Cisco Expands Two-Tier Services Incentives

Cisco has unveiled a program that will help its two-tier partners make more money by expanding their services offerings.

Called Pay for Performance, the incentive program is designed to provide six-month cash rebates based on partners' attach and renewal rates. To qualify, partners must sell more than $500,000 in hardware during the six-month period, have Cisco Service Expert program certification and be a Registered or Certified channel partner.

Liz Lawson, Cisco's senior director of channels for customer advocacy, says the program was designed to capture revenue that the company feels is being left on the table by partners that simply haven't taken the time to develop a more concrete grasp of the services business. Cisco estimates there is approximately $200 million annually in untapped services revenue, most of it in the SMB space.

"Part of the reason we're doing this is that partners don't necessarily understand the impact of services and are unable to articulate the value of services to customers, particularly in the midmarket," Lawson says.

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The incentive plan is being initially offered only to Cisco's top 250 partners (based on revenue) for the program's first phase, which is expected to last about six months. But Lawson says the program eventually will be global. The affected partners will be required to undergo additional services training to fully qualify and will receive cash rebates for achieving certain attach and renewal rate thresholds.

Cisco also has created the Performance Metrics Central tool, a portal-type solution that enables partners to access attach and renewal rates for various services and to find sales leads for renewal opportunities as well as for new business.

"It's one thing to tell partners, 'Go sell more services,' but if they have no way to measure the metrics, we're only giving them half the equation," Lawson says.

Partners that have begun working with the program say it will help them and the vendor move down market.

"Cisco had saturated the enterprise market and wanted to move into the SMB space," says Greg Engle, president of Information Engineering (a Dynetics company), a networking and security consultant in Huntsville, Ala. "They've already created the commercial channel advisory board, and that along with this new program were crafted to help Cisco make the SMB move."

Engle says he expects to see more similar programs rolled out by Cisco during the next six to 18 months, all of which will help bolster his company's already strong services offerings.

"We've always been in the 90th percentile for attach and renewal rates, and the new program will give us added incentives for staying on top," Engle says. "When you provide services, you need a continuous improvement philosophy to stay on top of things, but by reinvesting our rebates into our Cisco practice, we can continue to make it even stronger."