VMware explains new ‘tier credits’ channel plan

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VMware explains new ‘tier credits’ channel plan

VMware has revealed how its re-vamped channel program will reward partners.

A new blog post from the company’s global channel team explains how the new program will deliver revenue to partners through “tier credits”.

The aim of tier credits is to reward partners consistently regardless of what VMware products they sell and the consumption model used to sell it.

"Partners who resell subscription services or who focus on cloud consumption don’t have the same revenue model as a partner who resells licenses for on-premises software,” the post says. “Partners across all business models need to support all facets of customer demand, and a tier credit model helps eliminate the inequities along different types of transactions.”

That translates into a scheme whereby every sale “starts with a base level of tier credits corresponding to the dollar value of the transaction. Multipliers are then applied to the value of transactions based on the licensing model, market size, and solution maturity.”

Here’s VMware’s diagram explaining how this works.

VMware's new tier credits scheme explained. Click to enlarge. Source: VMware

Credits will also determine which tier of VMware's channel a partner can attain, although scoring Platinum status will also require one of the vendor's new Master Service Competencies.

The post says this scheme “follows a well-known rule of smart business: Keep things simple and easy to understand.”

But it sure looks like partners will have a lot to keep track of to understand their credit balance and what it means: the post says VMware will “… define sales performance thresholds for each strategic initiative. If a partner focuses on Data Center Virtualization and Network & Security, they can earn different tier credits for each — with unique sales performance thresholds and competency requirements for each focus area.” 

The post details how VMware will release more information ahead of the full 29 February 2020 launch of the full new program.

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