesign and cost justification;
sale -- hardware, software and services;
post-sale -- implementation consulting, system integration, application design and development, user and administrator training, and support

Only after each area is clearly defined and agreed upon do successful resellers proceed.

Too many resellers have gone out of business by winning too many of the wrong contracts. Whether it's a project outside your target market or that intangible something that tells you it won't be mutually successful relationship, office solution and system resellers have to know when to say "No."

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