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.
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?"