So tell us a bit about your new scheme.
What we’re announcing is revenue share for resellers. We sell into medium and small business, the reseller sells the license, and we then issue some extra functionality, for example archive or online backup, or family safety. And the customer, instead of going back to the reseller, goes to our online shop. But because we’ve linked the original customer with that reseller, it will get commission.
It’s time to marry those two channels together. And the reason we’ve done that is because our new channel team went out on the road, did a series of seminars, spoke to the resellers and tried to understand what’s working well and what could be better.
The one area that appeared to be an opportunity to improve things was how to get this online business working for them, and the solution came out as a revenue share.
So we already have a revenue share in terms of renewal. In this business, people buy from a reseller and then renew. But with new functionality coming through on that product, some of that new functionality is of a low sales value and that’s where the web comes in. The web’s a great place to sell that. So it’s bringing those two together – the efficiencies of the web, but we have also respected that the reseller has brought that customer to us, so we’ll give them the revenue share to do that.
Is this not a system that existed before?
The renewals bit has existed before, what we launched recently was the new products revenue share. It’s particularly relevant to the independent firm with a shop front.
So do you think previously retailers struggled to make money out of software? With something that has been so easily renewed online, you could argue there hasn’t been much point in a retailer stocking a lot of security software.
Those very small independent retailers either don’t track that there’s been a renewal, or it’s small monetary value. Naturally it’s not greatly in their interests to do it. We take that pain away, we renew it for them, or if a new module comes through, we sell it for them. We want to respect the fact that they brought the customer to us, and not get that friction you can sometimes get between the two channels.
Was there a lot of friction?
I don’t think there was friction with us particularly, but it’s a fact of the IT channel that you have reseller and online. I’ve always wanted to do something better than that, something we can share with the reseller.
So could this model could spread to a lot of areas in the IT market?
We’re looking to draw more resellers to AVG, and we think this is an important part of why they would. Selling it will be profitable, and we’re going to share this online/offline business with them. The fact is consumers and businesses will buy online, and it’s just about sharing that and not cutting them out of that opportunity.
Allied to that, we’ve put a big investment in team in the UK, with sales heads and technical support staff. If you talk to resellers and ask them what’s important, they say margin, and if we’re going to be there at 8pm when they’re fixing a customers server. And we are, we have 24-hour support.
So is the way software is being sold changing? Is this indicative of the market going in a different direction?
One of the directions the market is going in is clearly mobile – tablets and smartphones. Recently we’ve released a new mobile product for Android. And that fits well where we’re going, which is a big focus on SMB. Because a lot of small business and entrepreneurs are running their businesses off of smartphones – and increasingly tablets as well – that’s clearly where a lot of the market is going to be going over the next six to twelve months.
A lot of that ties into cloud storage. But one of the biggest problems that seems to be facing the mass adoption of the cloud is the high profile security cases that often, rightly or wrongly, make people question how reliable things online are. What role do security firms like yourself have to play here?
We haven’t got a cloud-based technology other than Live Kive, which is a consumer archiving service. We’ve not gone down that road just yet, but clearly its something that’s developing out there. Right now we’ve got a strong SMB product set, and that’s doing very well for us.
So in a nutshell what are AVG’s plans for the next 12 months?
Our plan is to continue to strengthen direct contact with our resellers, and our reseller programme. We’re looking to get more loyalty from existing retailers, and bring more resellers in. That’s our plan to get into the SMB market.
We’ve increased our sales and support staff by 50 per cent, and we want to build that direct relationship with resellers.
And the mobile push?
Mobile is an increasing opportunity for our resellers, and for us. And we’ve got a good product out there to help combat the threats.
But do you think there’s more education that needs to be done there? People used to talk about needing to convince the general public of the need to get security on their computers, but I personally don’t know anyone who has, or who would probably consider, installing security software on their mobile phone.
Personally where I think its really going to grow is on the tablet. As I was saying, entrepreneurs and small business are using smartphones to run a business, they should have the protection, because they are going to be vulnerable to threats, and tablets are just going to strengthen that requirement really.
That’s on the business side, but businesses tend to be a little more savvy anyway, is there anything more that needs to be done with the general population?
Yes, and through social media, which is a big area for AVG, and through general marketing we’ll be highlighting that those devices are at risk.