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Cisco rebates, tools promise higher channel revenues

Automating service contracts and finding new business are at core of new incentives for the channel.

Of the two new channel support programs Cisco Systems Inc. announced today, and one announced last week, the service-contract-automation tool has the biggest potential payback for channel professionals.

Every year Cisco and its value-added resellers (VARs) leave more than $1 billion on the table in deals with customers by not selling support contracts on new equipment or by not renewing the contracts on existing gear, according to Steve Blunt, senior director of global business operations for Cisco.

The Cisco Service Contract Center is designed to capture that revenue by automating the renewal process and highlighting equipment that is not covered, he said.

It is designed to make the process of getting price quotes on service contracts quicker and easier for channel partners, automatically monitor the status of existing contracts and keep data on a customer's equipment up to date and synchronized with the service contract data, he said.

Effectively managing and renewing service contracts creates an annuity for VARs -- steady, high-margin income that takes much less effort to sell or maintain than new products or services, according to Cyndi Privett, analyst at Viewpoint Research Inc. in Scotts Valley, Calif.

The other new service, called Cisco E-Consulting for Partners, is designed to compare a partner's sales results with those of other Cisco partners to show where a partner falls on the scale of success, and where the partner might improve. Cisco provides a series of best practice documents and other educational materials to help a partner shore up any weak spots, Blunt said.

Click here for more analysis of the new developments.

Both are aimed at Cisco 1-Tier partners -- that is, those who buy directly from Cisco rather than through a distributor or other partner -- and will go live March 27.

"Reigniting the Core," on the other hand, is a back-to-basics program designed to reward VARs who focus on core routing and switching products. It provides deal registration and larger rebates to VARs who bring in new customers for contracts of greater than $50,000.

It's an extension to Cisco's popular Opportunity Incentive Program (OIP) designed to "bring back margin opportunities when the partner is presenting the opportunity," according to John Growdon, director of core and data center products in Cisco's worldwide channels organization.

"When you look at advanced technology products, the margin opportunities tend to be larger, for obvious reasons," he said. "They're more complex, more services-rich; a lot of partners get caught in the middle of these massive shifts to IP telephony-based systems and other advanced technology."

The addition will benefit partners who sell relatively plain routing and switching products, but could be a major windfall to those who can stack routing and switching OIP benefits on top of advanced technology benefits.

"When partners are driving the opportunity, we want to reward them for that," Growdon said. "The OIP for advanced tech and this core opportunity incentive program extends protection to the partner, and gives special pricing to the partner when they find the deal and close the deal."

Cisco is also providing extra money to encourage partners to do whole-network assessments for customers -- a process that analyzes the hardware in a network to help gauge which need replacement or updating.

Partners can use Cisco's free discovery tool to create an inventory of a network, or data from any other tool that uses standard discovery methods and data. New business has to meet the criteria of the OIP to qualify for all the rebates, however.

"We're fairly flexible with this," Growdon said. "We have a financial incentive to help [the VARs] out; it's to drive joint sales, so it's a benefit to both, and it's to reward the partner up front for bringing in the business."

Let us know what you think about this story; email: Kevin Fogarty, News Director.

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