Better benefits

“There’s too many Middle East partners for vendor ‘X’ undercutting each other on price so no-one can make a margin,” complains the reseller. “We are always reviewing partner profitability and constantly introducing initiatives to boost channel margins,” vendor ‘X’ responds. Mixed messages? Too right; but this sort of exchange is becoming increasingly common in the Middle East IT channel.

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By  Stuart Wilson Published  July 4, 2006

“There’s too many Middle East partners for vendor ‘X’ undercutting each other on price so no-one can make a margin,” complains the reseller. “We are always reviewing partner profitability and constantly introducing initiatives to boost channel margins,” vendor ‘X’ responds. Mixed messages? Too right; but this sort of exchange is becoming increasingly common in the Middle East IT channel.

There is a glaring discord between these points of view and, in reality, the truth probably lies somewhere between the two extremes. Vendors are introducing increasingly sophisticated channel programmes in the Middle East and resellers need to make sure that they are taking full advantage of all the sweeteners, incentives and rebates that are on the table.

At the moment, not all resellers in the Middle East fully appreciate the overall package of vendor benefits that they are eligible for. To rectify this situation, many need to adopt a different mindset and understand that what they get out of participation in a channel programme is a direct correlation to the amount of effort that they put in.

With advanced channel programmes there also comes a degree of complexity that not all resellers are prepared to embrace. This can involve logging the purchases from authorised distributors online, registering possible deals with the vendor, providing end-user verification documents, completing training and certification programmes, and even coming up with business plans each and every quarter.

I always think that resellers fall into two camps when faced with the burden of the administrative tasks detailed above. Some resellers will embrace these requests wholeheartedly and, as a result, will progress through a vendor’s partner programme and receive greater product discounts, more rebates and various other incentives. This package of better benefits may even have a positive impact on their bottom line.

However, as always there is a counterargument. There are other resellers in the Middle East that still shy away from these processes, preferring instead to retain their ‘old school’ style of business, which keeps these time-consuming administrative processes to a bare minimum. Their argument is that the time taken up carrying out these tasks would be better spent hunting new customers.

Getting the maximum benefits from a vendor’s channel programme for the minimum effort is a vital weapon in a reseller’s arsenal as it battles for profits. Frequently, the staff members that actually understand the intricacies of a particular vendor’s channel programme — and therefore get the most out of it for the least effort — are more valuable to the organisation than they realise.

Using a channel programme to glean the maximum benefits is an art form and many of the vendors will admit this once you get to the truth behind their polished corporate soundbites.

On paper, programmes can look attractive in terms of the channel goodies on offer for resellers, but in practice some elements of the programme are rarely used by the channel because the processes involved are just too complicated, confusing and laborious.

When you take a step back and look at the Middle East channel structures that are in place, I believe it is fair to say that some specific product and solution areas do currently suffer from over-distribution — too many resellers chasing the same products and undercutting each other on price.

It is important that the vendors understand this, but it is equally important that the resellers start to recognise the futility associated with too many of them chasing the same business opportunities.

The most impressive channel programmes reward partners for developing new business segments, selling to new customers and moving away from the crowd into a value-added niche.

Even if there are too many resellers pushing a specific product or solution to market, the only time a vendor will really care is when the quality of implementation, support and service that the end-user receives starts to drop. That’s when it can start to hurt them. If these deliverables are not being compromised, then vendors are quite happy to sit back and watch resellers fight it out for zero margin deals.

If resellers want better benefits, they need to be clever in the way that they utilise a vendor’s channel programme. It takes a great deal of courage to break away from the herd and move into new product and solution areas, but for those that do, the potential rewards could well be worth the risk.

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