How VARs And MSPs Can Organically Increase Revenue In Rapidly Changing Channel

By Corey Cohen, Director of Marketing at TBI

An aging telecommunications channel is rapidly morphing into an innovative technology marketplace. Leading carriers, pure cloud vendors, ISVs are making indirect channel a priority as 60% of all technology purchases are made through an IT consultant. Business lies with the person that has the customer relationship, those IT consultants (referred to as agents in the indirect channel) have the proverbial keys to the castle.

The Channel is changing because of carrier consolidation and technology convergence, and therefore the agent landscape is changing; those currently selling and those capable of selling network connectivity and cloud solutions looks different today even more so  than it did just three years ago. Many traditional telecom selling agents are reaching retirement age. There’s an influx of new agents as ex-carrier employees go off on their own. Additionally, MSPs and VARs are looking for ways to increase company valuation and create succession plans as their margins are continually squeezed.

Shrinking hardware margins are forcing VARs to increase volume to keep up with revenue goals. Expanding service offerings and selling network connectivity, cloud solutions and complementary services helps close that gap.

With cloud ubiquity, hardware manufacturers are shifting to a software model, as opportunities to make money exist in managed services and virtualized hosting. It’s less expensive for these ‘agents’ to go deeper into existing customers’ infrastructure and transition into more professional services/monthly retainer type offerings.

The four main channel benefits for VARs and MSPs adopting a connectivity and cloud services practice include:

1. Additional, incremental revenue (without additional headcount and changes to org structure)
2. Additional value to the customer
3. Portfolio additions, easy sell-with solutions and wedge offerings
4. Further customer immersion and influence

VARs and MSPs can leverage the channel and avoid leaving money on the table. Close the loop on customers by offering up additional solutions that complement their core offerings, maximizing revenue per client.

Since these tech firms are already doing the legwork with each router, switch, firewall and phone system sale; selling complementary or adjacent services is not a heavy lift. Opportunities exist within every VAR regardless of “type of shop.” For instance, adding SIP to PBX and UC systems, adding private network or public internet connectivity to Aruba or Meraki sales, adding disaster recovery as a service to VEEM licenses or when an MSP sells colocation services, adding managed security should be another immediate consideration.

VARS and MSPs need to pay attention to the changes in the Channel to offset the loss of shrinking hardware margins. Thoses who leverage the growing need for connectivity and cloud services to increase revenues will keep businesses growing and poised to capture the wave of the next channel opportunity.