ScanSource, Intelisys Channel Partners Count the Cost of Cross-Selling
Partners agree that selling multiple lines of tech can create happier, sticker customers. But getting there is a journey.
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The 2022 Channel Connect conference brought ScanSource and Intelisys partner communities together for their first ever joint annual event. ScanSource has continued to widen its profile from a specialty distributor focused on point-of-sale hardware decades ago to now a hybrid distributor that also can leverage Intelisys’ cloud and carrier service offerings.
Resellers and agents alike heard from ScanSource and Intelisys leaders about how they could adopt products and services from the other side of the portfolio and become hybrid partners.
ScanSource senior vice president of marketing Ansley Hoke said messaging at this year’s Channel Connect didn’t emphasize the “coined term” of hybrid distribution as much as before. In addition, the plan for ScanSource is to conduct separate events for the legacy ScanSource and legacy Intelisy communities.
However, Hoke said ScanSource still views a hybrid approach as “a very key sweet spot.”
“The umbrella company really looks across all these different technologies, verticals, solutions and consumption models. So we’re able to showcase a lot of these and give partners a choice in a hybrid model,” Hoke told Channel Futures. “Hybrid may be different solutions within a hardware stack. Or you can be hybrid based on the different consumption models if you want to add recurring to it or services or software – whatever it may be. So we’re not using the buzzword ‘hybrid’ as much, but it is still in a lot of our marketing out to market as a valuable place where ScanSource can offer a choice. That’s all it is; a solution choice.”
The shift in messaging reflected a natural evolution, according to Tony Sorrentino, who leads ScanSource’s specialty business.
“Last year at this event, we were all about the opportunity of hybrid. And this year, the opportunity is still there. Now we want to help you go find the adjacent technologies that make the most sense.”
Jim Roddy, president and CEO of the Retail Solutions Providers Association (RSPA), said he saw ScanSource laying out more “tangible” next steps to helping partners adopt new technologies.
“Last year, I think they had to introduce the concept and show everybody the whole thing, but now they have to break it down into the practical,” Roddy told Channel Futures.
ScanSource chairman and CEO Mike Baur said his company has also shifted the way it emphasizes the hybrid model to different partner business models.
He told Channel Futures last month that while there are partners on the agent/Intelisys side that have embraced hardware, it’s not imperative that they do so.
He said agency model has proven extremely useful for hardware VARs in rounding out their practices and increasing margin. He added that VARs face less obstacles in adopting recurring revenue than agents face in adopting hardware.
“It’s much more weighted on the hardware guys. They have an easier time doing that; it’s harder for the agents,” Baur told Channel Futures.
Moreover, the option to sell in an agency route has demonstrably benefited the legacy ScanSource partners. The distributor noted in an earnings call in 2021 that VARs accounted for 57% of Intelisys sales partners.
And keep in mind that VARs far outnumber agents in the overall ScanSource partner ecosystem.
“If you think about our customer count, it’s very weighted on the VAR side, so there’s a lot of opportunity there. A lot of runway adopt and double, triple our business in Intelisys if they’re successful,” ScanSource chief financial officer Steve Jones told Channel Futures.
Roddy has seen new technologies enter the ScanSource ecosystem over the years. He said some VARs chose to embrace the expanded portfolio, while others did not. Some of them refused to go beyond point-of-sale solutions.
“They either got purchased, or they don’t fit into this ecosystem anymore, and so they’re not here. If you’ve have that fixed, limited mindset in the point-of-sale space, you’re fading away quite frankly or getting acquired already,” Roddy told Channel Futures. “Now, does that mean everybody here is going to add unified communications and cloud services to their own portfolio? Not necessarily, but we’ve seen a lot of them partner with other solution providers to bring that whole solution to market. Maybe they won’t all bring everything in internally, but they’ll still be open to partnership, because that’s how they’ve adapted.”
Members of the RSPA target retail, restaurant, grocery and cannabis customers. And the majority of them focus their efforts on technology inside the four walls of a store, Roddy said. The corporate offices associated with those customer brands might be a logical next step for these retail IT resellers if they adopt UCaaS or CCaaS.
But Roddy emphasized that this is a journey for partners.
“For ScanSource, this is only year two of the journey to ‘hybrid’ solution provider status,” Roddy wrote in a blog post. “Nothing permanent in our channel happens overnight.”
Credit that phrase to Mike Baur, who was speaking about the time Mercury Payment Systems, which entered the channel with an integrated payments offering in 2006.
Baur said Mercury gave retail VARs an unprecedendent opportunity to earn recurring revenue.
“All of these retail guys immediately started saying, ‘You mean we can get paid every month if a merchant buys credit card processing, and we are an agent for that?’ So Mercury built a huge channel for that,” Baur told Channel Futures.
Roddy said some partners said no to the opportunity. But those who said yes made “millions,” he said.
Many technology advisors (agents) tell Channel Futures that they prefer to stay away from hardware in general. Accustomed to making high margin in a low-capital agency business, many of them view hardware as too steep of a logistical undertaking with not enough payoff.
Some TAs, however, have leaned in.
ClearSync CEO Richard Rodriguez said he has tapped into some of the technology from the legacy ScanSource side, including warehouse barcode scanners from vendors like Zebra.
Rodriguez said some of the decades-old agents are content to wait for services renewals to come up in their existing base. But for three-year-old ClearSync, it’s key to help customers with as many needs as reaonsably possible.
“A lot of partners are just CCaaS or they’re just security – they stay in their niche. We have the full breadth of products, and I take advantage of them,” Rodriguez told Channel Futures.
He said ClearSync works with large enterprises in 80% of its business. And hardware is a common need for those companies.
“By doing that there are opportunities for hardware because they’re constantly going through the cycles of acquisition and divestitures and aging equipment. So the hardware opportunity is there. I like taking advantage of it,” he said. “But a lot of my fellow agents that friends, are more on that SMB side, and they just don’t want to deal with it – which I fully get. Because it can be a headache.”
The word “adjacency” came up frequently this week in discussions about how partners can expand their tech portfolios.
Rather than trying to adopt the other side of the portfolio all at once, start with the closest, most logical expansion, Sorrentino said.
“I know a barcode guy is not going to go and try to sell a phone system. Or he’s not overly interested in doing that,” Sorrentino said. “But a natural adjacent technology is networking products. Because those mobile devices are talking to access points.”
Intelisy vice president partner experience and enablement Kristy Thomas said mobility makes sense for some partners on the agent side to deep their feet into. That move toward wireless could be particularly compelling in light of what some consider a race to zero in business wireline.
“I think that there’s a huge, huge opportunity for our partners to augment the decline that we see in wireline,” Thomas said. “.. There’s a whole shift of revenue that’s out there for our partners that they can capitalize on. And it’s way more than just wireless phones. It’s Internet of Things devices, mobile management, all of those different components.”
Renodis and Amplix come to mind as two technology advisor firms that have gone into mobility. Both companies have leveraged M&A to acquire the capabilities.
Amplix CEO Joe DeStefano said his company’s mobility management practice has grown “like wildfire” since the purchase of CAG.
Thomas said some traditionally wireline agents might see customer experience (CX) and contact center (CCaaS) as a more natural evolution, while others might find it easier to start with an IoT sale.
“But they all intersect at some point too. Now more than ever, technologies more integrated, ideally. So they’re all going to be this ecosystem sale that’s going to come together at some point. CX rolls into security. And CX is often a piece of a cloud/digital transformation transformation engagement,” she said.
Five9 director of global partners Kelli McMillan said the vendor community can do a better job of demonstrating how the different technologies connect with each other as an ecosystem.
“If we can show them how the technology works together as an ecosystem, then that continuity will continue to happen and they can just layer in products and services as it makes sense,” McMillan told Channel Futures.
For Five9, a contact center and customer experience software provider, its technology may function as an adjacency to unified communications as a service (UCaaS), McMillan said.
“If partnerslayer in X amount of seats of CCaaS on top of UCaaS seats, they see this exponential growth in their base. And they’re more sticky with their customer,” she said. “They actually once you layer in UCaaS, it’s an easy upsell to layer in CCaaS. Then it’s an easy cross-sell over to the CISO to figure out how to secure the network.”
Rodriguez said he sees his multi-disciplinary approach helping him retain customers.
“The more sticky a relationship I can create with my client and having six or seven different contracts with them, I really will become that trusted advisor for them, where I am the first phone call and they’re talking to a bunch of different people,” he said. “Plus, people are constantly changing jobs, you know, every three years and things like that. So if I already have six or seven deals with them, even if a new person comes in, I’m still going to be that call. It insulates us from being kicked out when a leadership change happens.”
Massachussets-based advisor Amplix had been dabbling in mobility management prior to purchasing CAG. They had leveraged CAG as a supplier partner.
But DeStefano said bringing CAG fully into the fold has made all the difference. For instance, it has given Amplix’s sellers more confidence that they aren’t bringing an unknown entity from the outside.
“Having that in-house expertise is very important, because we can trust that person in that organization to do what they say they’re going to do. And it’s repeatable, and we know we’re going to get time in and time again,” he told Channel Futures.
Forming a strategic partnership with a new supplier is just one step in cross-selling. The element that may concern partner leaders is enabling sales people who are working on the front lines with customers.
And for those plucky souls might not always happily receive the mandate to cross-sell. It introduces risk, Thomas said.
“Oftentimes, if you are an individual contributor by DNA, naturally you want to pull away from the the adjacent sale or the upsell/cross-sell, because you don’t want it to mess up your actual active sale that you’re selling a customer,” Thomas said.
Bluewave chief operating officer Wayne Dietrich gave the example of a sales rep who has built a strong skill set in network services.
“You know the supplier ecosystem, you know the SLAs, you know who’s winning and losing. You stick to that. And if you go out into colo, and the client starts asking you questions and bending you back, it gets uncomfortable and you lose your credibility,” Dietrich told Channel Futures.
This concern ties back into the need for in-house talent for companies like Bluewave and Amplix.
In addition, those sales reps and their employers need to see the bigger picture.
“What you don’t realize is that by not doing that you’re putting in risk into your business as somebody else coming and bringing that solution in,” Thomas said.
Amplix president Dan Gill said partners are trying to help their sales people evolve in what is already a difficult job.
“Today it’s even harder, because the way you reach out and get in touch with customers is more challenging. Nobody answers the phone. They’re getting bombarded on every digital platform you can imagine. So it’s hard to do that to begin with. And if you don’t have the expertise and you don’t have you have the talent in-house to help with that process, it becomes harder to complete that sale and really bring value around that sale to a customer,” Gill said.
Lastly, partners who want to cross-sell may need to engage with an entirely different buyer.
“Sometimes partners get in, and they might be with the CTO, and they don’t have a good bridge into the CMO or the CIO or the CISO, or maybe for the contact center leader,” McMillan said. “If you don’t have those business relationships, then now you have to step outside of your box and get uncomfortable.”
If the purchaser happens to be the same person you sold to before, that presents its own challenges, Thomas said.
“The first thing foremost that our partners have to understand is that your customer remembers you for the very first thing you sold them. Regardless of how many times you tell them, ‘I have cybersecurity in my portfolio,’ or how many times that you say, ‘I have DR solutions in my portfolio,’ if you sold them a phone system, they’re going to remember you for that phone system,” she said.
Thomas said partners need to shift their messages with that particular person, and in the meantime start selling beyond their initial IT point of contact.
“Because there’s a 25% chance to the person that you’re selling to today will not be there at the end of that sales cycle,” Thomas said. “So you have to think more strategically around how do you go into these accounts and start to build alignment across multiple lines of business beyond just IT. Historically speaking, that’s where we have stayed.”
Lastly, partners who want to cross-sell may need to engage with an entirely different buyer.
“Sometimes partners get in, and they might be with the CTO, and they don’t have a good bridge into the CMO or the CIO or the CISO, or maybe for the contact center leader,” McMillan said. “If you don’t have those business relationships, then now you have to step outside of your box and get uncomfortable.”
If the purchaser happens to be the same person you sold to before, that presents its own challenges, Thomas said.
“The first thing foremost that our partners have to understand is that your customer remembers you for the very first thing you sold them. Regardless of how many times you tell them, ‘I have cybersecurity in my portfolio,’ or how many times that you say, ‘I have DR solutions in my portfolio,’ if you sold them a phone system, they’re going to remember you for that phone system,” she said.
Thomas said partners need to shift their messages with that particular person, and in the meantime start selling beyond their initial IT point of contact.
“Because there’s a 25% chance to the person that you’re selling to today will not be there at the end of that sales cycle,” Thomas said. “So you have to think more strategically around how do you go into these accounts and start to build alignment across multiple lines of business beyond just IT. Historically speaking, that’s where we have stayed.”
SCANSOURCE CHANNEL CONNECT- As the message of cross-selling grows more pronounced across the indirect technology sales channel, partners must take a methodical approach to adopting new products and services.
Channel Futures in the last four weeks has attended four different distributor conferences, and topic of cross-selling has cast a constant shadow. The hybrid distributor ScanSource over the years has encouraged hardware resellers to explore cloud agency-based and carrier services, and encouraged the reverse for agents. ScanSource executives at the recent Channel Connect conference said they understand that some partners may prefer to stay in their swim lane. They nevertheless affirmed the thesis that customers are interested in buying their various technologies from a single source.
“The end user is the holy grail. Ultimately those are the people with the final checkbook,” said Tony Sorrentino, president of ScanSource’s North American specialty segment. “[Partners] have to decide how how much of that checkbook they want to pursue. What are they comfortable with? They want to make sure they’re doing a good job, so they don’t want to overextend themselves. But certainly a big part of what we do is enable those folks to have those intelligent conversations and have the technical support they need behind any solution they need to build.”
Channel partners of all kinds – be they VARs, SIs, MSPs or TAs – see the importance of adding new lines of technology to expand customer wallet share and stickiness. Technology advisors in a recent survey called cross-selling and upselling their most important go-to-market enhancement. Some partners have cited cross-selling opportunities as the reason they chose to merge with each other.
However, significant challenges lie beneath those aspirations, according to recent data. Tech services distributor Avant found that 84% of its partners’ end customers only purchased one line of technology from them. Bridgepointe Technologies said its strategists on average are selling 1.25 products for every account.
Bluewave Technology chief operating officer Wayne Dietrich put the number somewhere around 1.3 for his firm. But he said he hopes that number will ultimately rise to three or four with Bluewave’s most engaged customers.
“If you do that, now you have an incredibly sticky, long term relationship,” said Dietrich, who said company now counts 7,000 customers in its base.
But Dietrich and other partner leaders noted that a cross-selling strategy must not be formed lightly. Partners described a mix of best practices they’ve done around hiring, M&A and distributor relationships in order to equip their sales teams to confidently approach customers with a wider portfolio.
“There’s a lifelong pursuit on how to figure out the adjacent sale for your customer and how to figure out the upsell/cross-sell,” Intelisys vice president of partner experience and enablement Kristy Thomas said. “You literally could build an MBA around it. Because everybody says you need to do it, but figuring out how to do it properly is the secret sauce.”
ScanSource/Intelisys channel partners and executives shared their insights for identifying and executing sales of new technology sales.
Read their commentary in the 10 slides above.
Also, explore:
ScanSource chairman and CEO Mike Baur’s keynote address about taking partner feedback.
Comments from the ScanSource c-suite about the future of the Intelisys business, including potential M&A.
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