VAR veteran Terry Petrzelka, now a valued advisor and consultant to vendors and resellers, discusses the top concerns for accounting technology consultants in this monthly Q&A series.

This month, Terry takes on marketing mistakes, how-to’s in partnering, and the one thing VARs -- or Professional Services Businesses -- should be doing for their future, but aren't.

AT: What are, if any, the clear signs a firm may consider partnering with or an acquisition by another firm?

Petrzelka: There are five attributes or characteristics a firm should consider when deciding on any kind of partnership with another firm:  a trusted reputation in the industry and as a trusted channel  partner to work with; make sure there are obvious cultural fits with your firm;  there’s a shared focus/goal on client retention/satisfaction programs; how well does management know each other; and clear business synergies or complimentary skills such as a niche specialty or other aspects your firm can leverage.

If the discussion does happen to focus on merging or an acquisition, I recommend seven additional points of consideration in your future partner such as a respected brand name; having niche skills that are part of your business plan or vision; unique industry recognition or referrals that are directly applicable to your business; a strong management team, particularly one experienced with mergers; client and staff retention is a priority; a clear plan for keeping principals engaged if they stay or putting the right executives in place upon their post-merger departure; and the transaction will make for a stronger firm, increased market share or expanded geographic footprint.

These decisions are instrumental in any partner’s business model in today’s economy.  Every owner or principal of a business needs to  keep these top of mind as they look at partnering and for sure when taking the higher level step of merging or acquisition discussions.

AT: What are some of the key marketing mistakes firms make and how to avoid them?

Petrzelka: The first mistake is Not marketing at all and depending on the publisher for leads, and second is believing that the business can make it go by ‘living off’ of referrals.  As I covered in our previous conversation[link], there is a new economy out there, a new buying process and -- even more challenging -- a new buyer. More buyers today have done their research before engaging a partner to join their buying process. Therefore, having in place a marketing program that is focused on being found is paramount.

Here is an understatement: Partners cannot market the way they used to. However, it needs to be said because partners are still marketing the way they used to one to four years ago.

Some marketing practices that partners should avoid include:

  • Outbound marketing with emails
  • Outbound email blasts at general untargeted lists or telemarketing efforts to random lists -- This is like hunting for a needle in a haystack as a business associate used to describe it to me.
  • Working on SEO with no real objective.
  • Trying to capture website traffic with only landing-page capture techniques.  Landing pages, even though essential, are starting to be not as useful anymore.  People are tired of filling out forms.
  • Programs that are NOT focused on an industry or vertical niche

Alternately, I suggest some absolutely Must Do ideas:

  • The marketing program has to be consistent, regular and persistent
  • The program must have a strong message, a compelling message targeted at the industry and the buyer
  • Needs to be laser-focused, as narrow of a niche as possible
  • The program has to be a omni-marketing program that includes a strong Website, focused SEO, Blogs, newsletters, etc. all focused on industry related, relevant and current messaging highlighting skills and solutions.

Maybe it is time for the partner channel to view marketing as it does with technical discussions with other channel partners.  Maybe partners should collaborate on marketing programs, as we discussed above.  In marketing, maybe it is time for partners to realize that they cannot do this on their own. They need to find a trusted group of partners who have a ‘common belief’ a ‘common approach’ in their thoughts on marketing, and start collaborating on marketing techniques and approaches. 
A lot of money is being spent on dead end marketing practices by partners because they are not sharing for reaching out to find out what is working and not working with others of like actions.  Just imagine how much more cost-effective a partner’s marketing program might be if they found two to five other partners where all of them could share in their successes and failures. 

AT: If you could narrow it down, what is the one thing today that VARs (traditional and otherwise) should be doing for their future, but are not?

Petrzelka: For me, priority number one is build a business and financial plan that today’s VAR world is built upon making profits on services only.  Forget about the margins from product sales and consider this a ‘nice to have’ when it occurs.  A VAR of the Future [I hate using the word VAR, by the way], the Professional Services Business of the Future must build their future on Not depending on publisher margin programs to help keep the doors of the business open – maybe include the yearly renewal fees to begin with.

The business and financial plan should be a precise tactical plan for the first year with a more general plan for years two and three and, if the partner wants to go further out, no more than five years. 

The plan has to be built on moving away from dependence on publisher margin and must include a roadmap of how the professional practice will be able to make it on its own and be profitable as soon as it is feasible. This above has to be Priority One; in today’s VAR world [aka Professional Services Business] margins are being reduced constantly or the bar of sales to reach has been raised significantly to get the same margins as in the past. 

Certifications are on the increase and that is to be expected since technology inclusions in publisher products are increasing exponentially – so this is just part of the game today, if you want to play the game. Finally, marketing costs are being increased in order be found and to stay visible and relevant – as answered above, and marketing is Not Optional anymore. Therefore, the channel partner needs to understand the effects of these cost items and what they need to do to make their business stand on its own without dependence on the Publisher’s software margins.

Got a question or concern Terry can address? Send it to seth.fineberg@sourcemedia.com for our next column

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