Sell Broadly through Partners, Channel Resellers, White Box Manufacturers, and Direct — or Die

Strong words but true. Consider how the big boys do it. Here’s an excerpt from Cisco’s Annual Report filed with the US SEC, dated September 14, 2011: “A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales. Our channel partners include systems integrators, service providers, other resellers, distributors, and retail partners.” (quoted from Cisco Systems Annual Report, 2011). Further, here’s Cisco on Alliances: “We pursue strategic alliances with other companies in areas where collaboration can produce industry advancement and acceleration of new markets.” (quoted from Cisco Systems Annual Report, 2011).

Dissect the meaning of “acceleration of new markets.” Strategic alliances (joint marketing deals) make sense for this business where striking an alliance with a complementary product can hasten Cisco’s entry into markets where they have little share, if any, of sales. In other words, Cisco uses alliances to widen the throat of the product “bottle”, to increase the velocity of sales, or else, Cisco does not pursue alliances. Handy dictum. But alliances have another value to Cisco, they can “produce industry advancement.”

The mysterious process of advancing industry that Cisco notes, to my mind, results in a better alignment of technology with palpable market needs. This industry advance sweeps away every “solution without a problem” within its reach, ensuring that products are not engineering-heavy and marketing-light. In part, then, Cisco chooses to use strategic alliances to keep its feet on the ground. Good idea for a company that has floated away several times on products light on marketing and heavy on engineering.

Product innovators should closely follow the above guidelines regardless of the present size of a business. Uniformly progressing in each of the areas just noted in the marketing plan and, further, as sales strategies are defined, ensures an optimum opportunity for success. Further, this approach affords a legitimate and convincing rationale for never, ever, agreeing to exclusivity with any particular participant in any one of these market verticals (meaning direct national sales, channel resellers or strategic partners). Rather each and every alliance and partnership should be a non exclusive activity. Closer association and, potentially, exclusivity may arise at some future time, but better to have such exclusivity arise through achieving or, better yet, exceeding revenue objectives than to enforce it prematurely.

You can be sure that there is a reason why very large successful businesses like Cisco opt for a multi lane highway when they put the bus on the road. Understanding that rationale and adopting it for one’s own approach can represent a big step towards success.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved

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