Bob DeMarzo, "The Channel Man", Forecasts Solid '05 Through Indirect Sales Efforts

After working in the trenches of VARBusiness for more than two decades, Bob DeMarzo has pretty much seen it all. That's why we caught up with him this month to get his thoughts on two hot channel trends: the direct vs. indirect sales model, and product vs. solutions focus.

For the few uninitiated ones, DeMarzo was recently dubbed by Marketing Technology Magazine as "The Channel Man." It's an appropriate name because few individuals understand the reseller channel and solution provider marketplace as well as he. Having spent most of his career helping solution providers and IT professionals sort through the most complex issues impacting their businesses, DeMarzo has been omnipresent on the pages of CRN and VARBusiness for more than 21 years and is considered the voice of the channel.

In addition to maintaining a close working relationship with Core Strategies, DeMarzo — in his role as a CMP Vice President and Editorial Director of VARBusiness —has been the driving force behind the magazine's transformation into the industry's leading-edge publication providing strategic insight to technology integrators.

DeMarzo's been observing the cyclical nature of channel selling since the early ‘80s, and has seen direct and indirect take their turn on top. Now, however, he believes that the indirect model has reached critical mass. Why? Because manufacturers are not necessarily good at distribution, and direct selling actually costs them money.

"Today the flow is strong on the indirect side," says DeMarzo, adding that the one exclusion to this rule is Dell, which has a unique business model that other companies have been unable to emulate. "The economics of indirect sales is simply more efficient."

DeMarzo's sage critique bodes well for the channel as a whole. "Next year, given the modest level of growth during the past few months, the channel will grow with optimism to a three-year high. We're definitely encouraged," he said.

Along with coming to terms with an efficient sales model, DeMarzo said savvy channel marketers are developing a fine line between product and service. "Service has become a wrap around," he says.

DeMarzo notes that service is the ideal way to prop up product margins that have fallen from double digits to single digits during the past 24 months. "Resellers must drive needs assessments and business processes, and realize that the bulk of their profits no long will come from their product alone."