'It's about not giving away margin to underperformers' - Pure COO on changes to partner incentives

Former Cisco channel boss and Riverbed CEO says Pure can’t give away margin to ‘non-performers’ as he hints at changes to incentives

Pure Storage is planning to drastically reduce front-end incentives for partners and instead push incentives to the back end of deals.

That's according to former Cisco channel boss and Riverbed CEO Paul Mountford, who was drafted in as Pure Storage's COO in November.

Speaking to CRN sister title CPI, Mountford (pictured) said that Pure plans to move benefits to the back end through "contra-revenue" deals, which he claims will lead to higher gross margins for Pure and its channel partners.

He said that Pure has been "giving away margin" to underperforming partners through upfront rebates. Now Mountford will look to increase engagement among Pure partners by pushing rebates further down the sales cycle and incentivising them to sell across its expanded portfolio.

"We have Pure Rewards which is still at the front as the unique thing we do in looking after partner salespeople. But all the other upfront incentives have moved to the back and they are contra-revenue-type deals where we are agreeing business plans with partners," he said.

"It benefits both sides. It's about [a way to] enrich gross margin without it being eaten away on the street. With me, with Pure, it is about how do we not give away margin ourselves for non-performers. We are happy to pay more if we see that partners are meeting the criteria we are trying to achieve."

The flash storage pioneer has previously come under fire from storage rival NetApp for encouraging a "transactional" relationship with its partners instead of building a longer-term business through back-end incentives.

Channel-only Pure Storage made some drastic changes to its go-to-market approach last year. It rolled out a new distribution model in Europe in April - transferring more partner engagement to its distributors.

Then in December, global channels and alliances boss Michael Sotnick's role was split in two, with Sotnick taking charge of its alliances business while its Americas channel boss, Andy Martin, stepped into a global channel sales role.

Claiming to be largely responsible for building Cisco's channel as it exists today, Mountford said that one of his main objectives at Pure is to increase "yield per head" among its partner base.

"Back in the day at Cisco the challenge was, people were buying our routers and switches but they weren't buying the security or the blade servers. At Pure we have the same thing; we've been very successful with flash arrays, but now we've got Cloud Block Store and Pure as-a-service that we're taking customers on a journey with. The more portfolio I sell, the richer the experience with the customer and the more yield we get per head," he said.

"How do you get more yield? You sell more of the portfolio. You leverage the channel to sell, so they're doing it for themselves because it's compelling for them.

"A lot of sales teams in the industry have a portfolio they can sell. But more often than not, if there's a product they're used to selling and they can make their quota by selling it, then they will just continue to sell that. If it's easy, then why not? So sometimes you've got to force the behaviour a little bit. And you do that through incentive schemes and margin swaps and contra-revenue and activity together in the market."

While NetApp has taken swipes at Pure's channel strategy, Pure has similarly targeted NetApp's channel after the storage rival withdrew its field teams across swathes of Europe and fell back on a distribution-only model.

EMEA channel boss Matthieu Brignone admitted in September that Pure had taken advantage of NetApp's withdrawal and won over displaced partners as a result of the move.

Mountford quipped that NetApp's financial performance indicates a business that needs to cut costs and said he wasn't surprised by its switch to a distribution-only model.

"I dare say that when your last quarter is as bad as NetApp's, then you need to look at your opex. That's what I would do. Your only option is to reduce costs and bring them in line with profitability expectations. So obviously you then have to think about reducing what you're doing.

"I don't know if that's the case, but going to distribution is a classic step because you can't afford to have all relationships direct and you can't afford to have all of the people. It's a classic consolidation play."