Creative compensation

By Channel Insider Staff  |  Print this article Print


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No matter how many support programs vendors put in place for their partners, solution providers always want more.

Creative Compensation

With model changes comes the need to adjust partner compensation. In an increasingly competitive market, where customers are looking to maximize tight budgets, revenue-boosting programs such as rebates and deal registration top the list of favorites for many solution providers.

Workgroup Connections, an IBM partner, for example, leverages both IBM's VAP (Value Advantage Plus) and SVI (Software Value Incentive) programs to bolster its bottom line. The VAP program offers additional margin, up to 15 points, for selling IBM products and adding a services component, while SVI provides deal registration, said Carol Schreiber, Workgroup Connections president. "By using both programs, we can make up to 40 percent off of our sales, which is huge," Schreiber said.

Solution providers are willing to go the extra mile to earn the additional margin. To qualify for IBM's VAP program, for example, Sirius Computer Solutions gathered three references from its customers and put its people through additional training, said Darrin Nelson, vice president of software sales at Sirius.

"The middleware sale is not a simple commodity sell, but rather a solution sell, as cliché as that might sound," Nelson said. "Customers want to understand the total cost of implementation, including services, before they buy the software. This program helps us quickly engage them, bundle up the total solution and receive extra compensation for it." Solution provider TekLinks works with Cisco to make sure the solutions it sells qualify for additional margin through Cisco's SIP (Solution Incentive Program). "If I partner with a manufacturer of a product that has built a specific solution, they can go to Cisco and get it certified and get special pricing," said TekLinks President Stuart Rayburn. 

Influence Pays

Increasingly, large or complex projects may demand the efforts of multiple partners working together. Traditional partner programs reward only the partner that signs on the dotted line even if other solution providers played a role at some point in influencing the sale. This, of course, leaves some providers in the lurch.

"A solution provider may have a relationship with a large customer and, although they might not be the sole provider, may have a lot of influence in what they buy," Crimson's Charles said. "Vendors have to think more about influence as a factor." IBM's SVI program re­­­­wards partners for influence. The program requires comprehensive documentation, but the return is good, Workgroup Connections' Schreiber said. "In our first quarter using the program, we got a six-figure check for our efforts," Schreiber said. "The money makes it worth it." Another deal registration program that gets high marks from channel partners is Cisco's OIP (Opportunity Incentive Program). By registering its deal, the solution provider is guaranteed the lowest-possible product pricing.

"This is a well designed and implemented deal registration program," TekLinks' Rayburn said. "Without it, I could spend a lot of time trying to sell advanced technology, only to have someone order it close to our cost or below from a large mail-order shop."

Playing Matchmaker

As the recognition of influence indicates, often multiple partners participate in a single sale or customer project. Partnering has become a way of life for some solution providers, and many keep an eye out for other providers with complementary offerings. It's another area, solution providers say, in which vendors can play a pivotal role.

Symantec, for one, has accepted the role by setting up a partner locator for providers. "Resellers we see are looking at new ways to partner to get new customers, since it is getting more difficult to figure out how to invest in their own business," Parish said.

Crimson's Charles said that, as a whole, vendors' matchmaking abilities leave much to be desired, often relying on portals with stale information. "A lot of these portal efforts are underwhelming," Charles said. "What is lacking in these portals is more engagement on the part of vendors in helping partners utilize the information there." The best efforts are based on Web 2.0, Charles added, citing Cisco's Partner Space, where solution providers can meet and mingle in a virtual conference environment.

"We are using 2.0 technology be­­cause it's more relationship-based," said Wendy Bahr, vice president of U.S. and Canada channels for Cisco.

Through Cisco's portal, partners can set up a virtual booth to demonstrate their capabilities and interests and then mingle with other partners. "It makes it easier for them to connect with other partners with a shared in­­terest," Bahr said.


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