What's the deal?
By Diane Krakora
Maybe it's just me, but it seems as though everyone is designing, developing or implementing deal registration programs. It seems deal registration progressed from an innovative idea to increase visibility into partner sales and increase partner profitability to a program must have in the last 6 months. Ross Brown from Citrix summed it up with the statement - if one vendor has an effective deal registration program – all will.
What is deal registration and why is it so important?
In short, partners can register new deals with a vendor, be guaranteed some early vendor support during the sales cycle and, most importantly, receive additional margin points when successfully closing the deal.
What used to be seen as a process to increase visibility into partners' influence within the sales cycle and to increase partner profitability, now helps validate the resources applied to influence partners and is seen as a vital way to minimize channel conflict – either direct to channel or channel to channel conflict.
Gateway's deal registration program, for example, is aimed at minimizing the direct sales team's conflict with channel partners. The program defines specific rules of engagement for registered opportunities. For example, if the account is not on the Gateway named account list and the Gateway direct sales force is not engaged, the opportunity will be registered to the partner and Gateway direct sales will not complete. If the account is on the named account list or the direct sales team is engaged, Gateway will disengage if the opportunity is greater than $20,000 and the partner can demonstrate a strong relationship with the account.
Cisco provides a good example of the second reason deal registration programs have become so popular, minimizing channel-to-channel conflict by providing additional sales margin to the partner that generates the demand. The goal is to help the partners that are making the market and driving demand to stave off competition from the higher volume, lower value-add channels that simply offer a lower price point. The reseller registers the deal on-line and the Cisco channel organization verifies the deal is an incremental opportunity. Once the deal is approved, the partner has 6 months to close it and receive an additional margin discount.
In talking to several solution providers, they had mixed feelings about deal registration programs. Don't get me wrong, they love the extra discount — to either be competitive in a deal they have been massaging or to take to the bottom line. Still, the additional administrative work can be overbearing. Consider an example of a small regional reseller working on a dozen deals a month — with a half dozen products involved in each solution.
Now that we've addressed some of the reasons and challenges of deal registration programs, here are 5 key elements of effective deal registration programs:
1. First and foremost the goal is to motivate behavior, so a sufficient discount or reward is imperative. The typical motivator has been money in the form of back-end rebates or additional margin points for the deal. The back-end rebate is much simpler to manage, but it is slightly less of a motivator than providing additional margin to the deal before it closes. This is simply because sales people typically hate administrative work and are often compensated on a percentage of the overall margin of a deal. Thus providing additional margin opportunity will motivate them more than the back-end rebate — as the sales person may never see the rebate dollars. The rebates are often simply added to the partners' bottom line by the CFO.
2. It is also very important to define and communicate the partner eligibility and purpose of the program. For example, deal registration may only be available to the top level of solution providers registered in the partner program — the elite or premier levels — or to deals over a specific size, for example, over $10,000 in the vendors' products. The purpose of the deal registration program might be to track opportunities in specifically defined verticals or within a specific product category. We see these specifics playing an important role when the purpose of the program is to accelerate the promotion or sales of a new product or shift the partner's business engagements to a solution focus.
3. The third element clearly defines the qualification required before registering the opportunity. This ensures a partner doesn't simply register every company from the yellow pages. It is important to clearly articulate the partners are registering a specific opportunity, not a customer. Thus the registration should include information such as the department and a specific solution to resolve the business need. For example, one partner may be working on a networking deal at Stanford University Medical Center and another might be working on security — both leveraging Cisco products. The registration should be more detailed than Stanford University Medical Center IT. Also, to ensure there is an active opportunity, the deal registration criteria might include specific's on the customer sales cycle.
4. Along with defining partner eligibility and the opportunity qualifications, most deal registration programs also define a specific timeframe within which the opportunity must be closed. This depends on the product and solution sales cycle, but often we see a time window of 6 months. It seems that most companies — Cisco, Microsoft, Oracle, BEA — believe the sale should close within 6 months of registration. Many programs also allow one extension or renewal of an opportunity that did not close in the 6 month window, effectively providing registration for a year.
5. Our fifth key element is a simple and efficient registration and approval process. Typically, the process is automated with a web based form for the partner to input the opportunity, electronic workflow through a database and email to acquire the necessary approvals and rapid communication of acceptance or denial of the pending opportunity. The most elegant solutions are fully automated through a partner extranet; however, many vendors are still effective with some manual intervention by the channel sales managers.
One of the most important aspects of the system implemented to manage the deal registration is a guarantee there will be zero leakage of information — either to other internal sources or to other partners. The goal of a deal registration program and process is to encourage a particular partner to communicate
About the Author
Diane Krakora is President & CEO of Amazon Consulting, a consulting firm based in Silicon Valley, dedicated to helping high tech clients increase profitability by effectively developing and leveraging partners. For more information on Amazon Consulting, please visit http://www.amazonconsulting.com.
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