Before VARs get involved with the digital homes market, there are some things they need to know about the industry.

Customer Acquisition Costs

VARs need to understand their customer acquisition costs before focusing in on the digital home-user market.  If your average digital home sale has $4,000 in gross profit lifetime value, it better needs to have cost a lot less than $4,000 to acquire that customer.

The Digital Homes Market and Cost Effective Business

As VARs, it’s VERY difficult to COST-EFFECTIVELY reach the target buyer in the digital home market. You typically aren’t going to find these folks at B2B expos, chamber of commerce events or industry trade groups. So you’re stuck with direct mail as one of the ONLY viable avenues.  And most VARs drastically underestimate the budget and skills required to do direct mail RIGHT.

What is Lifetime Customer Value?

Lifetime customer value is VERY elusive when it comes to the digital home market. Unlike a typical small business virtual IT arrangement, where you visit steady clients a few times a month, the digital home buyer isn’t buying ROI.  And they really don’t want to have even think about paying VARs for service after the sale. The digital home market isn’t about recurring revenue — it’s about largely a one-shot-deal product sale, which is a very 1990’s concept and a very difficult one on which to build your business unless you are very resource-intensive like Best Buy or Dell.

The Bottom Line About the Digital Homes Market

The digital home market is a very difficult one for VARs to manage.  Anyone that wants to get involved needs to think carefully about what will be involved in the process.

Blogged By:  Joshua Feinberg