The science of paying a channel manager

It seems logical that channel managers are paid on their ability to increase partner sales volumes. But if this approach compromises reseller relations then perhaps it is time for vendors to explore alternative reward models.

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By  Andrew Seymour Published  November 7, 2008

If vendors in the Middle East really are devoted to taking their partners' opinions on board then one or two of them may feel the need to revaluate their remuneration policies for channel and account management staff in future.

I hear a lot of vendors making reference to partner programmes and initiatives that they have launched in this region and, to be fair, most of these serve their intended purpose of improving the channel's ability to perform.

But, while overall partner management policies have come a long way in the Middle East, it is rare to find a vendor paying lip service to the way employees in channel-facing roles are financially rewarded, even though it is a subject that local resellers want to see addressed in a more scientific fashion.

As far as some resellers are concerned, the propensity for vendors to operate internal compensation structures based entirely on partner revenue undermines everything they preach about value add and customer satisfaction. Any reward model that is tied exclusively to sales volume will always drive certain behaviour - especially towards the end of a quarter when the pressure to hit targets really starts to bite.

You could argue that this has always been the case in the IT market - vendors and partners both know what the score is when it comes to meeting quotas. But that isn't preventing resellers from calling for change.

Several resellers I have spoken to recently have raised this issue, with one blasting: "Channel managers are still weighed and measured entirely on numbers. At quarter-end we'll have the guy calling us to see if we can increase our volume and achieve this or that because if we don't then he is the loser. But often when we call him because we have a problem he is unavailable or it is a second priority."

While I know for a fact that some vendors have already tweaked their internal compensation structures in a bid to prevent the very complaints above, there is still a perception in the reseller and VAR market that channel managers are only motivated by the current period and not by any long-term development plans or soft skills enhancement.

As one regional channel source said, it seems like it is more important for them to see the box going out the door today, rather than building something that gets 10 boxes out the door six months down the line.

It is perfectly reasonable for a high percentage of a channel manager's performance - 50% at the very least in my opinion - to be tied to partner revenue because sales activity is what drives the market. Consequently, the incentive must be compelling enough to inspire the individual to motivate the partner.

But, at the same time, vendors with the local resources or capacity to make their compensation models more sophisticated should really be taking the opportunity to do so. In return they may find that they enjoy enhanced partner loyalty and participation.

Some vendors have already demonstrated that this is possible by dividing their payment structures between revenue-based objectives and variable channel development objectives.

The non-revenue criteria could be linked to the results of regular partner satisfaction surveys, the amount of reseller sales staff trained each month or the number of technical workshops that are organised - anything that contributes towards overall partner fulfilment.

Embracing this kind of shift will undoubtedly require vendors to stray from their comfort zone and that won't be easy if they have always been accustomed to a sales-driven culture. But it is just the sort of action that will be widely commended by resellers as they look for vendors to demonstrate that channel development is as high up their agenda as they make out.

Andrew Seymour is the editor of Channel Middle East English.

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