Microsoft's Clough Issues Apology To Resellers Affected By Mailings

Microsoft

Microsoft says it is re-evaluating how co-marketing engagements are communicated to customers "to any appearance of favoritism toward certain resellers." In the aftermath of the controversy, Microsoft also pledged to meet with one reseller group, ASCII, about possibly doing a special program to drive sales through its 2,000-member resellers.

The complete letter follows:

Tuesday, May 28, 2002

Dear Microsoft Reseller,

Earlier this month, Microsoft initiated a direct mail campaign to small business customers with an immediate goal to educate them on the value of Windows XP Professional and Office XP, as well as the limited opportunity to purchase Upgrade Advantage before the July 31st deadline. Part of the campaign highlighted an industry reseller, CDW, for license fulfillment. While joint campaigns are a routine practice in our industry, we wish to express our apologies if these mailings created confusion with you, our community of independent resellers, or with your customers. While unfortunate, the situation does afford us the valuable opportunity to communicate directly with you on how we approach these campaigns, the scope of our investments in the broad reseller channel and the importance of your feedback.

First we'd like to clarify the overall campaign and our arrangement with CDW. Based on recent feedback from independent resellers, it is clear that the "42% discount" message created an impression in the market that this reseller was receiving some special pricing or support from Microsoft. The fact is that the arrangement with CDW was solely marketing focused, and we maintained the same pricing for this reseller that we offer to everyone. In fact, the offer made in these direct mail pieces was called out as also being available through all independent resellers, and indeed all resellers have an equal ability to deliver the offer to their customers. Recent feedback also indicates a concern from independent resellers that the highlighted reseller was given the opportunity to "steal" customers from local resellers. In reality, the campaign was three-part, first of which was a letter to those customers with existing Open license agreements urging them to contact their local reseller by name. The second part factored in records for existing customers, which did not include an identifiable reseller name. The letter suggested the customer contact "their local reseller." Third was a direct marketing piece mentioning CDW as the go-to reseller. Finally, we have a routine practice of making campaign templates available to all independent resellers, which allows you to engage in lock-step with Microsoft's marketing initiatives (available on the Microsoft for Partner website). This particular licensing campaign is most definitely included. As you know, Microsoft does not have a direct sales channel in the small and medium-sized business space, and we feel it's important to give end customers a place to go for the solutions featured on direct mail pieces.

Next I'd like to assure you that Microsoft maintains an unwavering commitment to drive SMB customers to independent resellers. We appreciate that local resellers provide an unmatched level of support integrating solutions for SMB business customers and providing on-site service. Microsoft's commitment to the channel has grown over the past year in some key areas, namely: increased channel support, training and readiness, channel marketing programs, increased sales opportunities, and technical support. Many of these investments were in direct response to feedback we've heard from you, our independent resellers.

We recognize you may not be aware of all the investments we've been making during the past twelve months, and we want to take this opportunity to share some of them with you:

Increased Channel support. We have added a team of inside sales reps to an existing team of field sales reps calling on independent resellers with $50k or more in MS revenue, improving our coverage and quality of touch with our top revenue generators.We also launched a new distribution model under which value-added providers can earn a 12% referral fee when their small or medium business customers purchase Microsoft technology. And we broadened our distribution channel to meet the needs of more resellers based on how and where you prefer to purchase.

Training/Readiness. This year we doubled our staff and number of technical sales seminars for technical specialists (TS2) allowing us to offer 550 local events in 356 cities www.microsoft.com/partner/TrainingEvents/TechnicalTrainingEvents/ts2.asp. In addition, we also offered a road show to nearly 10,000 system builders to get them ready to build and sell Windows XP PCs prior to launch. Also, the Microsoft Action Pack is a subscription program we added this year, designed to provide you with everything you need to successfully sell and implement Microsoft products and solutions. Finally, we're excited that more than 15,000 of you have taken advantage of our Webcast training.

Sales Opportunities. We are proud of the success of Big Day events, now known as Business Solutions Seminars, which are SMB customer events that allow independent resellers to participate and therefore get leads and find new business. Microsoft also recently opened up the Authorized Education Reseller program (AER) to more independent resellers who have demonstrated a focus on serving and supporting education customers. AER authorization allows qualified resellers to sell academic licenses of our products to educational institutions and students alike.

Technical Support. With our Business Critical Support program, we offer free post sales technical support in "business down" customer situations to ALL profiled partners at www.microsoft.com/partner/help/howtoregister.asp. We also offer free technical support for Gold Members of the Microsoft OEM System Builder Program.

Your ongoing input is invaluable as we strive to balance specific needs of both resellers and customers during the next year. On that note, we are highly appreciative to all of you who have given us feedback. We are immediately re-evaluating how co-marketing engagements are communicated to customers to any appearance of favoritism towards certain resellers. We welcome your additional input and look forward to a successful journey together as we continue to incorporate your valuable input.

If you have any further questions, feel free to contact your account manager or mail me directly at [email protected].

Best Regards,

Bob Clough

Vice President of U.S. Small Business and Broad Channel

Microsoft