Palo Alto Networks Formalizes Distribution Program, Mulls New Rebate Incentives For Partners

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Palo Alto Networks is formalizing a distribution program and taking a hard look at back-end rebate opportunities to reward consistent performance from partners, according to Ron Myers, vice president of worldwide channel sales.

The Santa Clara, Calif., company held a meeting with its top 10 worldwide distributors in April to unveil a formalized distribution strategy and solicit better ways to provide support. Palo Alto Networks' NextWave Partners Program doesn't have a formal mechanism for distributors to provide specific incentives, training and product marketing initiatives, said Myers.

Myers, a 15-year channel veteran, was hired in September following a four-year run as senior vice president of global channels for videoconferencing vendor Polycom. His assessment of Palo Alto Networks' distribution strategy was that it was a "very fragmented approach to serving partners."

"We need to provide the right incentives that will drive [distributors'] behavior with us," Myers told CRN in a recent interview. "We heard [in the meeting] a lot around training and a lot around go-to-market, especially around products."

[Related: Security Industry Must Drive Up Attacker Costs, Says Palo Alto Networks CEO]

Palo Alto partners, meanwhile, tell CRN they are doubling their business with the network security appliance maker, despite strong competition from Check Point Software Technologies, Dell SonicWall and Fortinet. Palo Alto Networks' channel marketing and partner sales and support efforts have been very well executed, said J.D. Butt, vice president of solutions at Chicago-based solution provider, Nexum. The marketing has been disruptive and helped foster engagement with customers, Butt said.

"I didn't think five years ago that there would be something exciting to talk about with firewalls," he said. "Their messaging has been very consistent and clear as to how to sell the product."

In an interview last month at the Palo Alto Networks Ignite 2014 user conference, Myers said he is adjusting the company's channel program, potentially adding rebate levers on the back end to reward achievement. The company has been successful in building out its 100 percent channel strategy, with a solid deal registration program that results in incredibly loyal partners, Myers said, but it is time to provide more training and ramp up program compliance efforts.

"We don't have or offer any back-end incentives, which typically become routine margin opportunity for partners and we are evaluating that," Myers said.

The goal is to get the company more exposure on partner executive teams, Myers said. There are different ways to drive performance and achieve goals, he said, adding that his team is considering a reward based on achievement. Rewards could be volume-driven from a rebate perspective, a certain product mix, attach rates or services competency.

"Rebates provide a way to provide that top-line profitability," Myers said. "When they see that net margin it translates into pushing stronger programs from the top down to their sales teams."

NEXT: Palo Alto Networks' Services Push

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