How he maintains his composure when his company experiences growth that exceeds his original projections?
He adheres to an annual plan while also making adjustments for new circumstances and possibilities, with an emphasis on rapid payback times and ongoing innovation.
How he allows those at the bottom of the chain of command to make judgments using values as a filter?
Alex Tatham gives people who make decisions autonomy while also supporting them, encouraging them to try, and providing an open communication atmosphere with easy approachability to seek for help. He also avoids being unduly critical of them when they make mistakes.
Specifically, how he leads and manages his team?
Alex Tatham manages them by being a helpful leader who helps them advance in their professions. He searches for people who share his beliefs, are high on trust, and have a certain level of humility.
Marcus Cauchi: [00:00:00] Hello and welcome back to The Inquisitor Podcast with me, Marcus Cauchi. Today, it's an amazing privilege to have Alex Tatham as my guest. He's the managing director of West Coast. Now most of you will never have heard of West Coast, but in a moment, Alex will tell his story. In up to 2019, he managed to grow his business by 800% over the previous few years.
But this year till 2020, um, he's experienced even more exponential, hyper growth. And we are gonna investigate that story. Alex's business is really a distribution business, but there are many common themes with running a fast growth hyper growth business that we're gonna be exploring today.
90 seconds on your background
Marcus Cauchi: So, Alex, would you mind giving 90 seconds on your background please?
Alex Tatham: Of course, Marcus. And what a privilege it is to be here with you in the new year 2021. I'm Alex Tatham. I am west coast managing [00:01:00] director. Uh, I've been at west coast now for 12 years or so. Six years as sales and marketing director and six years as the managing director of the business. And my job really is to lead a business, particularly here in the UK, because we have a growing business across Europe as well. But really it's the powerhouse of our growing business as you are currently right.
It is a distribution business, but actually it has many different aspects. Now it's a large cloud business. We are a huge, uh, logistics business. We're also a huge, uh, configuration business and all of services, uh, that we now provide on behalf of many different resellers. So my job really is to make sure that we've got the right atmosphere and the nimbleness as a business to keep that incredible growth that we've had.
And perhaps again, you're absolutely right in 2020, we grew by 25%. So the group will do three and half billion pounds this year. And that makes, uh, west coast the largest privately owned [00:02:00] IT business in the UK.
Marcus Cauchi: So I, in effect, you've grown over a thousand percent in six years.
Alex Tatham: Yes. I think that'd be absolutely right.
How do you keep your head on straight when your ex experiencing growth that goes beyond any original plan?
Marcus Cauchi: Wow. Okay. So first of all, how do you keep your head on straight when, um, your ex experiencing growth that probably goes beyond, uh, any original plan cause the business that you started out with in January the first is probably not the same business by March the 31st.
Alex Tatham: I think it's fair to say that, that we tend to follow a plan.
We started the it's a calendar year end business. So what we really do is, is that we, we tend to follow a plan for the year that we sort of set out the various activities that we are going to do. What's interesting is you are absolutely right. By the time we got six months through the year, that tend to be a much more activities that we have to do or are thinking of doing.
And that is because there's external [00:03:00] factors facing the business. COVID Brexit, whatever you like, but also opportunities that come along our way. So a new vendor comes along and says, we'd like you to do some work for us. We create, uh, a new service that then takes off. Uh, so what we find is a lot of the things that we do tend to have quite a quick payback period.
And therefore given that that payback period happens fast and we want it to happen fast. Then we're always developing new things and not everything works of course, but there's constant activity of new stuff happen.
Attitude towards risk
Marcus Cauchi: So it, given that not everything works, I'm really interested in your attitude towards risk.
Alex Tatham: Well, listen, we, we don't make enough money to be hugely, uh, a risky business. And I think it's fair to say that that we're a distribution business. And therefore, whilst we may have this wonderful top line number, you know, our gross margins are just north of 3% and our net margins are one. So you know that isn't a [00:04:00] enormous amount of money, but can you given your own by one individual, you can live on 40 billion a year.
So, you know, it's fine. The key point is, is that who doesn't take much money outta the business. And therefore the joy is, is that we can reinvest all those profits back into carry on growing the business. And that gives all our suppliers, all our stakeholders. Great levels of assurance that we can continue this amazing journey that we've been on.
Uh, but in terms of therefore of risk to our customers, we clearly have to make sure that we reduce that risk, given that our margins alone. So therefore we ensure our debts. We have make sure that our ability to be able to ship goods that are extremely portable and attractive, uh, insured as best we can, are protected as best we can.
And, uh, we have to make sure that we're not taking undue risks and therefore, a lot of the projects that we get ourselves involved in don't require enormous amounts of upfront investment, some do by the way, but many of the [00:05:00] projects don't, uh, and they, what they require is plenty of fad effort that we're so good at giving, frankly.
And that's, uh, perhaps one of the key jobs that I have as a business.
So what kind of culture have you created within West Coast?
Marcus Cauchi: Then brings me to the next critical question, uh, around people and culture. Let's start with culture at the, uh, the bigger end. So what kind of culture have you created within west coast? First of all?
Alex Tatham: Well, I think the first thing is, is that it's very much a can culture can just owned by one of Britain's great he's entrepreneurial character.
The values that we have as a business are quite entrepreneurial. If that being innovative is one of those key values. So actually we're always looking to do something a little differently all of the time. And because we are privately owned that makes us very agile and nimble and the ability to be able to execute all these things incredibly quickly.
And we can really turn on a six [00:06:00] months still as a three and a half billion pound business. And I think that is the culture that we need there for everyone to live by. So effectively those core values that we have of being innovative. Being agile and flexible. And then the other three that we have are being, uh, brave.
So having a go yeah, and also being team spirited to act as a team of people here and finally to be unrelentingly excellent. Well, that really is our sort of key and that means we don't give up ever.
Marcus Cauchi: If we think about decision making, you're a fast paced business, there's a huge amount of activity going on. If any one person becomes a bottleneck, then that derails the whole thing.
How do you use values as a filter to allow people lower down the train of command to make decisions?
Marcus Cauchi: So tell me this, how do you use values as a filter to allow people lower down the train of command to make decisions?
Alex Tatham: Well, I think the first and most important thing is, is that we support people who make a decision. Have a go. I'd I'd never [00:07:00] criticized you for having a go. Yeah. If it's the wrong decision, then don't do it again.
But we'll, that'd much rather people have a go at this whole thing. And because that is that we manage our business, it as though that people are supported when it comes to that. And that mean that team spirited, that they can do that. If they are unsure, the other thing that we have as a business is that we all tend to sit on one large sales floor and that's clearly not true at the moment and not true all the time.
Because we have, uh, regional offices as well. But nevertheless, I want you to feel as though that there is, we don't have an open door policy because there aren't any doors. Yeah. And I, and Joe and our finance director and our Ops Director, uh, and all the directors sit on the main floor. There are 250 people all sitting in there, fairly crammed together and therefore communication is easy.
Ability for approach someone with who's unsure of anything. And to ask advice is all there all [00:08:00] quickly. And actually we give quite a lot of autonomy to each of the pillars and each of the different sales people within our business to do the right thing. And, uh, it soon becomes clear whether they've done the wrong thing and we, yeah.
We make sure that we don't overly criticize them for having a go.
Does that mean that you then have a culture where people are encouraged to admit their mistakes so that others can learn from it?
Marcus Cauchi: Does that mean that you then have a culture where people are encouraged to admit their mistakes so that others can learn from it?
Alex Tatham: I think that's a really, really good point. The answer is absolutely. And you feel as though that people are very open with their business to say, "I had a go at this is, I, I don't think this has got well.
Um, we learn from how we could do that better next time." And that really feels as though that we have that all the way through our management. So, which is very flat structure.
Recruitment is a manager's number one job
Marcus Cauchi: So that then brings me to the next critical point, which is fundamentally, I believe recruitment is a manager's number one job.
And if you hire well. And then you get the best out of those people. 95% of your management problems go out the window. But where people compromise on [00:09:00] recruitment, they're effectively buying a management problem down the road.
What are the qualities that you look for that may not necessarily be obvious to other people?
Alex Tatham: So my question is this, what are the qualities that you look for that may not necessarily be obvious to other people in terms of values, in terms of things like humility, coachability, those kind of qualities that run as red threads through the people that you hire?
It's a really interesting point because I think that you find that we hire so many different types of individual, depending on which particular teams and types of people that we are hiring. You are absolutely right though, is that we have a, a culture of hiring people that are better than you as a manager.
If you see what I mean. Yeah. Much easier. And you know, one of the things that I encourage all our management team to do is not only to hire people that are better than you. But also to make sure that you have good succession planning, because that allows us to continue to be able to grow the business and move you to a different part of the business to help [00:10:00] carry on growing that business.
So that creates a big internal job market that we have as a business in terms of our people. However, there's no one size fits all the most important thing I think is that they have an ability to be passionate about IT. Passionate about sales, passionate about growing a business and working in a business that just says can do, can do, can do all the time.
Successful businesses look for people who share their values
Marcus Cauchi: This is interesting. One of the things that I see really successful businesses do is they look for people who share their values, who are very high on trust. So you can depend on them. And they also more often than not. Have a level of humility, which means that they know that they're not the finished article and that they're willing to ask for help.
Is that something that you see within your team?
Alex Tatham: Uh, put it this way. I certainly [00:11:00] display that myself. Yeah. And, uh, uh, I, you know, I've been in distribution now for 25 years and I think it'd be fair to say that there is always something new happening all the time, Marcus. As a result, there was always opportunities to ask help.
Clearly a lot of people look to me for some of leadership, and I really want to make sure that I am a leader that they are capable of following, and capable of escalating things to, and they fell as though that they are supported. I often, if I go back to my career a bit and say, when I was, uh, the sales director of the business, one of the things that I did very often when people were underperforming, I used to go sit next door to them. Not to scare them, be witless, but actually to be able to help them.
And I like to feel as though that I can manage from underneath our people as opposed to on top of them. And that effectively tries to lift them to new, uh, business and hopefully get 'em to learn. And of course that doesn't work every [00:12:00] time, but I don't like to think that there are lots of people still at west coast today that have been there a long time that I helped at the start of their career. And I think that I encourage all my managers to do, uh, to manage it a similar style.
How much of your time is typically spent coaching your direct reports?
Marcus Cauchi: How much of your time is typically spent coaching your direct reports?
Alex Tatham: Less and less. I think it'd be fair to say. Largely because I think as the managing director of the business, yeah. Whilst there are a, a number of direct reports that I have, I think at the moment, my job really is to make sure that I'm leading the business at the front and I am, I'm encouraging our people, I guess, to be able to be their own person.
I think in terms of the style of management that they have, I would probably speak to all of them every day to make sure that they feel us, that they're managing in the style that business is comfortable with and, uh, and fits the values and culture that we have within the business.
Marcus Cauchi: Okay. And what about [00:13:00] the coaching culture at the, uh, down the chain of command?
Alex Tatham: Yes.
How frequently managers and department heads coaching?
Marcus Cauchi: How frequently our managers and department heads, uh, coaching?
Alex Tatham: We've already said that we've got this very open plan sales floor, very open plan team structure, obviously very different within this, uh, particular COVID environment that we've all been living in or in the past year. Nevertheless. Yeah. I think that what you find is that, that each team really reacts as a team.
They work together as a team and you can see that they're really trying to help each other. I think what you always find is, is there's lots of information given to the team. I have to say, here's how we're doing is, and here's some of the things that I'd like you to do. And then you find, I think that the managers particularly coach them from underneath in that, in that style that I just talked about, that I, I find so incredibly valuable is that you manage underneath our people and lift themed to drag them with you.
What about accountability?
Marcus Cauchi: Okay. What about accountability? [00:14:00]
Alex Tatham: Well, the most important thing in a organization that's growing like ours is really measurement against the numbers that you and the expectations that you have. I think one of the reasons for our success over the past 12 years has very much been the ability to be able to measure performance and so that you can inspect what you expect and make that incredibly open, Marcus, incredibly open.
So everyone sees everything. The ability now that we have with power BI, to be able to mine every part of our business every day, uh, every part of that data for every manager to be able to see some of these things is incredibly powerful. And I think that really does drive an awful lot of behavior. So accountability is much easier when you are accounting for your numbers.
How are you making sure your people are evolving constantly?
Marcus Cauchi: Okay. So tell me about the kind of training environment that goes on in the background. Cause if you're growing that fast, your job is not gonna be the same by [00:15:00] the end of the year as it was at the beginning. So how you making sure your people are evolving constantly?
Alex Tatham: There is a, a strong training division now clearly that there is plenty of standard training, like getting people on.
Yeah. Uh, when they first can join the business, making sure that they are inducted well, making sure that they are understand the values of the business, uh, really making sure that they feel part of this amazing growth story in our country. Um, But then of course, as they develop over time, they begin to develop new skills.
They begin to develop new and no one is on a, you know, this is the track that they're on, you know, because eventually they find themselves going somewhere else. So we have a whole range of training courses that we give people largely, uh, eTraining that you, that they, they would take because that's part of some of the skill sets that they have.
But a lot of our training, particularly at the management level is much more bespoke than that. And so actually what we do is we tend to hire external, uh, [00:16:00] courses, develop an external course for a particular group of managers where we have a particular problem. So there's constant and different training all the time.
There's nothing standard about our business.
Marcus Cauchi: So given the scope and scale, because you guys operate outside of the UK as well, don't you?
Alex Tatham: Yes, we do. Yeah. In France and in, in Ireland in particular, but we have. And European distribution everywhere. So, uh, yeah, it's a, it's an ever growing and ever geographically growing business.
How does your international expansion affect the way you build your team in terms of diversity?
Marcus Cauchi: So how does your international expansion affect the way you build your team in terms of diversity, in terms of cultural awareness and making sure that you're getting all these different perspectives so that you're not classically English school boy turning up in France and just shouting in belief that you're gonna be understood.
Alex Tatham: The first, most important [00:17:00] thing is a similar that you talked about earlier is to hire good people for the right job locally. Yeah. So it, it is no surprise that the leader of our French business has been running a French business. Yeah. For a long time in a similar way that our leader of our Irish business does something similar.
Of course we have some Pan-European business, uh, that is done, uh, with a multinational team and a multilingual team. But that's interestingly based out of our Nottingham, uh, office. Nevertheless, they aren't English as a business. It's really much seen as a multinational team. But then effectively, once you've got the right leader in each of those geographic locations, then I think you've got to trust to them to build their team and the culture that they need to build the culture in their local community.
Clearly we show them the culture that we have made work so well here in the UK, but the businesses look different in Ireland and look different in France because they are because that's [00:18:00] the nature of distribution. And you've really got to trust them in a similar way that I trust the rest of the sort of teams that we have within the UK here.
Marcus Cauchi: So to summarize my understanding so far, you hire great people. You encourage them, uh, lift them up so that you get the best out of them. Do you make sure they have the tools, resources, reporting information that they need to do their best work every day?
Alex Tatham: Yes.
Marcus Cauchi: You work with them to help clear the roadblocks.
And I'm guessing every now and again, protect them from acts of idiocy from above. And then to manage.
Alex Tatham: I apologize to them all for that. Yes
Marcus Cauchi: And then to manage inclusively and to trust them. So they all have a voice and they know that you've hired them because they're better than their manager or their, um, their MD, um, at doing that particular thing. Um, and you trust them to do their job and you don't punish failure.
Alex Tatham: I [00:19:00] think that would be a very good summation. All of that is a very good summation.
Marcus Cauchi: Excellent. Okay. So let's now look at distribution. A lot of people won't necessarily understand distribution.
Alex Tatham: Yes.
What distribution is versus being a reseller or a direct seller?
Marcus Cauchi: Um, so can you give us a sort of two minute framework potted history so that we understand what it, what distribution is versus being a reseller or a direct seller?
Alex Tatham: So I think it'd be fair to say that there is a reason that distribution exists and distribution has existed for since the early eighties, west coast was founded in 1984, to give an example. And distribution really started because a value added reseller who are west coast customers. Their job is different from west coast job.
Our job is to buy vast quantities and finance, vast quantities of products, finance the, the sale of these products. Make sure that they are logistically, uh, managed very well. And of course, we're now talking vast [00:20:00] quantities of products. West coast probably sells something like forty thousand orders a day. It's a lot of kit that gets transmitted through west coast, and often delivered single drop there to home. Of course the channel has changed so much over the course of that period, but of course, our also our job is to consolidate various orders, to make sure that we can package these things nicely and make it easy for our reseller customers to be able to buy ,hardware and software too by the way, because of course processes become increasingly complex in our industry.
And of course the vast majority of goods are done on something called ship and debit, which effectively means that all of these goods are effectively sold to each individual end user at a different price. So we buy them all at the same price. Effectively, depending on who you, as a reseller are selling to, each of them would have a different price.
So imagine [00:21:00] managing 40,000 different prices for the same product every single day. Well, that is what, one of the things that distribution does so brilliant and really managing the ability to be able to do that creates a extraordinary way of doing business. Now, this business has existed and a lot of times everyone says, well, why do we need this?
Well, of course, what you've seen is that the consolidation of distribution in that these distributions that get bigger and bigger and bigger, and our warehousing now is we have about 700,000 square foot of warehousing in the UK. Yeah. So fast quantities of space to be able to hold all these products.
There is of course, huge amounts of financing that goes on to support that. And our job really is to make sure that we help resellers with the right product. So actually they can focus on what their role is these days and their role has changed over the course of the, uh, of the channels development. But there are these days it's really to be a managed service provider for the end user. In that they are [00:22:00] managing the it on behalf of the end user. Managing the security, managing the hardware remotely through the cloud, managing and helping the, uh, reseller save money on their IT projects.
And of course, taking them on a digital transformation journey. Our job is to do all of the heavy lifting behind all that.
Are you B2B2B or B2B2B2C?
Marcus Cauchi: And are you B2B2B or B2B2B2C?
Alex Tatham: We are B2B to everyone. Fair? So of course we support small businesses, local resellers in a local community uh, that's servicing their local community. Uh, all the way up to the very largest system integrators, the very largest corporate resellers, and of course, vast quantities of retail business that we now do and drop ship on their behalf.
There's six pillars upon which the business is built: strategy, structure, systems, skills, staff, and partners
Marcus Cauchi: So again, to summarize, if I understand it correctly, there's six pillars upon which the business is built, strategy, structure, systems, skills, [00:23:00] staff, and partners.
Alex Tatham: Well, I think the first one is more of the most important of the lot. Yeah. Because actually our partners are everything to us. So the relationship that we have with the vendors that we have a distribution contract for, and the ability to be able to partner with our customers so that they are not transactional partners, but they are a, a much closer relationship that we have with those, that is the key to the whole business.
It is a partnership business. If you are just merely a transaction, uh, then effect your Amazon and, uh, uh, and they'll do it better. So our job is to make sure that we can really understand the requirements and the complexities of the end user and help our partners achieve that and help our vendors achieve their, their goals too, through their channels.
And most of the goods these days are delivered through a channel. You know, HP is 93% of their business goes through distribution and reseller channel.
Marcus Cauchi: Well, 75% of all products [00:24:00] globally are sold through the channel.
Alex Tatham: There we're.
Marcus Cauchi: Now, most people have no idea about that. This is one of the things that really there is a huge opportunity, uh, because I think a lot of vendors don't really understand their channel.
Often they see it as a get out sales free card or an unwelcome competitor. Now it also raises another important question, which is as a distributor, I'm curious about your recruitment policy with respect to partners, uh, reevaluated resellers. Cuz what I see in a lot of distribution is they feel that they have to have thousands, tens of thousands of resellers, but they don't really have that close knit relationship.
So they end up in a transactional relationship.
Have you got a deliberate policy of having fewer partners and being more selective in order to ensure that you can have that kind of closeness?
Marcus Cauchi: Have you got a deliberate policy of having fewer partners and being more selective in order to ensure that you can have that kind of closeness?
Alex Tatham: I think it's a really, really good point. Yeah. We will service any [00:25:00] partner, but clearly in some cases, when you get to a long tail, they'll have a transactional relationship because they'll buy for our website, they'll buy it online.
And, uh, and because we've got it, but actually where west coast up forms so well is really in that partnership tier that we have. And we try to get more people into that. So I,
Marcus Cauchi: So it's two tiers in effect.
Alex Tatham: It effectively, yes, that's absolutely right. Yeah. And I'm not saying I'm gonna ignore that transactional tier, but the, but, but more than 95% of our business comes from the top 1000 customers.
Marcus Cauchi: And how many customers do you have?
Alex Tatham: Uh, in total, across the groups about 14,000.
Marcus Cauchi: Interesting. Have you come across prices law?
Alex Tatham: No.
Marcus Cauchi: Prices law states that 50% of your production or your a, your results will come from the square root of the number of people in your organization or your distribution network and so on.
So I actually you've, uh, taken [00:26:00] prices law to another level because one in 14 is probably what about six? Yeah. About five, 6%. So, but it's really interesting that most organizations have a tendency to focus on the land grab and on the volume as opposed to the quality. So what I'm really interested in, in terms of your sales team and their prospecting culture, when I'm working with my clients, I have them focus on trying to create lifetime customers. So then when they're prospecting, they're prospecting for customers still gonna be a customer 5, 10, 15 years down the road.
Alex Tatham: Yes.
Do you feel more confident being able to prospect like that rather than just going for anybody?
Marcus Cauchi: Not to hit this month or this quarters target. Now, given that you are private, I'm curious whether or not you feel more confident being able to prospect like that rather than just going for anybody.
Alex Tatham: I I'd certainly say that that's the answer. We, we, we make sure that [00:27:00] we, we bring on people and give them the attention that they need, if that they are going to be a partner, that can grow with us and help us grow and we can help them grow. And it feels like a virtuous circle. Of course there will be lots of a business that gets done at that transactional layer, but our focus is really to try and help our customers grow themselves.
And of course a reseller, a lot of resellers are very different. Some of them are specialists. Some of them focus in particular areas. Some of them are vast system integrators that need help with, uh, with huge rollouts. There's no one size fits all. However, each of them are managed in different teams by different people, depending on their level of specialism and what they do in order to be able to continue to grow them.
Our account managers, their job is to make sure that they understand the strategy of their customer and can then deliver [00:28:00] that because that is what partnership is really on.
Partners help each other get better
Marcus Cauchi: Absolutely. Partners help each other get better. It's not always pretty. You can often end up in conflict, but as long as you understand the ground rules, that you are respectful, that constructive and creative conflict is a good thing.
Alex Tatham: Yes.
Marcus Cauchi: And you don't shy away from it. And that I think is one of the other areas in, uh, the channel that you often see being underplayed. Is that, uh, often people are conflict adverse and they won't confront the difficult conversations. They won't hold one another to account. And then that's just a downward spiral.
How have you made sure that your account managers are willing to have those difficult conversations?
Marcus Cauchi: How have you made sure that your account managers are willing to have those difficult conversations?
Alex Tatham: Well, if they're not, then they escalate, I guess. So, you know, I'm afraid I'm willing to have those difficult conversations. So eventually it comes back. It'll come to me some at some point. And if I'm not willing to have that conversation, [00:29:00] particularly when it comes to finance and here's a really important rule within our business, is that clearly some awkward finance or credit decisions have to be made by our finance and risk teams, not by our sales teams, otherwise that they would sell to everyone.
And so therefore, yeah, I must make sure that there is a, a separation segregation of duties between now clearly I can encourage that conversation to be had. But sometimes they're very awkward conversations and our finance director has those kind of conversations on finance and credit. I would have conversations regarding conflict of interest as an example.
So often of course, it's just that we are supporting a number of customers that are all bidding on the same bit of work. How do you manage that? Well, there is very awkward conversations, very often happening, and they all think you're favoring someone else. So it's a really difficult part of the business.
Nevertheless, our job is to try and help them all win. And, uh, we're try, we try to make sure that we have as level [00:30:00] playing field as we can and have, uh, ability to be able to make sure that our customers are all getting the same price from us, albeit through different teams and different, uh, parts of the business, but actually the key people who manage all this are really our vendors who authorize the resellers to get the pricing from us in the first place.
Marcus Cauchi: Okay. Interesting. So one thing that I see lacking in so many, uh, businesses, especially as they grow is that senior leadership and, uh, management have either no contact or very infrequent contact with their customers. And as a result, they're not listening, they're not hearing. And most importantly, if they do have those conversations, they're not implementing and feeding back what they've done as a result of those conversations.
How have you made sure that as a business you are speaking to, listening to, and acting upon the information your customers are giving you?
Marcus Cauchi: How have you made sure that as a business you are speaking to, listening to, and acting [00:31:00] upon the information your customers are giving you?
Alex Tatham: Well, I think the first thing to say is that is the key role that I have. I personally have. It comes from being a sales and marketing director of the business, very customer facing.
Marcus Cauchi: Yeah.
Alex Tatham: And I spend more time with our customers as to our suppliers and we have directors of our business, my, my teammates and colleagues that focused on dealing with the relationship we have with our key suppliers, because they are equally important, as you might imagine. You know, having an apple distribution contract is, you know, there are only three of us in the UK and, uh, clearly that relationship is incredibly important.
However, if we are successful at selling lots of apple product, as an example, my job is to make sure that we have good relationships with all those customers that we're selling apple products to. And I would spend more, more time. And certainly I would have plenty of customer contact personally. I think one of the things that we've done over the course of this pandemic, as an example, when everyone got sent home [00:32:00] last March is very much to say to all, all of our directors, make sure you speak to one of their customers and find out just how they are, because actually there is lots of difficulties in the marketplace at the.
And our job is to make sure that we have good contact with a whole range of customers, large and small. And of course that will be delegated down to a, uh, uh, to lots of managers within the business. Nevertheless, is that I think that we have a wonderful customer base and cause of their partners. Then I speak to them regularly about their strategy of the business and how I can help.
Non-transactional relationship and getting deeply involved in conversation with customers
Marcus Cauchi: Two things come out of this, one is that the relationships that you've formed are human to human. They're not transactional. And then you're not seeing the, uh, customer where, or the partner, whether they be vendor or reseller as a commodity or a utility.
And the second thing, and you've mentioned it a couple of times is getting deeply involved in [00:33:00] conversation about their strategy and how you can help them achieve the outcome because no one buys product, no one in the history of humanity has ever woken up and said, what I really want is a Rooter.
It's just never gonna happen. There's always an outcome that they, they buy it for. And unless you can get deep enough to understand their motivation, then it's very easy to sell them the wrong thing. So-
Alex Tatham: That's right. And that again, it's not necessarily us doing that. We need to understand the end users point, Marcus. That's why it's so interesting is, is we're not just understanding our reseller strategy, but who they're selling to and the outcomes they're looking for. So we've really gotta get all the way through the channel in order to be able to help the reseller deliver the right outcome for the end user.
Marcus Cauchi: This is one of the reasons why channel sales is the hardest sales job there is bar none. The only currency you have are influence and trust, [00:34:00] and both of those can be lost very quickly and they're difficult to earn. But one of the things that flabbergast me still is how often vendors put the channel in the hands of either a green horn salesperson, who doesn't have the scar issue, the experience, the understanding of business. Or Tim nice but dim who's kind of, um, you know, earning their retirement by being sent out to pasture.
Now where I see the top channel sales people, they are exemplary channel managers, I think are closer to a general manager than they are to a sales manager in terms of profile and makeup and channel chiefs are closer to being a CEO than they are to being a VP of sales.
What advice would you give to vendors to rethink their approach to recruiting and developing their channel salespeople?
Marcus Cauchi: So what advice would you give to vendors? Because no doubt, a lot of the problems that you face. With resellers are catalyzed [00:35:00] by having channel managers who don't really appreciate the complexity, the difficulty, or understand their, uh, reseller partners, strategy and reasons for being in business. So what advice would you give to vendors to maybe rethink their approach to recruiting and developing their channel salespeople?
Alex Tatham: Well, I think the first thing to say is take your channel seriously. Because as you pointed out earlier that 75% of all sales go through the channel, the distribution channel generally, and therefore treat the channel with that kind, respect that what we, of course it upsets me when we change a good account manager, because we've spent 18 months trying to get to grips with this account manager, all of a sudden they change again.
And that happens frequently. I understand that of course, account managers have to carry on moving on. They they've got their own career within their large vendor organizations to, uh, uh, to look after. Um, and of course, [00:36:00] uh, no one, uh, you know, likes effectively when west coast changed their account manager on an account.
Sometimes that's enforced of course, but say people move on. Uh, and as I've already talked about, we have a fairly vibrant internal market. Uh, nevertheless, yeah, change, therefore has got to be embraced and has got be good. But having a good account manager and a good channel team at a vendor has an enormous impact on their ability to be able to sell things well through the channel.
If they do this as an afterthought, then actually what they tend to find is that the, the channel won't take them seriously. The distributor can't really create a market for them and they, their channel sales will fail. And it feels as though that it's an afterthought. If it is an essential part of their strategy, then they should make sure that they give it at least as bigger focus as they give their biggest customer [00:37:00] direct customer.
Marcus Cauchi: Absolutely.
Alex Tatham: If I think about a manager of a, of an organization, then you find that those vendors that do that really have very strong managers at both a direct and an indirect level. And I think you can really tell that who does well in this particular instance.
How critical is it that there is that frequent communication and that they engage in one another's meetings?
Marcus Cauchi: And you, you said that, uh, a lot of your team will speak so, uh, you've got all the different, uh, areas communicating. One of the things that I see being deficient in many organizations is these silos are built up sales, marketing, customer success, finance, operations, and so forth. Again, if we are talking about the channel, how critical is it that there is that red thread that runs throughout all of them, there's that frequent communication and that they engage in one another's [00:38:00] meetings in terms of reporting, but also seeing, uh, the impact that sales has on operations, on distribution, on finance?
Alex Tatham: Well, one of the things that I think that you, you, you find is this, that if you are embedded and we're really now talking about distributor supplier relationship, uh, vendor relationship, as we, we call them at west coast, uh, I think that where you have those multi touches. So you are touching all parts of their business.
You are talking about their operations. So therefore the logistics, uh, works. You're talking about their finance department. You're talking about the sales and marketing departments that, uh, uh, you have those relationships with. They are at all levels. Then you find that you have that really strong partnership relationship.
And west coast odd enough, don't have 500 vendors that we represent. We have six. Now that's not quite true cause I make flippant slightly. Yeah. But there are six core vendors that west coast have an incredibly strong [00:39:00] relationship with. And we put a lot of beef behind that relation, that day to day relationship at every single level within that organization.
How quickly you could fix problems if you really have that partnership relationship
Alex Tatham: Clearly we also have some customers that we do something solo. The vendor, the two has a relationship with the reseller. So actually time that three way is probably where the channel works at its very best. I'll give you a really good example. There is a health trial company, uh, that it's serviced by, uh, a large reseller in the UK.
There are a global company, uh, that health trial, but it's incredibly demanding, uh, and incredibly flexible. Uh, it's only when the vendor, the distributor, the reseller and the end user themselves all into the same room. And once we did that problems emerged in the channel that actually you could take away very quickly.
Uh, just as an example, I remember the end user say, well, we're, we're selling these things all the way across Europe, all the way across the world. Uh, how do we manage the logistics? How do we manage the exchange rates? [00:40:00] I said, well, we'll just carry on buying in dollars and sell to you dollars all the way through.
And they said, well, we'll we're a US listed business. That's wonderful. And the problem went away like that. It was forever. Yeah. And it just amazingly how quickly you could fix problems if you really have that partnership relationship. Of course, that builds trust as well. So getting everyone into the same area into the same room is, is a critical part.
Marcus Cauchi: Very, very important point. So let let's explore in a little bit more detail, the challenges of onboarding new resellers, because again, I think very often you go through the courtship process. And what I see is, um, my, my pals, Zach Sells describe as head hunters, and basically you go to an event or an exhibition and you sign up 50 partners, all of whom just want to have your logo on their [00:41:00] wall a bit like your Tiger's head there.
And net result of that is they end up getting lots of non-producing partners. And, um, what, uh, Jay McBain research suggests is that if you do not help them make the second sale within the first 90 days, you have a massive probability that that partner will go dark on you. So all of that upfront investment in terms of marketing to them, recruiting them and theoretically onboarding them, provisioning them on your PRM system and so on is wasted.
How you go about making sure that you onboard your partner well?
Marcus Cauchi: So talk to me about how you guys go about making sure that you onboard your partner well.
Alex Tatham: Well, the first thing is, is that one of the hardest things of any of these relationships, particularly if it's a large reselling customer, is, is that negotiating the terms and conditions. And of course, that can be extremely complex for large customers.
Because they will have supply terms and conditions. And we have [00:42:00] west coast's supply to customer terms and conditions and frequently they aren't compatible. So therefore there is a prenup negotiation, uh, that happens.
Marcus Cauchi: Absolutely.
Alex Tatham: That's pretty horrendous experience. Uh, but normally it's a prenup and these things tend to go away once you get going.
The other thing, and, and once you imagine you get over that significant hurdle, yeah, you are absolutely right. Is, is that very often they may be signing you up for just one transaction. But of course, what west coast do is to make sure that we have our best account managers on those new accounts. And those account managers, their job is that they get paid on everything that that account does with west coast, everything. A and therefore they're involved in every aspect of that.
And if you are a good account manager at west coast, you are encouraged to not just speak to the purchaser as a reseller, but your job is to speak to the managing director, the operations director, the credit manager, the sales [00:43:00] director of that particular reseller, because you are involved in their strategy.
And as soon as you start involving them and say, we can help with that and they can you and he go, yes, absolutely. We can. And you develop that longer term relationship. If a reseller is just not interested in doing that, then that these things you do tend to go quiet, but it's amazing how quickly they come back again, because all of a sudden the opportunity reemerges or a similar opportunity emerges and they you up and go quickly.
We need to get back track. We're not proud. Well, well, we'll sell, I can assure you
Marcus Cauchi: Well, this then points to another fundamentally important area of sales, whether it's direct or in. That where you are selling to e even a small business of under 200 people, chances are there are three to four people involved in the decision.
Well, when you get to enterprise pre COVID, there were six to seven post COVID. That number has risen to 11 [00:44:00] decision makers and key influences. So if you do not have that coverage, then you're gonna be in trouble because at some point, someone will throw a spanner in the works, or they'll say, oh, that wasn't on my roadmap and the whole thing can go south.
How critical is account planning and account mapping within distribution for those key clients?
Marcus Cauchi: So my question is this, how critical is account planning and account mapping within distribution for those key clients?
Alex Tatham: I think it's really important. We're really good at this at west coast. I'm certain, that's one of the reasons for our growth, Marcus. And actually we have our top 300 accounts talked about the top thousand, but take the top 300, where there is a rhythmic.
A rhythmic account plan for each and every one of them. And of course that continues, uh, as, as the more accounts that we are able to do that with. But that revolves around either an annual plan. In some cases, a quarterly plan that you have with that account. So account planning, all the, making sure that we're doing the right [00:45:00] things, getting a bigger percentage share of that reseller's business is a critical part of west coast success.
And we are really good at it. And then of course, one of the things that we are also quite good at doing is asking those open questions of our customers to say, probably your problems. Tell me your problems, because actually the key selling point is if I could help you solve those problems, will you give me all your business?
That's not a difficult thing to say. It's quite difficult to deliver by the way, but, uh, but nevertheless, ill, then I'll then walk outta the room and go, I dunno how we're gonna deliver that. But my goodness, me, at least I know that there's a problem there. And if I can help, that's gonna buy some me some loyalty.
And of course we're in a luxurious position where we've got a number of our senior sales reps and partner business managers that can have exactly that conversation. That's, what're encouraged to do. What are your problems? If I can help with that? You give all your business. Yes. Thank you very much that's good.
Marcus Cauchi: For many sales people, that [00:46:00] actually is an act of courage. They need to get out of their own way. So again, what I'm curious about is mindset in terms of
Alex Tatham: They're gonna get out to get outta my way. Coz I'm gonna do it.
Marcus Cauchi: Okay. So tiger Tatum will be on their back.
Alex Tatham: I'm afraid. That is exactly. What's gonna happen.
Marcus Cauchi: Excellent.
Alex Tatham: Don't do it. I, the director doing exactly their job for-
Marcus Cauchi: Right. Okay. I suspect that's quite an uncomfortable conversation coming to headmaster's office.
Alex Tatham: It's, you know, I am surprised that you didn't do. It doesnt take take too many of those conversations to realize that
Marcus Cauchi: Sam Walton
Alex Tatham: Change that would training. But yes.
Marcus Cauchi: Sam Walton used to fly out and manage to their head office if a new employee left within six months. So wherever they were in the States, they got flown over and then they had to explain why that [00:47:00] new employee left. Um, so that rarely ever happened more than once. Okay so,
Alex Tatham: Delighted that we don't have that problem and flying anywhere is not gonna happen anytime soon.
Where you see the channel going?
Marcus Cauchi: So tell me this. Coz we're coming to the top of the hour, and this has been incredibly insightful. If you look at the future of the channel and you stare into your crystal ball, the channel's done really well this year. And I fundamentally, I believe that the future of success in the future is going to be down to organizations and individuals ability to collaborate.
So I'm very hopeful that the channel will start getting the kind of respect and attention that it deserves in the future. But I'm curious about your take on, uh, where you see the channel going.
Alex Tatham: As I explained earlier, that I've been in the channel for 25 years, [00:48:00] uh, I joined at 95, uh, distribution business and I joined west coast 12 years ago.
And given that I've been in that channel, the, the demise of the channel, of distribution, has been predicted by many commentators, many times. Whether it was licensing or the cloud or the internet, all of these things were going to spell the end of the channel of distribution. Everyone was gonna buy direct.
And that was the end of that. What's interesting is that the channel has increased and exploded and has more share of the business not less. And there must be a reason for that. Look at the past year, and it'll tell you those reasons. West coast, as a large supplier of product had geared itself up for Brexit part two over the, uh, the beginning of the year, this time, last year.
And of course what happened was that the Chinese new year at the end [00:49:00] of January got extended by a week and then Wuhan went into lockdown. And as a result, all of those people that were buying directly from the factory or directly from a vendor could no longer get the product that they were now. Not just a little desperate for, but utterly, utterly desperate for, because they hadn't implemented their disaster recovery plans.
Uh, and they hadn't, uh, anticipated that they would have to send everyone home to work. Who had all the product available, but distribution?
Marcus Cauchi: The best thing you did.
Alex Tatham: And distribution and the channel performed outstandingly well. For the NHS for the, the school kids that we are still supplying all of those products to, you to make sure those underprivileged kids get access to, uh, devices online. For every single large corporate that had to send all their staff home to carry on working.
And they're still there. All of these products were delivered by distribution, not directly. And as a result, the [00:50:00] share of the distribution channel has gone up. And the speed that we can react compared to a direct vendor model has just shown itself to be utterly critical to the success of everyone's disaster recovery plans and their COVID plans over the past 12 months.
Is this going to change in revert? I think that people enjoy the experience of super fast, flexible ability to be able to get products directly to an individual's home address, preconfigured and ready to go without having enormous amounts of bureaucracy. Uh, they really enjoy that experience and I cannot see the channel reverting or any vendor reverting to, oh, let's do it like we always used to do because the channel really have proved itself to be nimble, close to its customer, close to the problems that the customers have, end user level, and us at reseller level, and us to be [00:51:00] able to deliver that going forward has been tremendous. Now, by the way, who are the largest cloud partners?
The cloud is the latest thing that's gonna kill off the channel. Everyone's gonna go marvelous. We're gonna buy directly from Microsoft. Well, of course that's just not happening. The fact is the biggest, most successful partners are the channel partners for Microsoft.
Marcus Cauchi: Yeah, absolutely. And Google and Amazon. They all do through the channel.
Alex Tatham: What Amazon, a finding is is that they have this fantastic direct business. Absolutely wonderful. They realized that actually, where Microsoft were competing and I competing with them is that they had a much better partner side relationship with their, with their customers.
And Amazon did not have that. They treated them as transactional partners. And as a result, they are changing because it's the channel it's closer to the customer.
Marcus Cauchi: And a again, whether COVID, uh, persists for another year, which I think is probably quite likely, um, you know, even if we are rolling out the [00:52:00] vaccine, um, we we've got this at least until, uh, probably December to January of next year.
And I think the road warrior salesperson from the vendor, so had a bit of a wake up call. Because many of them haven't adapted well to selling virtually. I think one of the really big areas of growth is certainly over the next 12 months, no one in their right mind is gonna be putting a highly paid, highly skilled account executive into an aluminium tube so that they can breathe in other people's viruses with the possibility of, uh, quarantine of two weeks, either end plus the possibility of falling ill.
And if you want to scale and you wanna scale internationally, it just doesn't make sense to incur the massive fixed cost of a direct sales force. When you have people with local knowledge, local relationships who are on the doorstep and gets hop on a bike or, uh, drive up the road 20 minutes, [00:53:00] rather than ferrying people around.
I think a lot of CFOs have got to grips with the idea that their travel and hotel budgets can be massively slashed. So that's where I think there will also be another major boost. What, whatever happens after COVID. I think that will be another big catalyst for the channel to grow.
Alex Tatham: I think you're right.
And I think that whilst we all rather miss that face to face interaction of a customer meeting and we clearly do, because we are social beasts. As social animals and we like that kind of interaction. It's quite easy for me to say, well, if you really miss it that much, you know, have a zoom meeting and then get in your car for three hours and sing along to it and stay in your car for three hours and then have another zoom meeting.
Because quite frankly, that's what you were doing. Yeah. And it's in unproductive time and you are now much more productive. However, we still need that social interaction. I really appreciate that. There'll just be less of it. And I think that pitching for new business [00:54:00] does make it significantly better. If you are pitching to an individual, not on a, uh, on a zoom call.
Marcus Cauchi: I've found since lockdown, I'm having eight to 15 conversations, meaningful conversations a day. And pre lockdown I might have three to five and I wasn't unproductive. I'm not especially hardworking. I'm fundamental believer that salespeople should be hired for high intelligence and laziness. Minimum effort, minimum loss of life. But you can be massively more productive with these new technologies and what I'm really curious about, cuz I think the Renaissance, uh, within sales and business generally will be driven by new collaborative platforms.
So I'm very excited by how those will evolve. Alex, look, we've come to the top of the hour and this has just been amazing. Thank you so much.
What are you struggling with? What are you wrestling with at the moment?
Marcus Cauchi: Um, a couple of questions to wrap up on what are you struggling with? What are you wrestling with at the moment?
Alex Tatham: The big thing that we're wrestling with [00:55:00] apart from COVID, because COVID affects everyone all the time and someone asked me this morning to say, well, are, are our decisions the same as they were yesterday? I mean, it really is. It's still, you're driving along in a pretty foggy road. And you dunno where the cliff is, although that the good news is we've had a fantastic experience last year, but last year is so last year, uh, I know we're speaking on the, on the 13th of January.
Yeah. But my goodness me, that actually that feels a long time ago now because things are changing all the time. So you've gotta be nimble. You've gotta be really on it. Uh, and, uh, and constantly looking that. So that's something that really occupies quite a lot of our thoughts. Uh, the second thing of course is Brexit and exports.
That's incredibly difficult at the moment. We'll get better. Of course it will. But there are still some significant issues around that. And, uh, we're trying
to navigate our broad customers through that. And finally of course is we've still got this vast demand for product. [00:56:00] Vast demand for product and not enough supply. And I think that you're going to see that for almost the course of this year and as the year changes a bit and let's make an assumption that people are back into their offices a little towards the second half of the year.
And as a result, what they will then do is to reenergize some of their, uh, on premise, uh, and cloud projects that perhaps that they've, uh, been putting off for the past 18 months. Uh, I think you'll see a real change in the year, uh, as we go forward. However, the core thing that worries me at the moment is are we keeping our staff safe?
Are we keeping them, are the business going? We've got to make sure that our warehouses as safe as we possibly can, otherwise our business will stop. And if you think about it like that, that is the most important thing that we can do on a day to day basis.
What are you watching, reading, listening to that you recommend other leaders pay heed to?
Marcus Cauchi: So what are you being influenced by, in terms of what are you watching, reading, listening to that you recommend other leaders pay heed to?
Alex Tatham: Quite interesting is, is that when the first lockdown [00:57:00] happened, you got, got, you were incredibly good at, at logging onto all sorts of podcasts and things that perhaps you'd never dream were doing, you never had time to do cause you're probably in the car singing along to Adelle. Yeah. Well, I think that what you are doing now is be much more selective.
And the things that I really enjoy doing now are what I describe as venting meetings from businesses of different, uh, types. Sharing information about how, what, what, what good looks like what you did well last week and what didn't go quite so well, uh, to say you're trying to take hints and tips from others, uh, in the same leadership positions.
So I really like those sort of round tables that I've really taken part in because actually that always gives you ideas to move and to improve your own business. And I think that's where I've spent most of my time being influenced. So I'm being influenced by my peer group in different businesses.
What bit of advice would you have given idiot, Alex, age 23, that, you know, who've probably ignored?
Marcus Cauchi: Very good. Okay. One final question then, um, if you had a golden ticket and you could [00:58:00] go back and whisper in the ear of the idiot, Alex, age 23, what choice bit of advice would you have given him that, you know, who've probably ignored?
Alex Tatham: Well, it's a wonderful thing. Uh, I qualified as a chartered account when I was, uh, 23, I think from this conversation, most people wouldn't have put that as the primary thing that I would've based my career on.
Actually I would've joined the IT industry in sales much quicker had my parents not be more influential and said, you Johnny well become an accountant cause you'll never be able to work Alex. And it's the sort of thing. Yeah. That I find myself saying to my children now, except the, the same conversation I'm having with the 24 and 26 year old young techs is the it industry.
That's where it's all at. I'm rather hoping that that's good at. I've never regretted being, uh, qualifying as an accountant. But I think if I had my time again, I'd been in the it industry much quicker.
Marcus Cauchi: I'm [00:59:00] guessing that having a good understanding of the financial side of things has served you well.
Alex Tatham: Not too much but you did ask.
How people get hold of you?
Marcus Cauchi: How people get hold of you?
Alex Tatham: They are very willing to always drop me a line. LinkedIn with me of course, he'll find me easy on LinkedIn and I back him on LinkedIn. Uh, but if you wanna drop me a line and it's firstname.lastname@example.org, I don't have a PA I don't have tons of people, uh, uh, try to answer these emails for me. I'll answer them directly. And, uh, feel as though that you can, I really would love to speak to anyone who is interested in working with west coast.
Anyone that thinks that they need help. And, uh, if you wanna share your problems with me, I'll tell you how I can fix it.
Marcus Cauchi: And if you're a salesperson, make sure that you deliver value, you are timely and you're relevant and don't waste his time. You can tell he's a busy man.
Alex Tatham: Thanks.
Marcus Cauchi: So Alex Tatham, thank you so much.
Alex Tatham: Marcus it's a pleasure to see you and delighted to be able to kick off the new year with some [01:00:00] hopefully sage bit of advice.
Marcus Cauchi: Wonderful. So this is Marcus Cauchi Signing off once again from The Inquisitor Podcast. If you've enjoyed the conversation, then please like, comment, share and subscribe. And if you'd like to get in touch with me, my email is email@example.com.
Now some of you have asked me, what is it that I do? Well, what I do is I help companies that are driven by ambitious owners and founders to scale at hyper growth. So 200% compound growth year-on-year. Build sustainable, uh, businesses with strong fundamentals, highly engaged employees and lifetime customers.
So if that's the kind of thing that you'd like to chat about, then please do get in touch. In the meantime, stay safe and happy selling. Bye bye.