HP Sweetens PartnerOne to Boost SalesBy John Hazard | Posted 2006-03-27 Email Print
HP is driving VARs to grow their HP business with changes to PartnerONE membership requirements, attachment rebates and marketing funds that encourage partners to sell more HP across the board.
Hewlett-Packard is driving partners to grow their HP business with PartnerONE program revisions including a new, quarterly rebate, upfront Market Development Funds and membership level changes designed to encourage VARs to sell across the HP portfolio.
HP is placing more significance on "attach"—more HP product in the solution—emphasizing annual revenue for its PartnerONE membership levels and replacing its Monthly Membership Rebate with a quarterly Attach Rebate that rewards attached sales, the company announced March 27.
PartnerONE also streamlined its marketing apparatus to get more money, sooner to smaller VARs and align larger VARs marketing strategies with the vendor's.
The revisions create a more scalable, flexible program, that encourages VARs to grow HP revenue and sell complementary or related HP solutions, by offering deeper investment for fuller engagement across the HP portfolio, HP executives told reporters March 24.
"It allows partners to move up the value-added aspects of partner programs," John Thompson, HP's vice president and general manager, Solution Partner Organization – Americas at HP.
"We're trying to create an opportunity to fund growth of partners around the HP portfolio, around the solution. It creates a benefit for them to grow business and sell sister solutions."
HP executives foresee a scenario whereby partners selling a solution such as storage would see a benefit to include more HP products in the sale, "more attach" or to add complimentary solutions, such as Blade servers or Storage Area Networks.
Attach Plus Rebates
The cornerstone of PartnerONE alterations is the replacement of the Monthly Membership Rebate with the quarterly Attach Plus Rebate, which HP said rewards partners who attach, cross-sell and up-sell HP product.
Attach Plus encourages partners to "sell a little more HP," Thompson said.
"If you're already selling an HP solution, you have the chance to earn a more lucrative reward by selling a little more HP with it," he said. Thompson said it could encourage partners to swap HP for a competitor's product in a solution set or explore a "sister," or related, competency.
The program, open to partners selling $1 million in HP products and services annually, rewards partners based their attach rate as part of the full sale and calculates the rebate based on their performance against the previous year's attach rate.
Compensation is based on three levels, which are different for each of four HP business units—Software, the Personal Systems Group (PSG), Enterprise Storage and Servers (ESS), Imaging and Printing Group (IPG) and HP Services (HPS).
Partners must meet a sales minimum in each unit to qualify.
For example, a partner who sold $5.5 million, in Personal Systems Group products and services and had an attach rate of 14 percent ($825,000) in accessories and services, meeting the 10 percent year-over-year performance goal would earn a rebate of 0.25 percent or $15,812.
A partner who did the same PSG sales, but had an attach rate of 20 percent ($1.1 million), would cross the 15 percent goal for that business unit and receive a rebate of 0.75 percent or $49,500. A third performance goal for the PSG unit yields a 1.25 percent rebate.
A partner who did not meet the minimum PSG sales for the quarter or the attach rate, would receive no compensation.
Attach for the other business units includes ESS – software and accessories; IPG – color and multi-function products; and HP services – hardware.
HP rejected the monthly payment, because 30 days would not yield a predictable pattern of partner performance, HP officials said.
Program levels and marketing changes.
Beginning Nov. 1, HP is altering the membership requirements for its two top partner levels, Platinum and Gold, requiring Platinum partners to earn membership based solely on revenue, but lowering the annual revenue bar for both to increase the number of VARs eligible, HP announced March 27.
Gold partners will continue to earn membership based on a combination of revenue and certifications.
Partners will be grandfathered into their current program level for the 2007 fiscal year, beginning Nov. 1, but HP expects the revision to swell Platinum ranks about 10 percent.
The Business partner level remains unchanged.
Streamlined and Aligned Marketing
May 1, HP launches a streamlined channel marketing organization designed to get more money into demand generation and provide great coordination between the vendor and partners.
Gold partners will be able to design marketing campaigns aligned with HP's early in the quarter based on an outline of HP business unit goals and a spreadsheet to draft their own.
They will also receive MDF for those campaigns upfront, 90 to 120 days sooner than the current system, to encourage spending, said Tom LaRocca, HP's vice president of Partner Development Programs. The current system relies on partners to front the capital.
HP crafted the program to encourage partners to spend more on marketing and explore additional specialties, that would have been prohibitively expensive to market, LaRocca said.
"It's about getting the smaller partners to get involved in demand generation," LaRocca said.
"Smaller partners say, 'If I have to front this for 90 days, I'm going to spend what I can afford, not what I necessarily need to.' This puts the burden on us."
Available MDF is capped according to revenue, as before.
Platinum Partners, who spend the bulk of HP's MDF, will receive more tightly integrated coordination from HP, led by marketing consultants and Partner Business Managers who will work with HP's largest VARs and distributors.