In its Third Annual State of the Channel Study: Channel Conflict & Deal Registration, trade association CompTIA painted a picture of mixed experiences for partners engaged in deal registration programs in 2013. While the CompTIA report affirmed the importance of deal registration programs to partners -- more than eight in 10 channel firms said the existence of a deal registration program is a critical or significant factor in their decision to partner with a vendor -- partners complained of program flaws, citing poor communications, technical problems with deal registration systems and inconsistent or unenforced rules of engagement.
Of the 350 IT company executives surveyed for the report, CompTIA said more than one-third believed a system of best practices would improve the current state of deal registration programs.
Consulting company PartnerPath and CEO Diane Krakora recently answered that call in a webinar, titled, The Principles of Effective Deal Registration, which offers guidance and best practices for vendors building or redeveloping their deal registration policies.
The question is 'Why? Why are you looking to do deal registration?' Other than, 'Everyone else is doing it,' why are you or any vendors implementing deal registration?
Krakora's webinar focused on "the higher-level principles," or the fundamental first steps, for creating a successful deal registration program. Vendors must, she said, align the deal registration program with corporate goals, motivate partner selling behavior, assess the level of trust partners have for the vendor, sell the program internally, and measure the program's effectiveness.
According to Krakora, in order to be successful, deal registration programs must align with the vendor's corporate sales and marketing goals. Otherwise, what's the point of having a deal registration program? "The question is 'Why? Why are you looking to do deal registration?' Other than, 'Everyone else is doing it,' why are you or any vendors implementing deal registration?" Krakora said. Answers to this question could include: to create pipeline visibility, reduce channel conflict or generate more product-specific demand.
Part of the reason deal registration programs are attractive to vendors is they are a means for influencing channel sales behavior by driving and recognizing good selling behavior. Krakora recommended vendors use financial incentives, such as front-end discounts or rewards, to motivate the selling behavior of partners' sales staff.
Partners, meanwhile, see deal registration from a different vantage point. For Harry Zarek, president of Canadian solution provider Compugen Inc., the whole point of a deal registration program is to "recognize the selling activity that happens upfront."
"The idea of deal registration is we get an additional discount on our costs so we can price it reasonably, competitively, knowing there will be multiple bids potentially, but still make a decent margin that will cover our sales cost," he said.
CompTIA's report points to a complication in the idea of using deal registration to motivate sales behavior: Many deal registration programs extend only to a fraction of a vendor's partner community. According to the report, only a quarter of channel firms said the majority of their vendors offer deal registration participation to their entire partner network. Sixty-eight percent of channel firms said most of their vendors limit deal registration eligibility to top-tier partners of their program or certain types of deals and/or product sales.
Krakora also recommended vendors determine the degree of trust partners have in them. Of the five principles she covered in the webinar, Krakora said determining trust challenged vendors the most, partly because their past wrongdoings continue follow them. "Trust is an issue, because we've heard so many stories over the last 10 years about a partner that registers a deal into a system and then, magically, within 72 hours, there are all sorts of people in their deal," Krakora said.
"I think there was a basis for [channel mistrust]," she said. "I think it's getting better, but … once burned, those stories become folklore and have a life of their own. Partners go to conferences, and they sit around having cocktails, and they share [stories] with each other. … It becomes cocktail fodder."
According to Krakora, resolving consistency or credibility problems, such as significant conflict with its direct sales team, is critical when implementing a deal registration program. She pointed to three areas in which a vendor may compromise trust: compensation policies, protection of data and engagement rules.
Loosely enforced engagement rules may have resulted in a conflict that one channel partner experienced with storage vendor Nimble Storage in February.
Jason F. Sparks, vice president of storage and systems at Oregon-based value-added reseller (VAR) Xiologix, said, "Every vendor has in place rules of engagement that talk about the registration process and what happens when you do have registration. For the most part … the generalized rules are something like this: 'We promise we won't go into this account without you; you promise you won't bring in multiple vendors.'"
According to Sparks, Xiologix had obtained a deal registration from Nimble Storage and was working with the vendor on a multimillion-dollar opportunity before Nimble Storage broke the rules of engagement by giving dual registration to a partner that Sparks said Nimble Storage favored more. As a result, Xiologix gave up the Nimble registration and sold competitor EMC's technology to the customer instead.
Although the conflict didn't end poorly for Xiologix, Sparks said Nimble Storage's action led Xiologix to terminate its relationship with the vendor, and he admitted months later he still holds a grudge. "Nimble Storage: They're not on my line card anymore. I don't support them anymore," he said. "I want to crush them in every account they want to go into because they broke the cardinal rule."
Nimble Storage has a different perspective on the incident. "We take our partner program and the ethics around that partner program incredibly seriously," said Mike Munoz, Nimble Storage's vice president of sales. "We put our partners first always. I think we've built that reputation in the industry. So it would really, really take me by surprise if somebody here did anything unethical in this situation."When Nimble Storage gives a registration to a partner, it holds the registration for 90 days, Munoz said. Within 30 days of registration, Nimble requires the partner to initiate a meeting between a customer and a Nimble Storage account executive. At 90 days, Nimble Storage will investigate the progress the partner has made for that registration and have a discussion about extending it.
Munoz said, "In this particular case, the meeting with the customer was never scheduled, so the claim was denied."
"From what I've heard, Xiologix was promoting [NetApp], but the customer was deciding not to go down the path of deploying [NetApp]. They came to us with the registration after that and went through the process of asking for registration with us, and our channel people reached out to Xiologix to discuss the opportunity, but were unsuccessful over a course of a long period of time [in] reaching the representative at Xiologix. … I also understand that we were engaged with the customer prior to Xiologix coming to us and asking for that registration."
"None of these programs are foolproof," Munoz said of deal registrations in general. "We've tried to design our registration program [to be] as fair as possible, and we think that it is. … We process a couple hundred of these deal registrations on a weekly basis. We've been doing it for several years, and it's rare for us to have a conflict. In fact, I was combing through my memory bank and could not think of a single conflict that we've had where I've had to get involved."
Krakora thinks vendors generally have improved and understand the importance of maintaining the channel's trust. "I think the systems are better, the policies are better, and I think we as an industry of vendors have learned that we can't do bad behavior like that," she said. "But I think that the bad taste in the mouth is still out there, so we've got to continue to be more vigilant, because now any misdemeanor becomes a felony."
Krakora also stressed that vendors must get internal teams on board with deal registration programs. The challenge here, she said, is that a deal registration program generally demands resources from every department. In some cases, department members might not have experience with supporting a deal registration program, and will require recruitment. "Partnering touches all aspects of a vendor, and you kind of have to go through and enroll your compatriots and [show them] why this is such a great thing [and] that they have to take time away from their 'real job' to help get this program out the door," she said.
Finally, Krakora advised vendors to establish formal metrics of success so their deal registration programs can continue to be reworked and polished. Metrics in the program can reveal whether the program is driving new leads, increasing partner profitability and decreasing channel conflict, she said. Furthermore, she said formal metrics also develop awareness of partner contributions and provide visibility into their performance.
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