In previous posts on the topic, The Art of the Deal Registration Program, we identified some options for cost justifying a deal registration program. We also examined how automation can amplify and expand deal registration program benefits. This latest blog on the topic addresses deal registration best practices for successful program design.
Full disclosure: I am a big proponent of deal registration when it aligns with vendor market position, strategy and offer complexity. That is to say I do not favor “blanket” programs that essentially attach deal registration to every deal. I know, however, that there is no single “right way” to design these programs and offer these best practices in deal registration as guidelines for vendors.
Deal registration requires a minimum level of partner mindshare to be successful. These programs have the greatest return for vendors who account for at least 8% of their partners’ total business. As a rule of thumb, vendors who account for less than 5% of their partners’ total business have poor results. If you fall into this position, you may be better off investing in other ways to gain mindshare, loyalty and sales growth. Examples here include: improved efficiencies that promote ease of doing business, end-user pull-through or branding campaigns, or a killer lead program that brings new business to your partners.
In my opinion, deal registration works best when applied to deals with specific characteristics:
– Firstly, complex deals requiring high levels of technical support. You want your partners to be able to offer a competitive price while delivering the support the end-user wants and needs.
– And secondly, large deals that are highly competitive and require significant levels of administrative support and coordination.
A relatively “simple” deal in which both the technical competence requirement and the risk to customer satisfaction are low is, in theory, not a cost-effective candidate for deal registration.
Best practice in deal registration is to offer the program only to those partners who are capable of selling and closing the deal. This capability has two key dimensions:
– Technical competence, as demonstrated by certification level and/or ability to meet product authorization criteria
– Market served. This variable is relevant when the offer is targeted at a specific account size (ex. large accounts, SMB, etc.) or vertical.
Thanks to automated tools, this degree of partner targeting is easy to accomplish.
Deal milestones help vendors and partners track progress and identify problems early on. Although they do add a level of complexity to the program, they are invaluable in fostering effective collaboration between vendor and partner. However, if you’re not prepared to manage these milestones, it’s best not to include them if you want to maintain credibility with your partners.
It’s best practice to align program complexity to your market position and level of maturity in channel management. If you believe your market position would benefit from a deal registration program, but you’re not equipped for complexity, begin with a simple design that you can modify as you mature. Automated tools make this type of evolution extremely painless.
When it comes to best practice in deal registration program design, the financial incentive (discount and/or rebate) should reflect the degree of effort involved as well as the competitive environment. If there is contention or disagreement on the amount, consider undertaking an activities-based cost analysis to understand the full cost of the sale. This kind of analysis provides vendors with a solid quantitative baseline that can be modified around competitive conditions.
After the above two factors, the most important factor to consider when modelling program cost and impact is program participation rate. This measures the number of partners participating in a given program and the revenue they represent. Depending on your portfolio and partner community, partner participation rates can vary significantly. They can have a significant impact on program expense and results. For example, if total sales through partners is $100M, but deal registration only applies to deals accounting for $30M, the deal registration rebate budget should only be applied to that $30M.
When designing a program, deal registration best practice is to identify “what can go wrong” up-front and develop a policy for each scenario. Examples include what to do if:
– It’s a multi-partner deal
– The customer wants a partner different from the partner who registered the deal
– The customer (or partner) wants more direct involvement
– A specific partner abuses the program
Net/net, when deal registration best practices are applied to program design, deal registration becomes a powerful competitive tool that offers vendors greater financial stability, while simultaneously growing partner mindshare and loyalty. New channel automation software eliminates the headaches of the past and gives vendors many options for program design and management. The design itself, however, is best left to each vendor’s understanding of their market power, portfolio partner competence and competitive environment.
To learn more on how market leading vendors automate and manage their Deal Registration programs, check out the Channel Mechanics Deal Registration Software