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Rule No. 4: Cut The Conflict
One of the most frustrating facets of vendor relationships can be in addressing conflict resolution, said solution providers. While the amount of channel conflict has been reduced over the years and some vendors like Dell utilize a mediator to rule on channel conflict, sometimes a vendor will just give the deal to its direct-sales rep, said solution providers. While it seems absurd to in essence undercut itself, that's what some vendors do, VARs said. It can also threaten the vendor's relationship with that solution provider, who is really an extension of the vendor's sales force.
Bruce Geier, CEO of Technology Integration Group, a San Diego-based solution provider, said more vendor sales reps are now willing to work harder with solution providers.
"A number of vendors do a pretty good job. Dell will fund marketing events if you become part of one of their Elite programs. If you attend seminars or join programs, a lot of vendors will help you out," said Geier.
Jonathan Elster, CEO of distributor SED International, Tucker, Ga., said most vendors now working in the channel have limited channel conflict. Especially in this economy, vendors recognize that the channel is a cost-effective route to market, he said.
"Due to credit restraints, vendors start to worry about getting their own salespeople on the street. We [the channel] are an extension of that sales force. Vendors can't do it themselves," Elster said.
Rule No. 5: Fix Channel Compensation
Many vendors have developed channel-neutral compensation plans, in which the vendor's sales rep gets paid the same for taking a deal direct or working with a partner. But it's unrealistic to believe that every vendor sales rep behaves the same way. In many cases, the vendor itself might evangelize the channel but individual sales reps still look to take deals direct, undercutting VARs in the process and hurting the vendor's own wallet.
Compensation plans should also be tied to how much investment the VAR has made in the vendor's programs, said Equilibrium Consulting's Busam.
"There are more levels of training that qualify you for the different levels. That's consistent across most manufacturers," Busam said. "Most programs are not geared toward, 'Are you a $10,000 reseller or a $10 million reseller?' It's, 'How many sales and technicians do you have trained? What specialties have you got?' If I'm a vendor, I want people to represent my organization properly with best practices and good implementation skills."
NWN's Phelps wants to take it a step further. In his mind, vendors should compensate more for channel business than direct sales.
"Sales organizations have to be biased to leverage the channel. It shouldn't be neutral. It has to be biased. Salespeople who are control freaks will want to control the account themselves. They have to want to learn about the channel," he said.
Rule No. 6: The Right Deal Registration
Deal registration programs can be a solution provider's best friend. Or its worst enemy. When they work properly, registration programs allow solution providers to protect the presales investment they've put into a client. There's no worse feeling than spending six months helping a client design a new or updated infrastructure only to see that effort wasted when the customer takes the information and signs with a competitor for a point less. Solution providers said some programs are flawed and offer too many loopholes or not enough protection.
A solid deal registration program can substantially reduce channel conflict, said Bill Richardson, vice president of sales at Micro Solutions, a Thousand Oaks, Calif.-based solution provider.
"If it's done right, resellers aren't stepping on each other or sniping deals," he said. In general, smaller vendors tend to have better deal registration programs because they are more nimble and flexible than larger vendors, he said.
"IBM in some cases does it very well, in some cases they don't. It depends on the product and on the program we're working under," Richardson said. "Also, any vendor that sells directly, by the very nature of doing so has a problem with their channel and with channel registration."
SED's Elster said VARs tell him that deals need to be registered more quickly by vendors.
"Time is of the essence. If it's not done quickly and efficiently, the VARs get uptight and some opportunities [might be lost]," Elster said.
NEXT: Rule No. 7: Communicate, Communicate