What is the colour of a carrot? Whatever you think the channel needs it to be. And in the current economic climate, that means the industry is witnessing the birth of a mottled bunch of incentive programs aimed at grabbing mind share and boosting sales.
The channel is certainly no stranger to offering these incentives. It has happened for years and stretched from golf lessons to driving Porches. But in recent months, there is anecdotal evidence the carrots are being served up in greater proportions and with far more vibrant packaging. Flick through any trade publication or scroll down the pages of their websites and the carrots can be plucked almost at will.
In recent editions of ARN, for example, among others there have been programs from: Westcon Group and EMC; Samsung and Dynamic Supplies; Kyocera and Dynamic Supplies; Ingram Micro and HP ProCurve; Saratoga Distribution and CA; Synnex and HP; itX and Sun; Ingram and HP/Microsoft; and a rather creative solo effort by Hitachi Data Systems that asked channel partners to submit a IT horror story to get it published as their own custom comic.
EMC general manager partner and alliances A/NZ, David Henderson, said the aim of the Shine in 09 program the vendor ran in conjunction with Westcon Group was to reward commitment.
“We choose to differentiate ourselves by providing comprehensive programs with real, tangible benefits that are about the motivation and enablement of the channel,” he told ARN in a written response.
“For example, the Shine in 09 program produces six winners each week as well as a larger prize draw at the end of the promotional period. The promotions also form part of an integrated program that includes training and accreditation in EMC solutions and the resources required for resellers to advance their business.”
Sound a bit like marketing guff? Well, yes, but the point about motivation and advancing a business is well-founded. When you have an economy teetering on the edge of recession, imbuing your channel with confidence and skills through incentive programs is a good move.
And with the economic climate also creating tougher competition in almost all sectors, these programs can help grab much-needed mind share. It was for this reason, Synnex teamed up with HP to offer bonus items like Targus Mobile Sync Cable USBs, carry bags, HP Deskjet DJD1560 Inkjet printers, and wireless routers with every eligible HP desktop and monitor.
“Synnex commenced distribution of HP’s full range of consumer and commercial desktops and monitors in March this year,”
Synnex category manager, Jay Ko, said. “The launch promo is aimed at increasing reseller awareness and to position Synnex as a one-stop shop for all HP PSG solutions. Aggressive promotions that deliver value will certainly attract more reseller attention during the economic downturn.”
Director of third-party channel advisory group Channel Dynamics, Cam Wayland, noted some of these approaches gave the distributors and vendors an opening to talk to resellers about long-term engagement.
“It certainly is a way for the vendors and distributors to engage more effectively with their partners and grab some mind share,” he said.
“I think you are seeing two different types of things. You are getting the fuel cards and other longer term chances to win something substantial. With the fuel cards, at the lower end it might change some peoples’ minds in terms of discretionary spend, but I think it is very transitory. It is basically a way to try and differentiate an undifferentiated product in one way, shape or form.”
In contrast, the larger incentive programs could change the overall spending habits in a particular market segment if it is supported by tactical product bundles.
“If it is also linked with an incentive to the reseller, you have alignment between the vendor, the distributor, the reseller and the end user that is going to be effective,” Wayland claimed. “There has to be something in it for everybody. And you can only do that if you are generally one of the larger players in the market place.”
Stepping up the game
Earlier this year, Ingram Micro teamed up with Microsoft and HP to unveil what it branded the “Biggest Promotion in the Channel”. The idea being that every time a reseller bought a qualifying HP server or a HP/Microsoft bundled server/OEM product from Ingram until April 30, 2009 – they receive an entry into the major draw to win $110,000.
itX hit back a few weeks later with a new Sun-backed promotion that gives its Sun volume resellers a chance to win $1 million. The promotion, which runs to the end of July, covers the vendor’s x86, entry to mid-level servers, and storage products, with resellers having to purchase $5000 or more of the qualifying products to go into a draw.
At the end of August, the $1 million will then be placed in one of 100 boxes as part of a Sun sales launch. Two winners will then be invited to try their luck to select the right box with both given a chance to win the money. itX marketing manager, Paul Sadler, said while the company was always active with programs, it had shifted its focus to helping resellers get business.
“The only thing that has really changed for us in terms of the downturn and the potential tough times ahead, is that we are really focused a lot more now on enablement than ever,” he said. “A lot of our marketing is around training and events. It’s about giving resellers the tools, the messages, and especially the prospecting tools they need to go out and get opportunities.”
While it appears the distributors are in a bit of a carrot measuring contest – Ingram’s branding claimed its was the “biggest” but itX’s retorted with, “Now THAT’S a Promotion” – both have taken a different tack to those running smaller, more frequent campaigns.
Channel Dynamics’ Wayland said as the Ingram and itX campaigns involved significant carrots, it provided the distributors with another differentiation point amid the clutter of other campaigns being launched. But there is no guarantee the rewards will be reaped.
“At the end of all this, does it actually change the run rate of the business?” he asked. “I don’t know and we will have to ask the marketing managers.”