Deal registration schemes have long been a staple of most vendors’ channel programmes. And it is hard to argue with the reasoning behind them: vendors get to recognise and reward their most committed partners, while resellers that display the effort and expertise required to win new custom are able to protect their margins.
But, with VARs needing to chase every pound of profit more doggedly than ever, there are those in the industry who suggest deal reg programmes have become little more than a lucrative loophole that the canniest players exploit, sometimes at the expense of rivals that are more skilled or better suited to the customer in question.
Vendors, particularly at the more value-oriented end of the market, are seemingly becoming hip to this trend. Security firm Fortinet made no secret of the fact that its new deal registration framework offers VARs no extra discount, but is instead geared towards hands-on support (see opposite).
Chris Walsh, sales director at Fortinet distribution partner Exclusive Networks, agreed trends in the security market differ between broad-brush anti-virus vendors and more specialised or niche technology.
“If you look at larger vendors, when they operate through a broadline distributor where the left arm may not know what the right is doing, [deal registration programmes] may be open to abuse,” he said.
“I think we will see more and more vendors go down [Fortinet’s] route. That would not work in the cutthroat anti-virus world. But if you look at our products, none of them are commoditised. These are products where deal registration is so important. Some of the deal turnaround times are three to six months. Partners need to know that their investment is protected.”
Alex Teh, director of fellow security distribution outfit Vigil Software, claimed initiatives such as deal registration schemes are “fundamental in building a successful and motivated channel”. But management is key and VARs should expect to be asked to demonstrate having qual-ified the deal through demos or proof-of-concept exercises, he said.
“One of the biggest issues with deal registration schemes is that some channel partners simply register all potential sales in the pipeline without proper qualification,” explained Teh.
“This can undermine the whole system, making it difficult to determine which submissions are genuine and which are simply wishful thinking. Some deal registration schemes need to be put under the microscope to take an honest look at whether the process is really working and if it is genuinely creating opportunities.”
Andy Zollo, EMEA managing director at Fortinet rival Dell SonicWall, explained that his firm runs a deal registration scheme that tries to offer hands-on support and increased profitability.
“We will go to end-user meetings with the partner and offer additional margin [as well]. If [it appears] their cost of sale is going to go up, we offset that by giving some extra margin on the deal,” he said.
But Zollo agreed that policing deal registration schemes to prevent abuse is essential. SonicWall has a team of staff checking whether or not registered deals have been qualified.
“We do due diligence; once the deal is registered, [our staff will] speak to the customer. Sometimes we might get a ‘hang on - we have already closed that deal’ [from the customer],” he added.
Paul Barlow, managing director of VAR Servium, argued that deal reg schemes are still a key component of channel programmes, and that vendors have become more stringent in managing them.
“They are something we use, but we have very strict guidelines internally. [Our sales staff] have to have a real [opportunity] and need a sign-off from sales management before they can deal reg,” he said. “Everybody is aware that in the past, VARs - especially larger ones - got to the stage where they had a team just to look after deal reg. But the vendors are getting wise to that.”
Out on a whim
Ed Bullock, vendor and pricing analyst at managed services firm Networks First, claimed that his company tries to make best use of vendors’ programmes and has a member of staff whose primary job is to handle deal registration activities. He counselled that, for VARs still reliant on product revenue, deal registrations are key to maintaining profitability.
“When it comes to product, it’s all about price [for customers],” he explained. “Resellers have to have a good handle on the different manufacturers. A lot of resellers will put a relatively low amount of margin on the product sales - anything south of five per cent. When you are working on those margins, that is when deal registration programmes come into their own.”
Jonathan Lassman, managing director of VAR Network Technology Solutions, claimed his firm “would like to use deal registration programmes, but most are not worth the paper they’re written on”. He said that the market was “like the Wild West”, with deal registration decisions subject to the whims and preferences of individual vendor employees.
“One vendor in particular will give a better price to [another reseller], even if we have incumbency with the customer,” he added.
Lassman claimed that resellers registering the same customer with various vendors is as big a problem as VARs attempting to register their entire customer base.
“I know of one particular reseller where, let’s say there is a web filtering opportunity. They would register [the customer] with Blue Coat, Websense, Trustwave and every single other vendor,” he explained.
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