Vendors aim for channel neutrality

Vendors aim for channel neutrality

A growing number of vendors are encouraging direct sales teams to engage the channel by levelling incentives for direct and indirect deals. According to several industry representatives, the changes are being driven by a growing realisation that resellers are key to vendor success.

Direct sales account managers of major multinational vendors have traditionally been disadvantaged for deals made through a channel partner. The problem often arises because vendors remunerate staff on sales volumes, as opposed to the profit margin model that drives the channel. This can mean indirect sales are worth less than direct end-user deals - sometimes by as much as 20 per cent, channel representatives claim.

But times are changing, with vendors such as IBM and HP now working on ensuring channel compensation neutrality.

General sales manager at Express Data, Mal Shaw, said the distributor had seen channel neutral models adopted increasingly during the past couple of years, but noted the trend had accelerated in 2007. "It's a great endorsement of the channel's value. Vendors are making a long-term commitment that resellers are key to their own growth objectives," he said. "This is a great time for resellers to take stock of their own specialties and capabilities.

"They should be talking to suitable vendors about end-users that are currently being serviced directly. Those accounts could be transitioned to resellers with the right skills."

Data#3 CEO, John Grant, said it had been arguing for channel neutrality "forever".

He also reported a marked rise in the number of vendors introducing incentives for direct staff that secured sales with partners.

"Organisations that say they have a channel strategy, but who disincent their own sales force, are introducing conflict," he said. "Traditionally, most of the vendors have been like that: it's more the hardware vendors than the software ones.

"We have seen a movement away from that - there's plenty of information around to say the direct model is not all it's cracked up to be. The Dell example shows direct doesn't work except in specific strategies with customers."

Grant put the channel's success down to more immediate and extensive supply chain capabilities. "Realistically, the vendors can't have the drop ship and supply chain efficiency we have," he said. For many, the move to channel neutral sales teams goes hand-in-hand with the larger vendor push into SMB. However, Astron sales and marketing manager, John Deacon, suggested the changes could also be linked to vendors challenging individuals to do more in their organisations.

He said vendors who demonstrated channel neutrality were much easier to work with.

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