Cisco Ups The Ante

In one of our top news stories this week, CRN Senior Editor Jennifer Hagendorf Follett reports that Cisco for the first time has implemented a bonus for its direct-sales force managers that is tied to channel objectives. Under the plan, bonuses for Cisco's direct-sales managers are contingent on their completion of regional sales planning that includes identification of top partners in the region, along with a detailed plan on how Cisco plans to co-market and work with those partners. Also for the first time, Cisco has implemented a bonus for its channel sales team tied to partner satisfaction. What's more, Cisco is contemplating a plan to extend that partner satisfaction bonus to its direct-sales force sometime next year.

This is where the rubber meets the road, and this can't happen soon enough. Cisco is moving hard and fast toward a channel model that forces its direct reps to recognize the importance of solution providers with specific technology (voice over IP, security, wireless, storage) and vertical-market expertise,rather than simply judging partners on pure sales volume. This is on top of the pro-channel compensation strategy Cisco has had in place for its direct reps for the past several years. Compensation is the biggest single factor in determining whether solution providers in the field,who are an extension of the vendor's sales force,are considered partners or competitors by a vendor's direct-sales operations.

The best-in-class plan is a pro-channel compensation model that pays a vendor's direct-sales force more commission for a sale that goes through a partner than for one that cuts out the channel. A channel-neutral model, which pays a vendor's direct-sales force the same commission for a deal that goes through a partner than for one if a sale is taken direct, is simply ineffective given the "I won the deal" ego of most salespeople.

Give Cisco credit. The networking giant is moving forward with a plan that absolutely incents its management team to get its partnering house in order. Cisco is one of the few vendors actually using compensation to encourage its field sales force to work with partners. As they say, money talks. Cisco is doing a lot of talking, and my bet is that its sales team is going to listen.

What do you think of the Cisco plan? Let me know at (781) 839-1221 or via e-mail at [email protected].