Making Channel Promotions Work Better
For most channel partners, admitting that you compete on price is almost like confessing sin. Most channel "coaches" implore partners to avoid such behavior.
The reality is that helping clients take the best advantage of current manufacturer and software provider promotions has long been a competitive advantage for the best integrators in our industry. Licensing expertise is as valuable as technical acumen. Configuring a less expensive solution is still highly valued by many clients.
When taking advantage of vendor promotions, the partners' assumption is that they will be kept whole, achieving the same margin performance they would have without the promotion. Someone else, either the manufacturer or the distributor, will absorb the discount.
This does not, however, take into account the hidden costs of vendor promotions.
One old channel joke that stopped being funny long ago is that you could employ people full time whose only job is to process promotions, rebates, SPIFs (sales performance incentive funds) and other "back-end" dollar programs. Any reseller who employs such people will find no humor in that. Just cost.
Another hidden cost-element is simply time—the time it takes to process the promotion and receive recompense. Fear of reprisal still keeps many channel partners silent about it, but in private conversation, you will hear many whisper of how close they've come to going out of business waiting for a major vendor to pay for their participation in various customer-benefit programs, including discounts, rebates and vendor-funded service deliveries. They will admit how stunned they are that such large companies delay payments to their small companies so skillfully.
Most promotions involve three participants, not including the customer. These are the reseller involved in making the sale to the customer, the distributor from which they obtain products, and the original equipment manufacturer or software provider. For many years, these three parties have wrestled with each other to complete the necessary paperwork, confirm the actual purchase and then reimburse the distributor and the reseller. Many manual processes, homespun Excel spreadsheets and other devices have been created along the way, along with much angst.
Automating the Mechanics of the Channel
Vendors who seek to cause no harm to their channel partners while making compelling promotional programs available to them might take a look at Channel Mechanics, a relatively new entry to the marketplace.
Channel Mechanics, a software developer that launched in the United States at the end of 2015, offers an automated solution for handling promotions. According to their own executive summary, "Using a SaaS [software-as-a-service] platform, Channel Mechanics configures, communicates, launches and monitors market promotions in real time. This allows differentiation of the partner base, instant flexibility to change offers and the ability to bring true solutions to an increasingly commodity-driven channel."
The Channel Mechanics process, managed within their cloud-delivered application, is a straightforward approach to what is really not a complex procedure:
--The vendor selects the kind of program they wish to run from the Channel Mechanics SaaS portal and fills in all the details. The program may be a straightforward discount, a trade-in program, a try-before-you-buy program, a comprehensive solution bundle or any of several others. The portal allows the vendor to profile their customer to better focus promotional efforts, and to monitor the progress of each promotional program with great granularity to help determine which initiatives are performing best.
--The reseller obtains full information on the program and all products involved directly from the Channel Mechanics portal. They can easily configure offerings to customers and, when an offer is accepted, create a "virtual entitlement voucher" (VEV) that becomes the vehicle through which they claim reimbursement through the distributor of their choice.
--The distributor who is fulfilling the offer confirms the details of each promotion using the portal, and processes reimbursements from the vendor by using the VEV number provided by the reseller. They, too, benefit from the deal-tracking capabilities provided by Channel Mechanics.
Processed properly, promotional programs driven through the channel can be more profitable. This service unites the interests of resellers, distributors and manufacturers.
Howard M. Cohen is a 30-plus-year IT industry veteran who continues his commitment to the channel as a columnist and consultant.