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Can You Buy Loyalty?

By Heather Clancy, CRN
March 27, 2006    9:00 AM ET

In some ways, you can think of Hewlett-Packard’s latest evolution of its PartnerOne program as a bold attempt to cure attention deficit disorder.

HEATHER CLANCY
Can be reached via e-mail at hclancy@cmp.com.
I’ve been around long enough to know that HP’s complex matrix of attach-rate rebates, which eliminates its basic membership rebates and instead encourages partners to cobble together designated combinations of related products and services, is nothing short of profound. Anyone selling HP must rethink their entire financial basis for doing so. The upside for exceeding certain levels means you could find yourself better off, but if you don’t meet growth targets along with the attach rates, you are in for a shock. Your rebates will be paid quarterly, which could be another financial jolt. If you’re focused on ProCurve or OpenView, you can put off the decision, but don’t dally too long. Attach rates that span across unrelated product divisions will be coming. Our cover story by Industry Editor Craig Zarley deciphers more details. Get out your calculator, though, because this stuff isn’t simple.

It makes all sorts of sense for HP to do this, and it’s been telegraphing such a change for months. Frankly speaking, its channel is huge, as is its product portfolio, and this will indeed reward those that are most “loyal,” or that proactively devote time to leading with HP products. HP’s channel ranks will certainly shrink, though, which is convenient for IBM and Lenovo, both of which are recruiting right now.

I can’t help but draw a correlation between HP’s strategy and that of Autodesk, a company I’ve watched for many years. I was stunned to learn recently that almost 90 percent of the design software company’s resellers consider themselves exclusive. I should point out, in fairness, that Autodesk’s reseller ranks have shrunk dramatically in the past two years, making its remaining resellers more focused. In addition, the company’s market-share position is formidable, enabling Autodesk to more easily push through programs. But for these resellers, loyalty comes down to a single thing: They can focus better on what’s best for their customers from implementation to training to process consulting. And, yes, they can now make more money by doing so.

As these changes take place, I can’t help but be reminded that there is so much more to loyalty than financial rewards.

Can your loyalty be bought? HEATHER CLANCY, Editor at CRN, welcomes your comments at hclancy@cmp.com.


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