How to Leverage LARs Instead of Losing to Them
A large account reseller can be your best friend or your biggest headache. Here's how to leverage the many benefits of working with these elite Microsoft partners while avoiding the very real dangers.
- By Rich Freeman
- October 01, 2008
In Geno Cenci's experience, large account resellers (LARs) are some of the best partners in Microsoft's channel-and also some of the worst.
Cenci is Microsoft national practice manager for Gold Certified Partner ePlus Technology Inc. of Herndon, Va., an infrastructure solutions provider that works extensively with Fortune 500 companies and other big organizations. LARs such as New Berlin, Wis.-based SoftwareONE Inc., Downingtown, Pa.-based Softmart Inc. and Palo Alto, Calif.-based Hewlett-Packard Co. are his go-to resources for in-depth licensing assistance when pitching new projects. "It's a great marriage," Cenci says.
Other LARs, however, get poorer marks from Cenci. Some, for example, handle licensing purchases as if they're rote transactions. "I get the quote within 20 minutes, but nobody walks me through it," Cenci says. Others try to push his clients into buying more software than they need. Not surprisingly, Cenci has been culling his list of LAR partnerships in recent months. "I've whittled it down to three," he reports.
Many solutions providers, VARs and integrators in Microsoft's partner community have similar opinions about LARs. An elite set of IT heavyweights characterized by deep licensing expertise, vast market reach and high sales volume, LARs are the only authorized sources for Select License contracts and Enterprise Agreements, two of Microsoft's most popular volume-licensing options. As many partners see it, the best LARs are invaluable sources of consultative advice, customer insights and new opportunities. But the worst, in their view, add needless complexity to the sales process and compete with them for services and hardware deals. The trick, according to veteran channel executives, is learning how to collect the benefits of working with LARs while dodging the pitfalls.
|What to Look for in a LAR
Many Microsoft customers have pre-existing LAR relationships that limit your ability to decide which LARs you do business with. But whenever you're free to choose, look for LARs with these qualities:
Minimal competitive overlap: The surest way to avoid competing with LARs is to avoid the ones that make money the same way you do. Stick to companies that focus mostly on licensing sales.
Meaningful expertise: LARs that simply record orders add little value to the sales process. "I can take an order," observes Geno Cenci, of ePlus Technology Inc. The best LARs bring real consultative insight to the table, he says: "I'm looking for a partner that can help me sell a solution to the client."
Reliable reporting: Under Microsoft's U.S. Partner Influencer Revenue Program, LARs are supposed to inform Microsoft every time a partner is responsible for initiating a licensing deal. That enables partners to get credit for Microsoft revenue that they influence rather than generate directly. There's just one catch: Not every LAR participates. To make sure your company receives full recognition for the licensing revenue it impacts, work only with LARs enrolled in the partner influencer program.
Integrity: Last but not least, stay away from LARs that have cut you out of deals or otherwise behaved questionably in the past. If they've treated you shabbily, just imagine how they might treat your customers.
LARS As Heavy Lifters
Unless you sell exclusively to smaller businesses, odds are pretty good that you interact with LARs regularly. Select License and Enterprise Agreements are available to organizations with as few as 250 PCs, and most companies find the low pricing irresistible. As a result, many partners say, it's hard to find a large or midsize Microsoft customer without a volume-licensing contract these days.
Still, IT decision makers often have trouble determining which bulk-purchasing option is right for them. For example, customers are sure to have questions about how Microsoft's new Select Plus licensing program, which officially debuts this month, differs from the more venerable Select License program. That's the kind of discussion that most LARs specialize in conducting. "Part of our value is the ability to explain these higher-level agreements in greater detail to the end user," notes Peter Ells, director of strategic alliances for SoftwareONE. Moreover, once a client chooses a licensing plan, a LAR can help the company get the maximum value from it. "We understand exactly what the customer has acquired, what Software Assurance benefits are included in the agreement, how to activate those benefits and how to assist them in consuming those benefits," Ells says.
Leaving such discussions to LARs benefits VARs and solution providers as well, says Hal Jagger, general manager of corporate sales for Software House International (SHI), a LAR and Gold Certified Partner in Piscataway, N.J. "They can focus on their competencies and let us handle the complexity of the licensing and the purchasing," he says. Most partners are more than comfortable with that division of labor. "At the end of the day my salespeople are not experts about Microsoft licensing. It's just too complicated," says ePlus Technology's Cenci. "We rely on the LAR to do the heavy lifting."
Including a LAR in the sales process is also a useful way to burnish your reputation as a trusted advisor, notes Margaret Johnson, director of marketing and alliances for Oakwood Systems Group Inc., a provider of application and infrastructure solutions and Gold Certified Partner located in St. Louis, Mo. Oakwood often inserts a LAR's licensing recommendations directly in its sales proposals. Clients find that reassuring, Johnson observes, as it shows the company has considered their needs from all angles. "It's a huge credibility builder," she says.
Meeting the Reps
LARs can help you build revenue as well as credibility, many LAR execs insist. "We reach a lot of people," says Gertrud Pillay, vice president of marketing at Torrance, Calif.-based PC Mall Sales Inc., a LAR and Gold Certified Partner with roughly 68,000 customers. When those companies ask for deployment assistance or other services that PC Mall can't provide, the company points them to its "informal network" of third-party solution providers. Other LARs, including SoftwareONE and Softchoice Corp., a Toronto, Ontario, Canada-based Gold Certified Partner, maintain full-blown partner programs that regularly feed referrals to their members. The effect is like having a cost-free, supplemental prospecting operation, Johnson says.
Meanwhile, partners often leverage LAR relationships simply to obtain valuable insights about mutual customers. "There's a lot of account intelligence you can gain just by talking to the reps," says John Jewsbury, a general manager at Gold Certified Partner SyCom Technologies Inc., a network infrastructure specialist headquartered in Richmond, Va. For example, a well-timed call to a LAR could reveal that a client has recently purchased Office or Windows licenses and potentially needs implementation support. Similarly, if a competitor has been sniffing around one of your accounts, a LAR contact is often the first to know about it.
Of course, getting a LAR to reveal that kind of information takes close personal connections. That's why Jewsbury meets a couple of times a month with his LAR contacts and regularly holds account-mapping sessions with them in an effort "to try to be really proactive," he says. Cenci, meanwhile, actively introduces LAR reps to his company's salespeople. "I invite them to my regional offices and have them pitch our salespeople on what their value-add is," he says. The result is a dense network of mutually beneficial relationships. "The LARs know every single sales rep I have in New York City, and I have 18 of them," Cenci observes.
Staying Clear of the Crossfire
Still, many partners caution that LARs can be a source of pain as well as gain. For one thing, LARs add yet another voice to sales discussions that already include a customer, Microsoft and one or more other partners. "You have to have a very large conference table to accommodate those meetings," jokes John Conway, president and CEO of Ananke Inc., a provider of managed services, staffing assistance and infrastructure solutions and a Gold Certified Partner in Providence, R.I. Meanwhile, Conway complains, employee turnover is a disruptive constant among LARs: "If we have an account manager, in one or two weeks we'll have a new account manager and they'll have no idea how we do business."
Worse yet, many partners say, some LARs are at least as likely to compete with you as they are to partner with you. Hardware resellers, for example, often find themselves undercut by a LAR's rock-bottom bid. "The guys dealing in volume like [LARs] can make their money on 2 percent margins," observes Conway. Smaller companies like his, however, can't survive on such slim profits.
Meanwhile, several LARs-such as CDW Corp. of Vernon Hills, Ill., and CompuCom Systems Inc. of Dallas, Texas, both Gold Certified Partners-have extensive in-house services arms. Others are rapidly building service capabilities. All too often, partners say, LARs that sell services will follow-up a licensing bid with an accompanying services proposal, cutting them out of the deal. "It's something you work past," says Adam Wilburn, a regional services manager at RCM Technologies Inc. of Pennsauken, N.J., a Gold Certified Partner and provider of business solutions and professional engineering services. "We work as cooperatively as possible and make sure clients don't get caught in the crossfire."
Partners cite two main techniques for minimizing competitive friction with LARs:
Set clear ground rules up front. Agree with your LAR contacts about how you'll communicate with their customers and how they may communicate with yours. The LAR reps that Jewsbury works with usually honor such agreements: "If it's their account, we respect that, and if it's our account they respect that," he says. Some LARs, such as SHI, even offer formal contracts specifically limiting their ability to bid against you. "The partner is contractually protected that our services organization isn't going to go back into that customer and try to sell competing services," says Jagger.
|The Incredible Shrinking LAR Community|
Large account resellers (LARs) belong to a particularly exclusive partner category -- one that's growing smaller all the time, thanks to a wave of M&A activity. The second half of 2007 alone saw ASAP Software, SARCOM Inc. and Software Plus snapped up by fellow LARs Dell Inc., PC Mall Sales Inc. and Softchoice Corp., respectively. Those deals follow earlier ones in which Softwarepipeline Inc. merged with SoftwareONE Inc. and Insight Inc. purchased Software Spectrum. The net result: The U.S. LAR community has shrunk in recent years by about 25 percent, now numbering roughly 15 companies.
If the LAR you're partnering with has a deal-registration system, use it. Such tools enable you to stake an official advance claim on pending opportunities. That should safeguard you against poaching-and if it doesn't, you'll at least have a clear basis for complaining to Microsoft officials in Redmond. "When I've registered [a deal], it's pretty rare that they try to undercut us," Cenci says. "The last thing the LAR wants to do is get into a dispute with Microsoft over deal registration."
Even so, most partners have been underbid by a LAR at least once. Moreover, it's often impossible to steer clear of those bad apples because many Microsoft customers have pre-existing LAR relationships. If a customer asks you to team up with a LAR that has pilfered deals from you in the past, you must usually oblige. Conway, of Ananke, covers himself in such cases by sharing as little information as possible with the LARs. "If they start asking questions about the details of the project, we keep it as vague as possible," he says. The less they know, the less likely they are to submit a competing proposal.
Many partners believe that mastering such tactics is essential because, ultimately, there's really no way to avoid LARs. Like it or not, there are only a handful of them, they perform a critical function and they do business with just about everyone you do. "We're going to work with them one way or other at some point in time," observes Wilburn. Why not derive as much gain from that interaction as possible?