Nortel Pushes Partners Toward VoIP

"They're saying to partners, 'Here's where we're going, we want you to be a part of this and we're giving you incentives to do so,' " said Stuart Chandler, president and CEO of Optivor Technologies, a $6 million solution provider in Jessup, Md. About 90 percent of Optivor's revenue is Nortel-related, he said.

The bevy of new rewards and incentives should bolster margins and help solution providers compete more effectively with carrier-class partners such as SBC or Verizon, which sometimes win deals at the 11th hour with unbeatable pricing, particularly on Nortel data deals, Chandler said.

The new incentives are the latest step in Nortel's migration from a volume-focused channel strategy to one that rewards partners for the value they bring to and investment they make in their Nortel partnerships, a shift that began two years ago, said Perry McDonald, director of channel marketing at Nortel, Brampton, Ontario.

"We're starting to see the positive effect that's having on our customer service," McDonald said. For example, the level of certified Nortel technicians increased 300 percent in 2004 compared with 2003, he said. "That's directly attributable to Partner Advantage," he said.

The new incentives aim to help spur adoption of VoIP and boost profitability among Nortel channel partners, McDonald said.

Available to the vendor's 130 North American Partner Advantage partners, Velocity Incentives includes changes to the vendor's Marketing Allowance Fund program that are weighted toward sales of converged voice, data and applications while decreasing benefits tied to sales of traditional phone equipment.

Under the new program, partners are eligible to accrue marketing development funds at a rate of 2 percent on IP telephony products, 1.5 percent on data (including WLAN and security) and applications (including IP contact center, unified messaging, and interactive voice response), and 0.75 percent on legacy phone equipment. Previously, partners earned 1.5 percent on all product categories, McDonald said.

Partners also can earn extra rebates for meeting overall year-over-year growth goals and achieving growth in voice, data or applications.

Partner Advantage program members get a 9 percent rebate as a reward for meeting year-over-year growth goals, which range from 10 percent to 20 percent growth, depending on solution providers' level within the program. Velocity Incentives now offers an extra 6-percent rebate to partners that meet the same growth goals for products in converged VoIP, data or applications.

In addition, the vendor's new Data Select program gives partners with Nortel sales of more than half of their overall networking business an additional five-point, upfront discount on networking products.

"Select" programs around VoIP and convergence applications are expected later in the year.

"This is the first time in recent memory Nortel has done anything to reward loyalty," Optivor's Chandler said.