Time and again, solution providers tell vendors making more money is their top objective. Topping their wish lists are products with high revenue and profit potential. Vendors can’t always meet margin expectations, but they can enhance margins with incentives – and it’s these incentives that can make the difference in channel profitability.
How much money am I talking about? Vendors put billions in hard and soft incentives on the table for solution providers every year. It’s literally money and benefits sitting there for the taking.
Solution providers leave more than half of that cash pile untouched every year. Hundreds of millions of dollars in unclaimed rebates, market development funds and training vouchers go unclaimed. There’s so much incentive money sitting on the table, a cottage industry of former vendor and distributor specialists has sprung up to search and capture these monies on behalf of solution providers.
Do vendors make it hard to capture these sales and performance rewards? Of course they do. Making it too easy would lead to abuses, which would undermine the system. And solution providers are challenged in learning and reconciling the process of multiple vendors with which they work. The portals, qualifications and information required by one vendor will differ vastly from those of another. Processing complexity is a barrier.
Perhaps the biggest reason solution providers don’t capture enough incentives is they treat them as opportunistic rather than strategic. Many solution providers will say that incentives take them off course from their existing go-to-market plans. These plans are mapped to solutions comprising multiple products and services – and they are a necessity. Conversely, incentives are tied to specific products that don’t always mesh with these solutions.
And let’s not forget deal registration and protection programs. Many solution providers avoid deal registration, fearing their sales opportunity will be scarfed by direct sales or flipped to another solution provider. Admittedly, deal registration violations are known to happen, but the rewards greatly outweigh the risk.
Most deal registration programs come with margin incentives or, in worse case scenarios, compensations. A partner recently told me that one-half of its 250 registered deals were approved, which resulted in another 20 percent added the gross margin. Even better, the already discounted quoted price was locked exclusively for them. This is how deal registration is supposed to work; added benefit with decrease risk.
No one would ever suggest a solution provider abandon their plans and lose focus. But, solution providers could do better of incorporating incentives into their strategic plans. By making incentives – such as reaching a higher tier in the vendor channel program, looking for rebates for specific products when building solutions and applying for market development funds – solution providers can keep to their plans and still capture valuable, profit-enhancing support.
For some solution providers, chasing incentives requires investment. Appointing incentive specialists to audit deals, check POS reports and search for promotions will enhance, not detract from, a solution provider’s profit objectives. Better yet, incentives specialists will pay for themselves, as they’re uncovering money that would otherwise go unclaimed.
Every solution provider is challenged in reaching and maintaining profitability. Leaving vendor incentive money on the tablet just doesn’t make sense when every dime counts.
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Fernando Quintero is vice president of channel sales and operations for the Americas. He is responsible for McAfee’s partner relationships as well as building strategies related to sales, marketing, operations and profitability, while promoting product and services growth for more than 10,000 partners in the region. His focus and proven understanding of the channel, specifically around partner engagement, value-based productivity, speed of execution and agility, have marked his career with a consistent track record of achievements around the entire partner experience and adoption of McAfee’s products. He has been with McAfee since 2002, holding key sales management positions. Quintero previously served as McAfee’s channel director for the Latin America region.
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