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SAP Distribution Blog

The 3 Rs of Surviving in a Zero Margin World

Posted by SAPDistribution Team on March 1, 2017

SAPDistribution's own President, Gary Feldman, was a guest on the SMB Jumpstreet podcast recorded live at the annual 90 Minds’ Meeting of the Minds Conference in sunny San Diego, CA.

The topic of the podcast, “Surviving in a World of Zero Margin,” led to some lively discussion as Gary, the hosts, and fellow guest Moira Goggin from Chismet Consulting imagined a world where their vendors no longer offered margin.

A great deal of wisdom was shared, focusing around the 3 Rs of VAR success that can be applied to most businesses.

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The 3 Rs:

  • Recur (recurring repeatable revenue)
  • Retain (keep your ideal, desirable customers)
  • Recruit (new customers)

The following questions asked by the hosts led to some interesting responses that you could apply to your business:

  • What is the first thing you need to do to adjust to this new reality?
  • How does this impact your new customer strategy and marketing?
  • Are you charging for initial visits?
  • Are you charging for discovery/due diligence?
  • What higher margins activities will you promote to offset the zero margin on the software?
    • Related – what activities will you stop offering

What does your typical customer look like for the future?

  • What type of customer will you fire?
  • Are you still reselling or do you distance yourself from the software/service and become more independent?
  • Do you pursue a niche? If so, what niche(s)?
  • If you are not realistically going to do X by X months, stop and find a better niche.

Gary had some excellent points, including:

  • Long-term social media strategy as it relates to customer acquisition cost
  • Humanizing social media and marketing
  • When it makes sense to be more selective when choosing a customer
  • Why it's so critical to define your packages (services) and their scope and value

The only real question you'll have left is, "What's with the bagpipes?"

To learn how you can improve performance in your business by implementing best practices, contact us! (And don’t forget to listen to the podcast!)

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