The classic two-tier model, where the skills and assets of distributors and resellers are used, is still best way for vendors to get higher returns from their go-to-market strategy according to research from the Global Technology Distribution Council (GTDC).
The industry organisation has issued its latest “Distribution’s edge: An economic analysis of routes to market for ICT products and services report” which contrasts benefits of going direct, using a single-tier model, or opting for a two-tier go-to-market strategy.
The report made the point that choosing to go direct – something startups often do to try to keep control of the sales process – was more expensive and limiting than working with distribution, which could reach customers via a wide network of resellers.
Those choosing to operate direct also faced high selling, general and administrative (SG&A) costs, limits to scaling caused by staffing levels and challenges getting to small and medium-sized enterprise (SME) customers, it said.
Cons listed for the single-tier model included the age-old issue of handling conflict over which customers are direct and which are indirect, as well as having to get on top of compensation plans and partner rewards.
A partner-led model has higher enablement costs and the chances of it being harder to get pipeline visibility, but the benefits are significant, with a large reach to market on offer and the chance to work with an established and sharp set of channel businesses.
The Global Technology Distribution Council will be using the research to underline the benefits of distribution and challenge the ideas some of those firms that might think it is more cost-effective to go direct. It will also be discussing the findings in more detail at its summit on 10 November.
