Panel 2: Progams
Channel programs are a must-have part of any vendor’s toolkit. But while these tools drive channel business, programs are also one of the biggest complaints heard among resellers. Earlier this year, CRN surveyed 150 resellers on best practice in programs.
Respondents told us that while program elements like lead-generation, rebates and discounts were all extremely important, they couldn’t replace product quality and support. However, when technology is of equal quality, the program benefits can become the differentiator. This is especially true at the disties tier, where they are selling the same product.
To unwrap some of the issues surrounding programs, and to define best practice, we gathered a group of channel leaders on stage at the Fast50 to thrash it out.
Anittel has partnered with many tier-one vendors, which has given managing director Peter Kazacos a firm idea of what works and what doesn’t. He praised those vendors that helped Anittel during its early days.
“We do a lot of Cisco. One of the biggest issues I have found is when the companies are small. When Anittel was small, Cisco didn’t see us as small; they looked at the individuals and what was the opportunity to get a result. Others will say, ‘Hey they’re not big enough to get a result, here’s junior rep, best of luck!’.”
He also admired vendors who took a longer view. But Kazacos has also seen much of the bad practice in programs. One bugbear is vendors that try to directly incent a reseller’s sales team. “When they give direct to our sales people, it creates a behaviour that is not aligned with what the company wants to do. For example, you have sales force and need them to sell a certain mix of product. Then one vendor says, ‘I will give you a Visa card worth X, Y or Z’, and it will sway salespeople to sell that. If you are a single product company, no problem; but where you are selling multiple products and services, it can skew the strategy.”
To overcome this issue, Anittel pools these kinds of incentives and shares them across the team.
“The other thing that has a negative side is accreditations. I am very supportive of accreditation, but the issue is that the accreditation follows the individuals and the individual can hold the company to ransom. They can move and the company can lose accreditation. You as a company can suffer because you spent a lot of money on this person and they left, and another company found an easy way to get them.”
Kazacos praised vendors with rules to weed this out. “I know some vendors won’t accept a new company for a few months to stop that kind of poaching. The vendor has to be the sheriff.”
He also recommended vendors use their power to stamp out damaging behaviours from buyers, such as “when the end customer plays the partner against the supplier”.
“He gets the partner to do a whole lot of work, because the vendors won’t do it, then once they have the solution designed, they go to the vendor.”
The other reseller on the panel, Somerville Group boss Craig Somerville, agreed that while some problems with programs weren’t the fault of vendors, the vendors must adjudicate the system.
Deal registration is a popular program element that is intended to protect resellers who put the work in. But Craig Somerville offered an example of how rogue partner behaviour could derail it.
“A customer puts a tender out and a reseller deal-registered it for two networking vendors. We were a certified partner for one of the vendors and we know the customer well. So we rang the vendor and said, ‘We want to deal reg it,’ and they said, ‘Sorry, someone else has already done it,’ so we didn’t put a bid in.”
However, the other reseller only put a bid in for one of the two vendors. This reseller had essentially roadblocked Somerville Group from pitching for the work, and also stymied one vendor’s chance to win the account.
“Stuff like that, the partner should have banned from deal registration,” he added. “Often it is partner behaviour that can be atrocious, but vendors put up with that.”
Somerville is a fan of vendor pro-grams that allow flexibility around credit terms. “Sometimes to get an extra 15 days of trading terms takes a whole lot of pressure of your cash flow. Say we have 30-day account with customer and a 30-day account with the vendor, and the customer finds an excuse not to pay in 30 days. Having that flexibility is very valuable.”
The topic of credit limits and terms was close to the heart of another panellist, Paul Mitchell, general manager of distribution finance at GE Capital. GE has been making a big push into the ICT sector, where it has been warmly welcomed thanks to the need for flexible finance, said Mitchell.
“Where we are having our wins is that time between paying for the equipment and when you get paid – the working capital cycle. We see financial flexibility in terms of enabling greater credit limits and longer terms as a key part of both the vendor and distributor’s channel partner strategy, arguably, as important as deal reg, incentive schemes and so on.”
After the panels concluded and guests moved to the 90-minute Fast Networking element of the program, GE Capital’s booth was flooded with companies looking for solutions to the finance and credit issues.
During the panel session, Mitchell told the audience how disties in particular were turning to GE Capital because it helped them remove the risk from their balance sheets.
Likewise, vendors are leaning on GE Capital to add financial elements to their partner programs. For instance, one PC vendor might use more generous credit terms and limits to swing a distie into preferencing them over a rival OEM.
The panel boasted three represent-atives from the vendor community with different experiences around building and operating partner programs. Daniel Campbell, channel manager of Fujitsu, shared some insight into how he had totally overhauled the company’s program. While the program was guided by Fujitsu’s global framework, “we started from scratch”, he said.
“One of the advantages we have as a vendor is a lot of flexibility to shape our programs at a local level. There was a framework but no real meat on the bone. We built the program from the ground up based on feedback from partners. It’s an acquisition, not a retention, program: it offers aggrieved rebates and a lead-gen program.”
As a more recent entrant to the commoditised server market, having this kind of generous program is a way for Fujitsu to convince partners to step away from their incumbent supplier.
“The main thing people kept bringing up is lead generation, finding ways to bring them business opportunities. We have gone through several iterations of our lead-gen program. As a vendor, you must appreciate that if you want a reseller to come across to you, there is a cost. We had to build a program that puts enough on the scales to tip it over to us,” said Campbell.
“A partner program is a fundamental ingredient. There are also things like product quality and competitive pricing up front, but certainly the partner program we built has been a key factor in our success.”
One elements that has also resonated with partners has been free training. Campbell said he recognises there is a cost to the partner “if they are going to send an engineer to do five days of training, so all of our training programs are complementary”.
Another vendor on the partner-acquisition hunt is ESET. The security provider is trying to aggressively grow its market share in Australia, and national channel manager Gerard Nunez said the program was an important tool.
“We give very high margins. We are on an acquisition cycle of business; we want to acquire as many reseller as we can at the moment. It is fair to say we are giving reasonably high margins – better than most of our competitors – and it is because we are young and new in the country,” said Nunez.
He listed a bevy of program instruments that ESET is using to gain traction in the local channel. “We tend to promise the channel we will protect their revenues and make sure they have a renewal protection scheme, as well as offer education, certification in our product, and we also offer free marketing materials as well as the use of our portal.
“But the high margins tend to get some attention. It is an easy conversation to have where the resellers can see money,” added Nunez.
A considered approach around licence renewals is another part of the current formula.
“At the moment there is a lot of discontent with certain companies. It’s not my place to say other companies are doing a bad job, but there are resellers with a serious concern around how renewal revenues have been treated. We are promising a complete change of scene in making sure they have their renewal option guaranteed.
“If a company was to sell our software, their renewals are protected for the next two years. If a customer decide to go to the web store and buy the software direct from our website, we would recognise that reseller’s income for two years until we start owning the support. If a reseller contacts that customer and the customer keeps going with them, we have no problem with crediting them with that money.”
While Fujitsu and ESET are both in the acquisition stage, the other vendor on the panel, VMware, represents a company with a very established partner community in Australia. John Donovan, VMware’s ANZ director of channel, says that while vendors are fixated on quarterly targets, the mark of a good partner program is one that is able to meet the needs of both vendor and reseller.
“It should look wider than just achieving vendor sales objectives. A good partner program should tap into engineering and services requirement. It won’t just teach them how to sell stuff, but also how to be the architects and implementation experts.
“If you look back over 20 or 30 years of IT programs, it was sales, sales, sales. Now we have a bunch of programs that help partners become the one to solve the customer’s problems,” said Donovan.
“Customers aren’t interested in your new piece of technology or how fast it is or why it’s better – what they are really interested in is, ‘How does this make a better outcome for my company?’. It is about how I can use this tech to create a better relationship with our customers.”
To better understand what partners want from a vendor’s program, VMware operates a local advisory council. Among the partners in the group, “a hot topic is around programs and profitability. A lot of times vendors assume that what is right for the vendor is right for the partner. Sometimes you don’t foresee things but the partners do. You build in extra rebates, but achieving that objective isn’t important to the partner,” said Donovan.
He also succinctly summed up VMware’s approach, which also happens to be a neat rule for the vendor community as a whole to take on board.
“It’s always good to engage and collaborate [with others] when you build the program.”
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