Scheming for deal success
Most deal registration schemes do not work, says Alex Teh
Teh: Too many deal registration schemes encourage 'ambulance chasing' by VARs
Most vendors offer deal registration schemes and many promote them as a bonus of becoming an authorised partner, enabling resellers to qualify for additional discounts on major account deals.
Yet our experience has shown me that most of these systems are flawed and don’t work - either from the perspective of the vendor or the channel partner.
Their aim, generally, is to:
• Track major deals, to assist in forecasting sales
• Help funnel resources towards closing these deals
• Minimise channel conflict
• Identify potential conflict, where the vendor has its own direct sales force
• Reward channel partners who generate and add value to opportunities
• Stop ambulance-chasing
It may sounds good, but these registration schemes encourage a land grab by certain types of channel partners. In other words, the reaction of some channel partners is simply to register all potential sales in the pipeline.
For many large tenders, at least six or seven potential suppliers will be listed and many more looking to bid, so the problem becomes obvious. Most deal registration systems lack the intelligence to differentiate genuine submissions from those that are simply wishful thinking.
There must be a way to demonstrate a dealer’s proactive investment in time and energy, and to determine if the customer is also in fact engaged with that partner.
Also, additional dealer margin offered is frequently so slim it is not worth bothering about. In many cases, the margins offered by vendors to the large channel players, who have negotiated the top level of discounts, can still outbid an authorised dealer with a few extra margin points. So the smaller dealer is still unable to compete.
Not to put too fine a point on it, most of these vendor-managed schemes are failing to deliver any of the benefits they were originally designed to achieve. They are far from motivating partners to raise their performance; they can have completely the opposite effect.
The vendors’ aims are laudable, but clearly some process is needed that will highlight and funnel resources towards key account opportunities and minimise the potential for discounting within the vendor’s own channel. Done correctly, this should instead focus attention on competing successfully with the competitor’s channel to win a deal.
The key thing is to have insight and contact with both the channel partner and the end user. The dealer needs to demonstrate a clear knowledge and proactive involvement in the account. This could include conducting a demonstration, having a meeting with the client or undertaking a trial proof-of-concept for the customer.
The second aspect involves verifying the end user’s commitment to the channel partner. If both elements are present, the deal will be successfully registered. We have found such an approach very successful, although it is also quite resource intensive from a management perspective.
The results should speak for themselves. Handled correctly, the process is fundamental in building a motivated and successful channel.
In the security business in particular, most vendors want to add value, rewarding and motivating partners that generate business. The partner delivering the value has to make enough margin – which in most cases should be upwards of 20 per cent retained.
A vendor business cannot thrive with a channel that adopts an ambulance-chasing mentality. Some vendors need to put their deal registration schemes under the microscope to see whether the process is really working, and to ensure they are offering enough margin to the partners that are genuinely creating opportunities, rather than those that prefer to buy their way into deals.
Alex Teh is commercial director at Vigil Software