Siebel Rebuilds Midmarket Channel

half-hearted attempt to sell into the midmarket

A company co-founder, Cleveland previously had constructed Siebel's enterprise-focused alliance and marketing program before leaving two years ago to sail around the world. He returned this past July to engineer the company's entire SMB sales and marketing approach--aimed at companies with less than $500 million revenue--for both the Siebel On Demand hosted application and the on-premise Siebel Professional Edition. During his four months since rejoining the San Mateo, Calif.-based vendor, Cleveland's attentions turned to building a separate sales organization, crafting rules of engagement and creating a full-blown channel program--all with an eye to what Cleveland calls "team selling."

"To create demand and awareness, the marketing and sales channels need to be linked," he told CRN. "If you can incent the channel to work with the sales organization--and everyone gets paid--then everyone is happy."

On the face of it, Cleveland's approach is unusual. Many companies for example, attempt to avoid channel conflict by preventing their internal sales organization from selling to the midmarket. But the jobs of Siebel's newly created 70-person sales and support organization "will be to sell to the SMB market exclusively," said Cleveland.

"But even though we team sell, we fulfill through our partners," he said. "That means our sales reps cannot sell without a reseller. When the direct organization sells, they have to identify which VAR will be paid. VARs provide the lead generation, but VARs give us those leads only if they want to help. The reason I want this is I want a linkage between demand generation and VARs. This is the secret sauce to the program, and the whole idea is to eliminate channel conflict."

Under the new program, resellers that qualify for Siebel's invitation-only program must train and certify a dedicated Siebel sales rep and technical expert. Those partners must also agree to promote Siebel's software on their Web sites, as well as jointly finance marketing events that Siebel will create and coordinate with them. In return, Siebel will set aside 5 percent of the resellers' revenue for MDF. For the time being, at least, those funds do not have an expiration date.

In addition, each reseller partner has an assigned channel manager, receives an eternal-use license and presales technical support and has access to a dedicated partner portal. Reseller partners also receive 30 percent margins regardless of whether they sell Siebel's On Demand or Professional Edition software.

"I absolutely say the SMB community needs the trusted adviser role, since CRM is more than just technology, it's selling methodologies and business processes," Cleveland said. "We will start off with a small group of partners and, as we get better at this, really open it up," he said. "It would be a mistake to just open the floodgates."

Siebel will inaugurate its effort with seven U.S. resellers, but Cleveland said he hopes to have 50 in the United States and Europe by the end of 2005.

Now Siebel just has to convince resellers that this time it's serious about the midmarket channel. Two years ago, for example, Fred Reede was among few certified Siebel partners for the midmarket. Earlier this year, Reede's company, CRM Solutions, was forced to disband because Siebel never managed to get its act together, Reede said. When Cleveland heard of Reede's fate, he directed Siebel's channel organization to contact Reede to brief him on the new program.

"It sounds like they actually are going after the midmarket this time, with a fully coordinated program," said Reede, now a principal with organizational development consultant Reede Creative Services, Canton, Ohio. "This time they might be able to pull it off."

Siebel is now launching its channel and SMB effort in the Americas and the EMEA region, and will begin its program in the Asia Pacific region in the second quarter of 2005.