Good deals are a precious commodity in the channel so it’s no surprise that many companies baulk at the idea of disclosing the details before closing the sale.
But proponents of deal registration maintain that it’s the next logical step in improving vendor/partner relationship. Vendors say they now have more scope to monitor and respond to market trends while partners in well run registration programs report better pre- and after sales support with sometimes vastly improved margins.
Many programs are not so well run, however, and there’s no shortage of tales of underhanded tactics and heartbreak throughout the channel, often with the vendor’s knowledge.
As anyone in the channel knows, pitching a solution to a client can involve a lot of time and money, so that suddenly losing a prospect can cost more than the lost opportunity.
Ask Daryl Chambers, director of Integrated Wireless how he feels about deal registration and he gives a heavy sigh.
“The deal thing is quite ugly,” he laments. “It’s too easy for the company to sack you and not pay commission.”
Specialists in advanced communications systems, Integrated Wireless has only recently had to contend with the registration issue as some of its suppliers move to keep step with the wider industry. With the drift towards open standards such as IP communications in Chamber’s world, solutions have become less proprietary and therefore available from a larger number of suppliers.
While registration programs can offer important protection if properly run, suppliers of more commodity-based products often view them as an invitation asking to be elbowed out of the way because of the focus on price.
“Component distributors have this [registration] as a way of business now and they don’t like it,” Chambers says.
His philosophy is that before a partner even considers deal registration, it should negotiate a contract that mitigates against the worst-case scenario.
“You need to make your sure you have a commission contract behind any deal registration in case the vendor tries to deal directly with that customer at a later date.”
Either that or try to gain some sort of exclusivity rights with the vendor.
“If there was a product or a vendor that we were interested in said ‘You can have the product on a non-exclusive basis and we want deal registration’ then I would think that our shareholders would sit up and say ‘There are better things to look at and spend time and money on’.”
Chambers awaits with some trepidation the details of Wavecom’s new registration program in the wake of its acquisition of Sony Ericsson’s M2M business earlier this year, one of his biggest clients. He’s hoping that it won’t be cause for consternation but he hasn’t got his hopes up.
“You should never take a big company for granted – we took Sony Ericsson for granted and overnight they left the market.”
IDC’s Tim Sheedy says that there has been a lot of activity around deal registration in Australia over the last 6 months especially as vendors and the channel recognise its value in managing a market with one of the highest concentrations of small to medium businesses.
“Your ability to react to your pipeline is how you live and die in any sales role,
“If this is giving people a better ability to forecast then it is all hunky-dory for everyone.”
However it’s not to say that he is unaware of the flip side.
“That said I’m aware of a number of software resellers that have had their vendor go after the deal they have initiated.”
One integrator representing one of the bigger multinationals and who asked not to be named bristles at the mention of registration.
“I have registered many times and have been burned,” says its director. He explains that while most programs start out with all the best intentions the ‘human factor’ is often what lets them down.
“We’re talking about real people with real relationships – if you hear about an opportunity you’re going to tell your buddy,”
“There’s too much discretion involved which can work for or against certain parties.” The upshot is that registration systems must be designed to ensure that partners aren’t robbed of opportunities.
Frank Colli of Leading Solutions agrees and warns that it is often too easy for a rival company to come in and commit what he calls a “drive-by-shooting”.
“It’s good if everyone plays fair, the problem is people don’t always play fair: It’s a very sneaky world out there.”
A key reason why partners view registration as so risky is because for unscrupulous rivals, they’ve absolutely nothing to lose by going in hard as they’ve spent no money on the prospect.
“Dealers can listen out for deals that are going down,” Colli says.
“Because it cost them nothing to get the business they can go in at 1 percent margin.”
Veteran communications specialist now national sales manager of distributor TR Telecom, Ross Chiswell recognises the pitfalls but says that registration delivers mainly on the upside for his business.
“We definitely do it – because we’re an organisation involved in design we get involved with partners quite early in the piece.”
With more complex technologies and deployments it is not unusual for resellers to invest hundreds of hours in a client and the way the registration usually works for him has been to protect that effort.
“If they really have been working with the customer and have put a lot of time into it – we then register to the manufacturer.” This is especially important in cases where there are multiple distributors circling a deal when it pays to be a little forceful.
“If there are multiple disties for the project we seek to register the deal with the vendor to say ‘We as your distie are flagging that this as a significant project and it’s our channel that has brought it’. We then insist that we get the special pricing.”
Nevertheless, Chiswell relates a recent situation whereby one of his dealers had done all the leg work for a project only to be gazumped at the final hour.
“The price was shot because it was a quantity deal, it was a box drop then.” While it’s unfortunately inevitable that deals often pivot on price, Chiswell stresses that for the benefit of the client, money is the thing that should only come into play “eventually”.
Again this is one of the ideals of registration programs. How they are handled on the ground determines the actual outcome.
“Relationships are personal.”
“Some people haven’t got the necessary ethics involved to hold to the values of what the organisation is trying to do.”
Approaching registration carefully
That’s not something you need to tell Mathew Hatzitavlis, marketing unit manager with communications component distributor Soanar, based in Melbourne.
The company is one of the main distributors for Integrated Wireless and like Chambers, he is far from a convert to registration.
Soanar deals with around 80 different manufacturers from across Europe, Asia and the US all which maintain differing standards for registration. For instance while U.S companies usually make an effort to recognise things like first dealer status and design input, he says, Asian, especially Japanese, companies tend not to be so good.
“Business is tough and people get very creative with what they tell the vendors.”
“At the end of the day you just hope for morals and ethics - it’s a real curly one.”
It’s now policy at Soanar that reps request some sort of official recognition for the company’s design input in the manufacturer’s system. That way there is less room for confusion.
“From the outset it comes down to the part – if it’s not a commodity part we ask for an acknowledgement from the vendor such as a number or code added to their product.”
Only a few weeks ago Soanar was faced with yet another rival attempting to steal the business.
“We designed a part and another distie went in and quoted the business at a lower price.” Luckily because of the way in Soanar approaches its registration it maintained its position.
Philip Parton, CEO of Oracle partner Attain IT says generally those dealers who register prospects with the software vendor receive valuable support that they wouldn’t otherwise receive.
“The system works smoother if we register the deal.” Rather than telling stories of dealers that have had lost prospects that they have registered, he is more likely to relate cases whereby those that haven’t registered wished that they had.
“We warn resellers about the dangers of not registering: If there’s an offer already it gets declined – it’s first in best dressed.”
“In all my experiences from using this system not once have we had an Oracle rep’ dealing directly with the client once a deal has been registered.”
Register that deal!
By David Binning on Aug 10, 2006 9:44AM
This article appeared in the 202, August 7 issue of CRN magazine.
In The Spotlight
Page 1 of 2 | Single page
Got a news tip for our journalists? Share it with us anonymously here.