Partnership Primer

In a way, solution providers can be a lot like love-struck adolescents: they want to know their partners care. That there's someone special out there thinking about them and how to make their relationships better. Is communication good between us? How loyal are they? How much money will they spend on me?

Except for the fact that, in this case, their partners are multimillion dollar hi-tech vendors, all the above holds true. And each year, we give solution providers a chance to tell all which vendors make good partners.

The results of the 19th VARBusiness Annual Report Card revealed that the five companies receiving the highest partnership scores are Samsung (score—83) for Display Technology, Intel (77) for Desktop & Server Processors, NEC/Mitsubishi (74) also for Display Technology, SonicWall (71) for Security Appliances, and Computer Associates (which tied for 4th, also with a 71 score) for Security Management Software.

Here's a look at what the top vendors did in the past year and what they have up their sleeves to keep their rating high for the 20th ARC.

Samsung, which took home its second ARC award for Display Technology, is pushing ahead with all VAR-facing initiatives to make sure it keeps its reputation strong. First off, the vendor has allocated $1 million to start up two lead management programs, say Rey Roque, Vice President of Marketing for Samsung's Information Technology Division, and Helman Lukito, Reseller Marketing Manager for Samsung's Information Technology Division, in a joint interview. The first program targets small and medium customers directly with all collected leads sent out to the vendor's solution partners, they say. This telemarketing program staffs 15 and reaches out customers with anywhere from 100 to 5,000 seats. The second program searches out customers with fewer than 100 employees via mailers and other means, including a web site, to come up with pre-qualified leads.

Samsung has taken action in a number of other areas as well to make business more profitable for solutions providers, including the doubling of its inside sales team from five to 10. It also strives to differentiate itself if there are problems with its products to reduce SP hassle factor, say Roque and Lukito. For example, it recently changed a policy that now says the company pays all expenses for defective exchanges, including shipping costs. "Our competitors usually charge one way in displays," said Roque. "And in color laser printers in the sub-$1000 category, we even offer onsite service for free."

Perhaps most importantly, Samsung's "Big Deal Cash Back Program" forks over an additional two to four percent incentive to the sales team because "rebates alone help the company but don't help the sales team. We're trying to improve their margins," says Roque.

Intel's Steve Dallman, Director of North American distribution and channel marketing/sales, gave us a rare look at the thought process behind improving a channel program. The chip giant takes it on the chin from time to time (most recently during a panel at CMP XChange in Chicago) for a perceived less-than-ideal channel program despite scoring high ARC numbers. Dallman's theory about that: the problem with Intel's rebate program is that it's 10 years old with minimal changes and, by now, VARs tend to pass it on to their customers so it doesn't add any value to the solution provider's business.

Dallman says he given a lot of thought to a new channel membership benefits program, one that's expected to roll out just as this publication hits your desk. And while it's not in its final incarnation, he knows it's going to be about saving costs for partners in innovative ways.

He started off on August 22 by eliminating the rebate—rather, just reducing the price on the list and moving forward from that baseline. "There's been a pretty good reaction to that," he tells VARBusiness. His next move is to put fresh dollars into the program, aimed at improving solution provider's businesses.

Some of his ideas include reducing travel costs for channel partners who want to see customers, attend training sessions or go to events by rewarding them with travel vouchers. Dallman says Intel has done a little in this area but he wants to kick it up a notch so "they can have the level of professionalism of the billion dollar companies they sometimes compete with." As of press time, Dallman had RFQs out to several service providers.

Other ideas he's considering include offsetting external training programs and reducing the cost of shipping for channel partners. Dallman also is contemplating increasing channel tech support for its customers to 24x5 and creating a more robust seeding program. One reason: "It's very expensive to get our latest product to several thousand resellers at once," he says.

The Intel exec says some of these programs will break in October and the maker will provide a roadmap for when some of these other considerations might become reality. "We don't want to start down the path and then [be stalled]," he explains.

"The secret sauce to these programs is really simple--it's stability. We just don't' get into it and get out of it. We give the program the time, energy and financing it needs to be successful.

"Too many companies roll out something at the beginning of a quarter and then want to see results at the end of it. That doesn't work with resellers. It takes six weeks, alone, to roll out the info. You've got to be willing to commit for years and then resellers can commit to the programs," he continues. You can't knock the legs out from your reseller [if you switch programs too often]. He may have bids out there. We don't want to screw anybody because we're changing the program."

NEC/Mitsubishi, meanwhile, has decided to do much of the solution provider's heavy lifting for it, creating, then vetting, a hardware team of vendors to complement their displays, allowing VAR's to sell their displays as part of a total solution, according to Doug Albregts, vice president of sales and marketing.

In fact, the company is now putting the finishing touches on a new configuration product, set to release in early 2005 at its web site, that will allow all its partners to enter data about the type of application they need, the dimensions of a facility, the type of image they want to show and whatever soft wear they need. The results walk them through the entire solution, said Albregts.

"From a reseller viewpoint, it finally offers something that is margin-based rather than selling a display alone," he tells VARBusiness. Margins on display alone hover in the three percent to 10 per cent range but when a solution provider adds cabling, software and mounts, it can quickly increase to the 15 percent to 30 percent range. Albrgets also talked of hooking up solutions with small form factor servers, which mount to the back of a display in order to run many different displays. "Those are the kind of things we want to bring to the reseller community," he said.

Additionally, NEC/Mitsubishi is now talking with a sense of urgency, with Albregts in aggressive commitment mode to create a display partner program (the company also has them in hardware and software) with an enthusiasm that will see his build a list of 150 to 130 partners by the end of next year, then grow it further in 2006, he pledges.

SonicWall two years ago lost its way and hired a direct sales force to chase down the enterprise market. That was then. These days, Director of Channel Market Dave Crilley knows he had better keep his finger on the pulse of partner satisfaction. "My compensation is dependant on it," he acknowledges. To that end, going forward Crilley intends to make the vendor's partner program even more enticing by rewarding partners that help the company meet its strategic goals. Specifically, partners that excel in recurring revenues and selling services are expected to be increasingly rewarded in a new program that will likely start next calendar year.

"As a manufacturer, we need to increase subscription sales," says Crilley, noting that the security devices sold by the company offer anti-virus updates. "Solution providers should sell these boxes with services and make sure the customer renews the services." To do that, SonicWall plans to provide incentives on top of already existing incentives.

In addition, since SonicWall tracks subscription sales, they take on the responsibility of communicating with the customer about renewals, urging it to "go back to your favorite resellers" in a relatively new program started this year. In fact, gold and silver partners can qualify for some additional funds even if customers buy products directly from SonicWall during an ongoing solicitation.

Computer Associates wants to continue living up to the moniker it gave its partner program last year, "Partnering for Profitability." According to CA Senior Vice President George Kaskarkou, the vendor has just announced spifs at $250 a pop for its security appliance E-Trustvulnerability Release 8, which is sells exclusively through the channel.

CA also debuted this year, in May, a policy that pays its direct sales force an uplift if they sell product through channel partners. "It encourages greater teaming and more partner opportunity. We wanted to provide better value to the channel partner and to the end user so we incentivized our direct sales force, Kaskarkou explained. "Partnering with the channel is within CA's DNA."