Proliferating Vendor Rebate Programs Yielding Profits
Moves by vendors away from the once-maligned rebate programs that solely reward volume and toward programs that encourage solution selling and demand generation appear to be having a positive impact. Solution providers today say they are having greater success keeping rebates for profits rather than giving them up in price cutting.
See-Com President Greg Starr recently booked a $75,000 rebate check from Cisco Systems right to the bottom line.
The 20 percent back-end rebate, which the New Boston, Texas-based integrator earned for meeting Cisco sales requirements in telephony and IP communications equipment last year, is just what Starr is looking for from vendors. It incents everyone within the company to create plans and set goals, and it helps the company increase profits, he said.
The 2005 CRN Channel Compensation Study underscored that point. In the survey, 42 percent to 52 percent of solution providers, depending on the technology area, ranked rebates as the single most important form of compensation. And 87 percent of all solution providers ranked it among the top three.
Rebates, though, only ranked fourth in solution provider satisfaction, a middling performance perhaps indicating room for improvement. Solution providers said they would like to see more substantial rebates, more flexibility in the programs and easier ways to manage a proliferating number of programs.
David Temple, president of integrator Saratoga Technologies, Johnson City, Tenn., said solution providers should get higher rebates when they are increasing sales significantly with vendors. In exchange for a threefold increase in sales, he negotiated extra points in back-end rebates and marketing support with a security vendor partner for his database customers.
| AD | |
|---|---|
| id | unit-1659132512259 |
| type | Sponsored post |
Solution providers also consider extra points for deal registration and marketing funds a useful form of rebate. Koji Mori, a practice manager at Calsoft, Torrance, Calif., likes Citrix’s deal registration program. If a VAR registers a deal and does the legwork but the customer ultimately buys its product somewhere else, the solution provider still gets credit.