Deal Registration
Deal Registration is a form of compensation as an incentive for previous issues common in the technology industry where a channel partner selling a technology product from a supplier is able to register their sales opportunity with the supplier to earn incentives exclusively available to the registrant.[1] This approach addresses the problem of asymmetrical sales cost in complex product sales, where sales cycles can take 60–180 days to complete.[why?]
Principles[edit]
In these kinds of complex sales cycles, a partner may develop, demonstrate the value and technical fit, and create an integration plan for a solution for a customer at significant expense, only to have the customer shop the solution around to other partners for a better price. In this case, the partners who are solicited to bid on the project by the customer have a low cost of sales because the originating partner has a high cost of sales due to the time spent developing the proposal. As a result, the partners who are solicited to bid tend to have a cost advantage over the partner who created the customer demand and solution.[2]
Over time, this has resulted in disinvestment by channel partners in developing new customer opportunities in lieu of waiting for bid proposals from customers for opportunities created by other partners. This disinvestment creates a drop in revenue for the technology supplier who relies on these channels for demand generation.
In deal registration, the originating partner registers the customer opportunity early in the sales process; typically early enough that they are the only partner aware of the opportunity, due to their role in creating it, and late enough to determine that the deal is potentially valid. Once the sale closes, regardless of which channel partner the customer chooses to purchase from, the supplier pays the originating partner an incentive payment for creating the deal. This effectively rewards the creation partners at a higher rate than the fulfillment partners, creating a virtuous cycle of opportunity creation by making the act of waiting for deals to come in a lower profit activity than creating opportunities.[2]
Program elements[edit]
Many deal registration programs exist with varying features, but generally, the programs contain registration requirements to determine that the opportunity is both significant and likely. This is accomplished by requiring information from the registering partner on customer identity, budget, the customer contact title and authority, a defined need for the product and other information.[3] Requiring this level of detail helps restrict partners' ability to register every customer in their market in order lock up the market. Second, most deal registration programs have time requirements - for example, that the opportunity be registered at least 45 days prior to its closing. This process ensures that the orders that are customer-originated, such as reorders for additional products, are not subject to the same incentives while orders that are created by the channel partners are still eligible.[4] Typically, rules exist regarding deal size, both on minimum and maximum order size; this ensures that the cost of administration relative to the value of the incentive is reasonable, as well as capping the maximum amount of payout.
Administration[edit]
Many vendors who adopt deal registration programs use a third party company to administer or provide technology solutions to enable the quick adoption of the program.[5][6] These solutions are typically integrated into a full partner relationship management application, or exist as a web front-end to the vendors' customer relationship management (CRM) system.
Origin[edit]
Deal Registration has been around since at least the 1980s, and possibly earlier. At that time, it was a common practice to reduce conflict in the OEM component market for hard drives, tape drives, and similar technology. The goal of the program was to allow partners to register deals to award an advantage to the partner who contributed the most value add in the sales cycle, vs. other partner-competitors or the manufacturer's own direct sales representatives. Since introduction, deal registration has become a standard feature of partner programs and vendors who do not offer a variant of deal registration are rare.
Criticism[edit]
Critics of deal registration argue that many partners poach and troll vendor deal registration programs, and those who do so do not deserve the best pricing on merit for registering in the program first. Another downside is that manufacturer sales representatives may favor one partner over another, and accordingly award registration. Both of these instances go against the spirit of the program, which is to award the partner who found the lead, developed the opportunity, added the most value to the sale process for the customer, and can then get the project adopted by a manufacturer.
References[edit]
- ↑ "What is deal registration? - Definition from TWhatIs.com". Searchitchannel.techtarget.com. Retrieved 2013-04-18.
- ↑ 2.0 2.1 "Why Every Company Needs Deal Registration And Partner Certification Programs?". Street articles.com. Retrieved 2013-04-18.
- ↑ ""The Channels Connection" Newsletter: Secrets of Successful Deal Registration Programs". Imakenews.com. 2005-01-11. Retrieved 2013-04-18.
- ↑ http://channelfocus.baptie.com/cfs-filesystemfile.ashx/__key/CommunityServer.Components.PostAttachments/00.00.00.02.79/Best_5F00_Practices_5F00_in_5F00_Deal_5F00_Registration.pdf
- ↑ Jessica Davis (2007-12-05). "Dell Picks Salesforce.com PRM Platform - News news from". Channel Insider. Retrieved 2013-04-18.
- ↑ Jessica Davis (2008-06-05). "Boosting Revenue While Reducing Channel Conflict - Microsoft news from". Channel Insider. Retrieved 2013-04-18.
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