You've recently launched a new Reseller Lounge which gives more money to retailers through repeat subscriptions that previously went wholly to the vendor. Do you think this trend will become more common in the future?
It is difficult to predict whether other vendors will follow suit. What the vendors will do also depends on the channel. If the channel becomes vocal about participating in downstream revenue, vendors could start adapting.
We have seen several attempts at setting up revenue share programmes, but most of them failed – either because they were not simple enough, or because of a lack of transparency. These kinds of programmes only work if they are easy to implement for the channel partners, and it is paramount that the partners can monitor their own revenue. Finally, it must be easy for partners to recover the downstream revenue they are entitled to.
We think that our scheme addresses these requirements head-on. To participate in the programme, resellers basically just need to sell BullGuard products, and the Reseller Lounge is the portal where resellers can access, monitor and claim their revenue share. This setup will give us a competitive edge in the channel. But it's a bit more than that.
BullGuard has always been working with revenue share programmes because it is our standpoint that our channel partners deserve a share in the downstream revenue. In our line of business, the first sale to the customer is all-deciding. Once customers entrust their online security to a vendor, they are likely to continue renewing their subscription, and in most cases they will do so online.
We feel it is perfectly natural to reward our partners for making that allimportant first sale. Once that's done, it is up to us to protect the customer and give them a good BullGuard experience with a great product. If we do our job properly, most customers will remain loyal to our brand.
The programme appears to reimburse retailers for the rise in online sales or re-subscriptions. Do you think box product sales will continue to decline on the High Street, and will there be a time when software is only ever downloaded?
No, I don't believe in a future where software is only downloaded. The retailer's expertise will always be called on by consumers. I do believe that the trend of retailers being mostly called on for first purchases will continue, not only in software, but also in other product categories.
Also, a lot of the software sold in the UK today comes in the shape of a bundle, usually with a new laptop or PC. Many consumers will continue to seek expert advice on big purchases like a new computer, and consequently, many consumers will continue purchasing software along with it.
How will retailers have to adapt to keep making money out of software?
Credibility is the retailer's strongest weapon. Every consumer knows that online, anybody can make anything sound and look good, and most people are worried about getting cheated by some vague cyber set-up, with no one to hold accountable if things go wrong.
So basically, to be successful, the retailer should do what all good retailers have always done – offer honest advice and good service. And by this I mean know your business, and employ well-informed sales staff. A happy customer will come back or – better yet – spread the word. Good service always pays off.
On a much more practical note, retailers should be prepared to create packages or bundle software with hardware and other items. Offering package discounts will – in the current economic climate – enable consumers to continue spending.
Is the security market unique in this regard?
With security software customers, credibility is arguably more important than in many other markets. After all, security software is sensitive stuff. It's your insurance against a massive and – to most people – intangible threat, a threat that can cause devastation in your private life if you're not properly protected.
Trusting the wrong person or company with your internet security is a lot more serious than trusting the wrong person when you buy a new plasma screen.
What are the chief new security threats on the radar at the moment?
Let me start by making clear what will not change. Spam and viruses and other malware will continue to exist, in everdeveloping shapes and forms. It's a bit like asking the police what kind of new criminal behaviour they see. The bulk of the problem remains break-ins, car theft, drugs and violence – same old, same old.
We are seeing some new trends however, like the ever-increasing vulnerability of the mobile platform. Also, un-patched software and websites are increasingly becoming an attack vector for cyber criminals. Social networking sites have become a target for cyber criminals, too.
Online criminals follow the crowd. So if we all become obsessed with Facebook, LinkedIn and Twitter, and at the same time all start surfing away on our smartphones, then it is to be expected that the mobile platform and social networking media become targets for cyber criminals.
How do the current threats compare to that of five years ago?
In general, one can say that the scams have matured and the threats are more sophisticated. This goes for social engineered attacks like phishing, but also for the different attack vectors.
Five years ago, it was virtually impossible to get infected without clicking something, be it a malicious link in an email or a shady program download. Today, hackers are able to place code in otherwise legitimate websites, making us more vulnerable to clickless infections. Common sense alone is not cutting it any longer. Without proper security software you are vulnerable regardless of your level of expertise.
What are BullGuard's plans for the year ahead?
In the UK we are looking to double our reseller base by the end of 2009, compared to the end of 2008. We are achieving this through different channel initiatives, like promotions and the launch of the Reseller Lounge. A quarter into the year I am pleased to say that we are ahead of schedule. With Target, GEM, Spire, Enta, we have a good distribution line-up. A lot of our recent growth has come from Ireland where we are gaining market share quickly in co-operation with Midia, our local distributor.
We will be looking to open some new retail accounts, but the independent channel remains our priority as they are the true ambassadors of our products.