|Although they are still used by vendors, SPIFs rank lowest in terms of the importance to solution providers when it comes to sales and profits.
That is one of the findings of the 2005 CRN Channel Compensation Study. Only agent fees ranked lower in frequency than SPIFs among all the forms of compensation received by solution providers, with just 10 percent of respondents reporting receiving SPIFS paid to salespeople and 7 percent receiving SPIFs paid to owners. Only in the peripherals category did solution providers cite SPIFs as being among the top three compensation vehicles.
Don Richie, president of Sequel Data Systems, an enterprise solution provider in Austin, Texas, says he dislikes SPIFs because they can drive bad sales behavior, sometimes incenting sales reps to sell obsolete or discontinued products. Richie has implemented a strict policy against his sales reps participating in SPIFs without his approval. Our motto is we focus 100 percent on what is best for the customer regardless of SPIFs and compensation.
Tom Derosier, co-owner of CPUGuys, a solution provider in Hanson, Mass., said he also prefers vendors not offer SPIFs, but rather use solution providers as their professional services arm. I don't want a free Webcam, he said. I want the installation and support of the Webcam. None of the vendors are providing installation, maintenance and service opportunities.
Derosier said hardware margins are next to nothing because of the brutal product price wars being played out on the Internet. Companies are beating each other over the head to beat each other by a penny, he said. You can't make any money on product. You have to make it on service. CPUGuys makes about 80 percent of its sales from services and software, with only 20 percent coming from hardware, he said.