CRN Research: Small Solution Providers Tough Critics Of Vendor Channel Programs

Data from CRN' s monthly channel satisfaction survey was broken out for hardware channel programs offered by vendors IBM, Cisco Systems and Hewlett-Packard, and software channel programs offered by vendors Microsoft and IBM, and was based on the annual revenue of the solution providers rating their satisfaction. The breakpoint between small and large solution providers is set at $5 million in annual revenue. Between 451 and 706 solution providers, depending on the vendor in question and the size of the VARs, rated channel programs during the four-month March-to-June period.

The results show that small solution providers had a lower overall level of channel satisfaction with these vendors' programs compared with larger solution providers, with a single exception. CRN defines the overall level of channel satisfaction as the percentage of solution providers satisfied with channel programs minus the percentage dissatisfied.

The differences in satisfaction ratings between the two groups of solution providers were largest for IBM.

Looking at hardware channel programs, IBM's overall satisfaction level was 32 percent among larger solution providers but only 26 percent among smaller solution providers. The difference lies in the percentage of satisfied solution providers, which is nine percentage points lower among smaller VARs compared with larger solution providers.

Turning to software channel programs, IBM's overall level of channel satisfaction was 35 percent among larger solution providers, compared with 28 percent for their smaller counterparts. Once again, the difference lies in the percentage of solution providers that are satisfied with these programs, which is a full 11 percentage points lower for those with less than $5 million in revenue.

The trends are similar, though less dramatic, for Microsoft and HP. Among larger solution providers, for example, Microsoft's overall channel satisfaction rating is 40 percent, six percentage points above the 34 percent figure for smaller VARs. For HP, the figures are 24 percent and 20 percent, respectively.

Unlike IBM, however, the differences in ratings between the two groups for Microsoft lie in the percentage of dissatisfied solution providers, not the percentage of those satisfied. For example, 23 percent of small solution providers said they are are dissatisfied with Microsoft's channel programs, compared with only 18 percent of large VARs.

For HP, the difference in ratings between large and small VARs is split evenly between those that are satisfied and those that are dissatisfied with the vendor's channel programs.

It should not be surprising that there are significant differences in opinions between the two groups of solution providers. In a previous newsletter, I highlighted the sharp differences in what each group thinks is important when it comes to channel programs.

But why would smaller solution providers give lower marks to vendor channel programs? Perhaps because vendors are not up to par in those channel program elements that small VARs deem to be most important, including free marketing materials, lead-generation programs and competitive deal bonuses.

Dissatisfaction also comes into play when vendors (or distributors, for that matter) fail to put enough resources into communicating and staying in touch with their smaller solution providers. These solution providers have come to expect the short end of the stick when it comes to channel programs, but when they don't get regular communications from their vendor reps, that's going to help tip the scales.

Cisco is the one exception to the trends cited above. This vendor receives much higher marks for overall channel satisfaction from smaller solution providers compared with larger ones.

Cisco's overall channel satisfaction rating is 34 percent among smaller VARs compared with 27 percent for larger ones. As is the case with IBM and HP, much of the difference is found in the percentage of dissatisfied solution providers. Twenty-one percent of larger solution providers are dissatisfied with Cisco's channel programs, more than double the 10 percent figure for smaller solution providers.

These results likely reflect the experience of larger Cisco partners--those focusing on enterprise accounts--that have been facing serious margin erosion and have been going through an unsettling time as Cisco weeds out its "non-value-add" partners in this area.

To find out more about CRN's montly channel satisfaction surveyclick here.

John Roberts is CRN's director of research. He can be reached at [email protected].