When it comes to selling IT goods and services, it turns out the Aristotelian adage rings consistently true: The whole really is greater than the sum of its parts.
Wrapping discrete technology offerings into business-focused solution bundles is a proven way for IT resellers to deepen customer engagements, increase profits, and grow their businesses. Research shows that VARs and solution providers that combine individual products into targeted solution sets capture more recurring services revenue and keep customers under contract longer than their transaction-focused peers.
In its 2014 Channel Profitability Report, channel research and strategy firm The 2112 Group found that IT resellers combining products and services into prepackaged, branded solutions enjoyed total margins 20 to 30 points higher than peers selling hardware and software products separately. That dynamic has nearly half of channel partners polled (47 percent) actively looking to increase the number of bundled solutions they offer by pooling products and adding additional services, the 2112 Group found.
But driving incremental revenue through services requires some work on the part of the solution provider to develop bundles that address specific business challenges for their clientele and demonstrate the partner’s differentiated value proposition. The most successful bundles target vertical opportunities with purpose-built solution sets conspicuously branded as the partner’s unique offering, the 2112 Group research shows.
At its heart, bundling makes IT offerings less complex and easier for the client to understand. The buyer sees a comprehensive package that looks and feels like one solution. Bundling also helps protect against price and profit erosion by eliminating itemized prices that are often subject to client push-back. Bundled solutions ensure that negotiations remain focused on value rather than cost.
Solution providers looking to energize their practices with bundled solutions can streamline their efforts and maximize their potential for success by keeping these three considerations in mind.
Vendor selection is imperative
Once a partner commits to crafting bundled solutions for its vertical specialization of choice, the first phase of development is product evaluation and vendor selection. It’s important to partner with vendors that share a similar vision for product and services packages and can provide the partner with the fundamental parts of a value-added offering.
For example, Samsung’s Chromebook 2 “Classroom in a Box” pilot combines hardware, software, and support for resellers seeking entry into the lucrative education vertical. With Classroom in a Box, much of the bundling is done already, leaving partners to layer on deployment, management, and maintenance services in pursuit of deeper engagements with prospective school systems.
Samsung’s reseller partners can approach education clients armed with a fully integrated digital-learning program for an elementary-level classroom of up to 30 students. The bundle includes 30 highly durable, Intel-powered 11.6-inch Samsung Chromebook 2 notebooks, along with 30 licenses for McGraw-Hill curriculum and teacher-development applications.
Choosing a vendor partner such as Samsung that offers tightly integrated, market-focused combos lets the solution provider focus on enhancing bundles with high-value services and other elements that can drive partner profitability and growth.
Branding is vital
One of the chief benefits of solution bundling for the reseller is that it provides the opportunity to present a new, comprehensive solution set identified with the solution provider rather than the constituent vendors. When a partner ignores or plays down the power of its own brand in favor of a vendor’s brand, it diminishes the value of its expertise and service quality.
In the 2112 Group profitability report, solution providers consistently said they didn’t see much value or positive results from vendor-led marketing programs, rating them just a 6 on a scale of 1 to 10. In this new services era, business clients associate the value of an IT offering with the company that provides it, the research found. The solution provider is the brand that businesses are banking on and need to trust.
Bundles transcend the sale
The ultimate goal of developing and delivering bundled IT solutions is to bolster revenue and profit through deeper and broader engagements with customers. To that end, the partner must think beyond the initial sale to the elements of the offering that solidify the client relationship and hold the potential for incremental revenue.
Vendor warranty programs represent a prime opportunity to enhance solution bundles in a way that builds customer entanglement and demonstrates the reseller’s positioning as a purveyor of high-value services.
For example, Samsung’s Protection Plus extended services arm partners with flexible warranty programs for laptops, all-in-one PCs, tablets, and commercial displays. The program pairs expert technical support from Samsung partners with extended factory coverage on hardware and commitments for quick replacement of damaged or malfunctioning equipment.
Resellers can give their clients granular choices for coverage periods of up to 5 years for digital signage and four years for tablets, PCs, and laptops. Samsung’s Protection Plus options also include provisions for ship-in and on-site coverage that can be customized to meet the client’s needs.
Extended warranty programs not only bolster the confidence of buyers with assurance that their systems are protected against downtime; they also raise the profile of the solution provider with a high-value service that locks the client in for the life of the extended-service contract.
The evidence is clear: Bundling should be part of every IT solution provider’s go-to-market strategy. Bundling simplifies the marketing of solutions, as well as the conversation with the customer. Replacing à la carte technology offerings with a bundle-first approach can help partners solidify their position as trusted advisors and build deeper client engagements, all while increasing revenue and boosting profit margins.
