Solution Provider Panel: The Key To Recurring Revenue Is Depth Over Breadth

Asked to share their best advice to VARs looking to push into a recurring revenue model, a panel of solution providers who have already made the jump said they found diving deep into particular vendors or verticals as the key to success.

The complexity in the market is helping drive margins up, the solution providers said on the panel, which was held at the ONE Ingram Micro event in Las Vegas and was moderated by The Channel Company CEO Robert Faletra.

"With that complexity brings significant opportunity for us," Scott Young, president of Houston, Texas-based Penncomp, said. "If it's simple and easy... they don’t need us. Whether it's complex wireless or security, we've found some great opportunities to do that."

[Related: Continuum: 'Smartsourcing' The Wave Of The MSP Future]

In particular, Young said he develops expertise by diving into specific verticals, especially finance, where Penncomp takes the time to really understand the industry and its businesses from the ground up.

Michael Goldstein, CEO of Fort Lauderdale, Fla.-based LAN Infotech, agreed with Young's vertical approach, saying that he dives into the healthcare and legal verticals in particular.

"The complexities are really good for us because now our team is no longer a sales team," Goldstein said. "I think a lot of our customers now need us ... I think that you have to verticalize. When we stray off of what we know, we partner."

Goldstein said he also finds value in focusing around a vendor that provides the technology, resources and engagement levels his business needs. He added that Microsoft has been very good for his business, particularly when it comes to cloud and emerging technologies.

For smaller resellers, JoeAnne Hardy, president of Calgary, Alberta-based WBM Office Systems, advised they take advantage of the vertical opportunity in front of them. For example, she said that her managed print-focused company, which can stretch across a wide variety of verticals, developed a healthcare following after marketing a few client successes in the area.

"We've been led there as opposed to it being a strategic move," Hardy said.

Hardy said resellers should make sure to listen to their customers and work to push a recurring revenue shift into areas they are asking for. Don't just build it and hope they will come, she said.

"If you know your customer and you know what it is that they need and you're building toward that then you're always going to end up in a good spot at the end of the day," Hardy said.

Jim Reinhold, CEO of North Andover, Mass.-based Network Allies, said he takes a simpler approach. He said that he has grown his business to $30 million through focusing on keeping customers for life and asking them to refer new business if they were satisfied.

"Really to me, it's about taking great care of your partners, your suppliers, your customers and your employees," Reinhold said. "That’s been my focus."

PUBLISHED SEPT. 22, 2014