Editors Note: This is the second in our Ingram Micro SMB 500 Distributor Engagement Series exploring the benefits and value of distribution support services to small and midsized solution providers. In this installment, we look at the value of distributor-backed credit and financing.
When it comes to delivering IT solutions for their clients, most partners are adept at cobbling together disparate technologies from a variety of vendor sources to round out their offerings. But while most solution-provider needs can be found in the marketplace, the sticking point is finding a simple, cohesive way to finance up-front purchases for quick and profitable customer delivery.
Research indicates the most successful SMB-focused solution providers avoid this by taking full advantage of credit and financing programs from distributors like Ingram Micro Inc. Indeed, an overwhelming majority of highest-performing partners on the Ingram Micro SMB 500 list report regular and judicious use of the Santa Ana, Calif., distributor’s financing options.
One such company is Technical Integration Services (No. 2 on the 2012 SMB 500), a Fairfield, N.J.-based solution provider specializing in IT services for medical, financial and legal clients. According to TIS account manager Steve Rossi, the firm had been working with smaller vendors and distributors, but found the practice inefficient.
“We were spending a lot of time managing our distributors and didn’t have the resources – including credit — to really give our customers the solutions, services and support we wanted to provide,” Rossi said.
Rossi was instrumental in shifting much of TIS’s business to Ingram Micro with the hope of landing better and larger deals by leveraging Ingram’s credit and financing options, which include dedicated credit analysts and SMB sales teams designed to boost the partner’s buying power.
“A major factor that was holding things back for TIS was the lack of credit the smaller distributors were able to extend,” said Melissa Dreger, the Ingram Micro account representative assigned to work with Rossi and company. “After working closely with TIS, we were able to increase the company’s credit line and the business really took off.”
Since turning to Ingram distribution and financing, TIS has seen stellar results, posting 1,594-percent growth between June 2009 and June 2012, according to the SMB 500 research compiled by Ingram Micro’s Business Intelligence Center and U.S. SMB Business Unit and channel research services firm The 2112 Group, the parent company of Channelnomics.com. Rossi said Ingram’s larger lines of credit allowed TIS to land a lucrative, high-dollar deal late last year with even larger deals in the pipe for 2013.
TIS’s experience is mirrored by other high-performing partners on the IM SMB 500 list. Of Ingram’s top 500 resellers, 130 report “very high” use of credit and financing, leveraging the services for more than 50 percent of their deals. Another 279 say they take advantage of IM credit and financing between 5 and 50 percent of the time. All told, that’s 82 percent of the fastest-growing SMB resellers turning to the distributor’s financing options to facilitate deals.
Of that group, 373 Ingram Micro SMB 500 partners — or 75 percent — have a credit line of $20,000 or more, with 210 currently hold lines of credit above $50,000, 80 above $100,000 and 28 with more than $250,000 of buying power courtesy of Ingram Micro credit.
In an informal roundtable of SMB 500 members organized by The 2112 Group last month, all of the attendees reported using Ingram Micro credit services and 80 percent said they were doing at least some financing through the distributor.
In total, these resellers make up part of the 2012 Ingram Micro SMB 500 list, derived from the more than 20,000 U.S. solution providers and MSPs that work with Ingram Micro’s U.S. SMB Business Unit. The channel partners named to the list demonstrate a consistent, average three-year growth rate of more than 200 percent. The list also accounts for select criteria such as company size, overall technology category revenue growth and innovation with SMB business engagements.
The performance of the Ingram Micro SMB 500 is undeniably impressive: The average three-year growth is 219 percent, while average gross revenue is $15.2 million. The collective sales capacity of the Ingram Micro SMB 500 members is $6.53 billion, and the number of jobs supported by these companies is 72,150.
This is the second in our Ingram Micro SMB 500 Distributor Engagement Series exploring the benefits and value of distribution support services to small and midsize solution provider. In coming installments we’ll look at how SMB VARs leverage distributor-led technical support and training, sales and marketing assistance, services augmentation and more.