Google's new channel program: more lucrative but much tougher

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Google's new channel program: more lucrative but much tougher

Google is ringing in 2015 with some significant changes to its partner program, which is not only more lucrative, but also more exclusive, according to documents obtained by CRN in the United States.

Premier partners, such as large resellers and managed services providers, will see their margins jump to 30 percent for products such as Google Apps For Work and Search For Work.

But Google has upped the requirements to reach Premier status, meaning potentially far fewer partners will actually qualify for the top tier.

While Google has not released the information to the public, CRN US obtained documents and compensation schedules sent to the Mountain View, California-based tech giant's global network of partners, detailing the nature of the revamped programs (CRN Australia has not seen these documents).

The new partner program came into effect 1 January, merging seven product-specific partner programs under a Google For Work and Education Partner Program umbrella.

The most significant change is the margins increase for Premier partners from 20 percent to 30 percent – news of which was broken by the Wall Street Journal in early December, before Google could inform its partners of the impending overhaul.

One local partner confirmed that the program changes were the same for Google's Australian channel.

He told CRN Australia it was evidence of Google "growing up" as a channel vendor.

"I support the move. For a while, just about everyone here was a Premier partner. It will spread out the pack. I think it [US$500,000] is a reasonable mark. Yes, it is based on US dynamics but it is not that different here."

For many partners, the new half-million-dollar mark will represent a substantial increase, in large part because the direct-sourcing requirement amplifies the shortfall they have to make up.

Google also is implementing a US$4,000 revenue requirement to qualify for the standard partner tier, which before just required deploying a certain number of seats.

Another change introduced this year is that transfer rates, which resellers earn from taking on customers already doing business with Google, have decreased for some products – for Apps down to 15 percent from 20 percent.

In the documents sent to partners, Google said the changes are meant to reward those who invest significantly in skills and technical certifications. The new Premier tier is "for partners who demonstrate significantly higher levels of competency and success".

Google notes most partners will find themselves in the lower tier, with the same margins all partners have seen in the past.

Tony Chadwick, co-founder of Queensland-based Premier partner Rype Ideas, said the vendor was "seriously raising the bar" for Premier partners.

"There will only be one or two in Australia that will be able to meet that criteria."

Chadwick told CRN Australia that while achieving the revenue threshold would be a challenge, "we will have serious crack at making those numbers gel for us".

He said he wasn't motivated by the uplift in fees at the Premier tier as much as the credibility for being one of the country's top Google partners.

"It is not because of the commission level, it is the referral model that will come with that. If we could say, 'We have done everything from a 20,000-seat enterprise business to a one-person tradie, Google would naturally engage us into more deals around Australia'.

"We helped Xero to go to Google and that was enormous credibility for us. We didn't do the whole integration but where they needed training, they called on us to help."

Next: Making it simpler

The simplified two-tier program breaks down into three tracks: sales, service and technology.

The sales track covers high-volume resellers that generate revenue primarily by selling licenses; the service track applies to solution providers offering end-to-end services going beyond simply selling the product, such as systems integrators, MSPs and cloud brokers; and the technology track is for application developers complementing Google's technology.

By abandoning separate product programs, Google also is making it easier for partners to sell multiple enterprise products across the portfolio, like Maps For Work, Search For Work, Apps For Work and Chrome, one American partner told CRN US.

Some partners are thrilled with the changes, which will, as one partner told CRN US, "separate the men from the boys."

While partners in danger of losing Premier status don't need to worry about seeing their margins decrease, many are irked to be relegated to the lower tier.

The UK partner complained on a message board that while selling Microsoft Office 365 seemed a more financially lucrative decision, his company chose Google and has been evangelising its technology to an often skeptical business clientele. No fathomable level of success in his market would see sales exceed the half-million-dollar mark, he said.

"We would imagine that an awful lot of Premier partners (we were working towards that ) being relegated to standard partners is a very bitter pill to swallow. What a kick in the teeth!" that partner wrote.

Another partner based in Ireland wrote on the same message board that his entire country doesn't have enough business to make the threshold realistic for any partners.

"We won't be a Premier partner at the end of 2015, it is simply not possible, even if we got all the business," he wrote, speculating the same could be said for all small European countries.

"This strategy means there will be no indigenous Premier partners in any of those territories," the partner wrote, adding he believes the reason for the changes was diminishing sales of Google Apps and the decision to drive more business to a smaller set of partners to make sure they stay afloat.

Google's notice tells legacy Premier partners who wouldn't qualify under the new threshold that they can continue in the Premier tier through the transitional year of 2015. They then will be evaluated on the previous four quarters of performance, and if they don't meet the new standards, they will be dropped down to standard.

In a Frequently Asked Questions document sent to partners also obtained by CRN US, Google informed the community it developed the new program after considering feedback from its Partner Advisory Boards and annual Partner Satisfaction survey.

"We believe the changes will drive further profitability for your business, simplify the program and processes," reads the document.

Next: Maturing program

Google's channel program is relatively young. When the program first launched, much partner business came from customers who first purchased direct from Google, but then realised they would benefit from a relationship with a solution provider.

Google Australia did not respond to our requests for comment.

While Google would not comment to CRN US on this story because it is based on leaked documents, it did respond to upset partners on the same message board hosting the complaints cited above.

Louise Byrne, a London-based director of partner operations for Google, noted in the forum that news of some of the upcoming changes – consolidation of partner programs and higher margins – broke unexpectedly, the result of the leak to the Wall Street Journal. Google was caught off-guard and had not yet planned all communications around the issue, she wrote.

But she said Google listened extensively to partner feedback and took into account the evolution of the market and its own products before structuring the new program. "Continued evolution of our products will ensure both more profitable license opportunities for our partners and more service opportunities," she wrote.

"Partners globally wanted the word 'partner' to truly mean something in the market and felt that the existing entry requirements did not reflect the strength of the partners in our ecosystem and the value that they can bring to our customers (we also got this feedback from our customers).

"When we examined our ecosystem we felt that the focus should be on helping our existing committed partners grow and be successful rather than having thousands more partners to join up (which is what would have happened if we had not changed requirements)," Byrne wrote on the board.

The Google executive also said that the changes encourage partners to focus on obtaining new customers, rather than maintaining revenues from legacy ones.

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