Why are resellers and distributors an unfashionable route to growth for tech companies?

Music fans mourned the untimely demise of Joni Sledge, one of the quartet of Sledge sisters responsible for the disco anthem ‘We are family’, released in 1978. The classic tune remains popular almost 40 years later amidst all the explosion of musical styles we enjoy today. Fortunately, we haven’t become too carried away by the latest hip-hop to forget the big hair and big beats of disco.

In the marketing world digital has become pervasive, to the extent it sometimes seems the ‘classic’ ways to grow a business like using channels (e.g. resellers, distributors, sales agents) are seen as irrelevant. According to the evidence one of the best ways for New Zealand technology companies to grow is selling through channel partners.

The main method of indirect selling is through resellers who typically handle the physical distribution, sale and implementation of a product. Licensing is another indirect option, where a company can use your product, or a part of it, as their own branded product. And there are many variations on these themes.

“If the product is really good the next most important thing is to have a crystal clear understanding as to what is the best distribution channel for the product,” said one respondent in the annual Market Measures study of hi-tech sales and marketing.

A finding of the 2016 study of 300+ Kiwi tech exporters was that although using a reseller or distributor had a positive statistical relationship with high turnover growth, only one third of companies surveyed used a channel of some sort. While that is an increase on the 25% of channel users in the 2010 study, there is still plenty of opportunity.

To read the full blog, visit the Concentrate website here.