Watch The Compensation Tea Leaves For Vendors' Directions In 2005
It's obviously one of the biggest culprits of channel conflict. Suppliers' unsuccessful indirect-sales efforts often can be attributed in part to direct-sales force compensation that puts them at odds with the channel.
I'd like to offer solution providers some advice on this issue.
Watch the pages of CRN and our online properties over the next few months, and pay close attention to compensationstories of all types.
We are about to enter the very busy channel-partner conference season, when all the big players gather up their solution providers for three days of intensive lobbying.
In the midst of all this, companies often change their own internal compensation structure as well as the way in which they compensate their channel partners.
These compensation changes will reveal a lot about a supplier's attitude toward indirect sales and what it wants from its solution providers.
One example of this was the change to Hewlett-Packard's enterprise sales team last November. HP also turned over a number of its named accounts to the channel. (For more on this story, go to crn.com and search for "HP's Season Of Giving.")
Since HP is pushing more customers to the channel and is changing its direct-sales compensation in such a way that channel conflict will decline, you have to believe the company is going to rely more on solution providers.
EMC also is changing its channel programs to push the channel to sell more software. To me, it's an indication that EMC sees more upside in the software part of the business in both volume and profit, and it needs the channel to concentrate on software more heavily.
I think what you are going to see over the next few months and for the foreseeable future is more regular tweaking of compensation structures for both direct sales and the channel, at least on the part of the larger manufacturers.
It may cause you angst, and you may feel there is less consistency in channel programs than there has been over the past few years. But I think these changes are a sign that the channel is becoming more important, and vendors are going to try to use the most powerful tool there is to push their sales force in a particular direction, and that's compensation. In the end, the channel is often the biggest part of a supplier's sales force, and it will not be immune from tweaks to the compensation structure.
Some of these moves are going to be poorly designed. When that's the case, the changes will result in undesired outcomes.
The CMP Channel Group and you, the solution provider, should make it known to the vendors involved that these changes are hurting, not helping, the sales effort.
The good news here is that vendors are increasingly realizing they need to coordinate internal direct-sales compensation with external indirect channel-program compensation. It isn't easy to pull it off perfectly every time, but it is important to try.
Sales compensation and the coordination of the direct and indirect structures of that compensation are going to be among the most important ongoing decisions every company makes over the next few years.
We all need to be prepared for it and help make sure it is done in the right way. That means speaking up both when it is going well and when it's not.
Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].