Factfile: Common program elements
Vendors often offer additional discounts based on the achievement of agreed targets. These can often make a difference on margin for all sales in a given period. For example, if your normal buy price is 10 percent off the manufacturer’s suggested retail price (MSRP), you might hit their target volume and then get 13 percent off not only your next purchase but on all the products already purchased over the target period.
Marketing development funds (MDF)
Similar to the rebate plan above, many vendors set aside a small percentage of total sales volume (usually three to five percent) and make this available to spend on approved marketing activities. MDF funds are usually subject to a minimum revenue achievement.
Most vendors want to hear about your new customer prospect as quickly as possible to maximise support and minimise infighting. This usually includes some price protection (see below) and special access to resources. Public tenders and RFP requests are almost always excluded from these types of programs. Deal registration also helps the vendor forecast. Some resellers are wary of deal registration because they think it will serve as intel for a direct sales teams to gazump the partner.
The key benefit of deal registration is often price protection. Most vendors will offer an additional discount for registered deals (10 percent is fairly common) and will only negotiate any special pricing with the nominated reseller. A very important tool for smaller, specialist organisations to protect themselves for what’s commonly referred to as a “drive-by attack”.
Your credit card company runs them, the supermarkets have one, even the movie theatres. Most vendors run a loyalty program to encourage you to sell more of their products. While rebates and MDF target the business owners, most loyalty programs are aimed squarely at salespeople. A well-run program rewards staff for growing your business, while a poor program can drag your business off in the wrong direction. The risk here is that any one vendor may start to have too much input into your sales strategy.
A few times a year, vendors like to take their top partners and really rev them up about new products, sales methods and promotions. Sometimes resellers need to sell loads to qualify, sometimes everyone gets to go. The big guys usually spare no expense (think HP, IBM and Cisco) but if you are a smaller reseller or boutique provider, you probably won’t get a ticket to this dance.
Vendors are always trying to widen their view of the market. This means that when a new product is released or an old product needs more attention there’s usually a good deal to be had. Watch for product bundles that can add real margin to your offering.
Events and roadshows
Vendors will often fully or partially sponsor your participation in an industry event or tradeshow. It’s a win-win situation. Your company gets funded to attend an event and prospect for new customers and their products and logo get displayed prominently.
Large established vendors frequently charge large sums for training and qualification on their product sets. If they have a large pool of resellers, there’s no reason not to. Smaller, challenger vendors will usually give away training for free. It’s good to have a mix of both in your portfolio.
Almost every vendor who is confident they make great gear will want your prospective customer to try it out. The good news is, they’ll usually let them try it for free. Sometimes the bigger guys will expect you to buy subsidised demo stock for trials, but with some careful negotiation you should be able to get trial equipment at no cost.
CRN worked with Paul Sadler, managing director of PushPull Marketing, and Pat Devlin, WatchGuard Technologies regional director, ANZ to define the most common schemes in marketing today.