Part of a Series: Are Your Alliances Missing the Money?
- 3 Steps to Monetize Your Strategic Alliances
- Step 1 – Build a Complete ATM Bridge to Your Customers
- Step 2 – Set up your Alliance and Bus Dev organizations to both “hunt” and “farm”
- Step 3 – Choose the Business Model that Matches How Alliance Solutions are Sold
- Measuring Alliance Impact:
In last week’s post, Measuring the Impact from Your Alliances and Solutions, I talked about the options to measure alliance impact and how most alliances end up with a meet in the channel business model. In another recent post, Choose the Right Model for Your Alliance , I talked about when this model makes sense, and when you should look at other models like OEM and Resale. The challenge with the “meet in the channel” business model is that it is hard to measure since there is not a unique product sku that you can report on in your systems. The key to measuring revenue impact is to tie your alliance solutions to your deal registration system.
Before we talk further about the alliance nuances of deal registration, let’s step back and look at what forces led to the creation of Deal Registration programs, their wide adoption and the value to vendors and their channel partners have evolved. Figure 1 below outlines the drivers and stages of adoption.
Figure 1: The Evolution of Deal Registration
State of the Channel – 2002
In 2002, there were two interrelated problems that were impacting effectiveness and measuring channels. Those two problems were 1) channel conflict and 2) deal invisibility. Vendors provided margin to distributors up front, but could not see deals in the pipeline because there was not systematic way to share (or require) deal data.
Vendor Perspective Summary: “I can’t manage the process to drive revenue through my channel!”
- “I’m already giving 50 points to the distributor – and they want more”
- “I don’t know what deals we will close this quarter. Resellers won’t share data till it closes!”
- “My Distributor data tells me what has already happened. I want to be able to influence deals early in the sales cycle!”
- “Our execs plan to reduce channel investments – they just don’t see evidence that more $ leads to more sales…”
The Resellers also had a big issue (that led to issues for vendors as well) in that they could invest months in pre-sales work and POC to prove out a product with a customer, but then customer’s engaged their purchasing department to put the project out for open bid. Since all resellers were treated the same in terms of the discount available to the vendor a hungry reseller who had zero investment in the deal could win on price. That made channel partners angry, but also made vendors sit up and take notice when these same resellers stopped investing in the critical pre-sale work that is needed to drive new technology adoption.
Reseller Perspective Summary: I developed a deal but lost when it went out for bid. I can’t afford to invest in your product…
- I’m not comfortable sharing my deal data before it happens – you’ll get the order when the deal is ready…
- I developed a deal but lost when it went out for bid. “NEVER AGAIN will I invest in your business – unless you find a way to protect my investment…”
How Deal Registration Program Value Has Evolved
Phase 1 – Channel Conflict
Initially vendors deployed Deal Registration to gain control over the channel conflict issue. The basic process vendors used (and use today)
- Register a deal in a deal registration portal (typically partners have to document that it is a net new opportunity and that the partner has done work on the deal
- When deal is approved, the partner will get additional margin on the deal when it closes
- That margin effectively provides protection from other resellers “swooping” the deal
- For example if a vendor provides 30% margin to Distribution on sales to the registering channel partner and only 15% margin to all other resellers, that added margin eases the channel conflict issue.
Phase 2: Deal Visibility
As vendors implemented deal registration to address channel conflict, an interesting thing happened – they found that the additional margin they provided for registering deals was an incentive for their channel to share their pipeline with them – before it closed!
- Vendors immediately began to see a much higher percentage of their pipeline that was being built by the channel and they began to build more trust with their channel partner on working together on deals
- Registration has provided a programmatic way to engage with the channel on opportunities, but I would say that this is still a gap in the industry. Deal Reg should help partners implement their channel Rules of Engagement (ROE)– but many vendors do not have ROE and what they have often lacks teeth… (just ask a channel partner for war stories on this over a drink sometime and listen to the venting…)
Phase 3: Platform for Targeted Incentives
A further value of deal registration is that it can be a programmatic and scalable way to put targeted incentives in place for your channel.
- Let’s say you want to provide added margin for a limited period on new your product offering. Before Deal Registration this would have been done with special pricing and even special skus at Distribution – but this process is quite manual and does not scale
- With Deal Registration, a vendor has a ready-made vehicle to implementing a special incentive. Want to add margin for a new product? Make the added incentive a part of your deal registration (leveraging your Deal Reg System, your sales/channel operations staff and any outside vendors you use to process transactions or Deal Reg incentive payments
State of the Industry – 2010
By 2010, most technology vendors were using Deal Reg for channel conflict, many were leveraging the added visibility and a few had made Deal Reg the vehicle for managing their channel incentives – but many/most vendors I’ve seen have along way to go and are still operating in the Deal Reg Stone Age” But how does all of this affect measuring Alliances and Solutions?
The critical thing to recognize is that your channel partners are selling solutions every day – and these solutions include your products and the products from other technology vendors. (your Alliances).
- From a vendor perspective – You have no visibility to what deals they are working that include both you and a particular alliance. And if you run a joint GTM programs like webinars, trainings, you will have a hard time tracking revenue impact with traditional Deal Registration (for some exceptions, see “Measuring the Impact from Your Alliances and Solutions,”)
- From a reseller perspective – You are working these deals with multiple vendors, but you have to register the deal separately with each of the vendors – and they each have their own entry forms and convoluted rules. It is just too complicated to administer and hard for your to “Productize” (see The Recipe for Productization) these offerings into repeatable sales. More complex and hard to track makes it less likely you will invest in selling these solutions…
For the Vendors and Resellers to develop a more scalable approach to selling solutions, something has to change (and that is where “Solution Registration” comes in… Figure 2 describes the evolution of Deal Reg that has led to Solution Registration.
Figure 2: Beyond Deal Registration to Solution Registration
The key things to understand about Solution Registration is that:
- Resellers can:
- Register all of the components of the solution (i.e. multiple vendors) in one Deal Registration portal. This portal is typically connected on the back end to the Deal Registration system from each of the vendors – so all registrations go through the same process and are in the same database of opportunities – but with unique coding
- See all of their opportunities in the Solution Registration portal, and often in their instance of CRM (like Salesforce), through plug-ins
- Vendors can:
- See the registrations for their products AND for other vendors (assuming that you have an agreement in place to share solution data)
- See these opportunities with all of the underlying territory assignments, so they can see data, run reports and get their sales teams engaged in deals – for example: Registered Deals for Solution A that includes Vendor X in Northern Wisconsin territory
Since solutions and alliances are increasingly how IT is bought in today’s virtualized and cloud world, the ability to drive and measure solution sales and alliance impact is increasingly important – and it is important for technology vendors to get their Del Reg programs “Out of the Stone Age”. One of the leading Solution Registration vendors is a SaaS vendor called VARtopia, who has been in business for nearly 5 years and works with leading companies like Cisco, NetApp and VMware.
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