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Lawrence Walsh

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Lawrence M Walsh is the president and CEO of The 2112 Group, a US-based channel consulting and research firm; editor-in-chief of the blog Channelnomics; and founder of the Cloud & Technology Transformation Alliance and Channel Vanguard Council.
By | Lawrence Walsh 20th July 2012 12:04

Survey: Deal registration will never stop channel bloodshed

But it's the best protection you can get

When it comes to maintaining a fair and level playing field in the channel, solution providers say deal registration is the most effective tool in the arsenal of a vendor or supplier. However, deal registration itself is not always effective, according to the new 2112 Channel Conflict Study.

The survey of 150 solution providers, managed service providers and telephony agents rated deal registration as the most effective tool for maintaining fairness and consistent channel sales engagements with partners.

Deal registration was rated as more than doubly effective as the next highest conflict management methodology. However, on a scale of 1 to 10, channel partners participating in research gave deal registration a score of 6 in reducing channel conflict and protecting partner profitability.

These conflicting ratings appear to be a contradiction, and so they are, but perhaps it's a case of deal registration being "the best of a bad lot". Deal registration is a staple of channel management and is frequently cited as a source of channel conflict and contention. The hard reality is that it is nevertheless the best tool, despite its flaws, in the absence of a viable alternative.

Vendors only channel-centric up to a point

Since the dawn of the channel, conflict has been an inherent part of vendor-partner relationships. Even the most channel-centric vendors and suppliers will periodically run into conflict over sales with their partners on every level. And channel conflicts come in many forms: vendors conflicting with partners, partners conflicting with partners, and customers driving conflict with suppliers and integrators.

In the grand scheme of partner relationships, vendors and suppliers employ several tools for managing channel conflict: rules of engagement, certifications and graduated benefits based on performance, business planning and co-selling agreements. But of all the tools for managing conflict, none rise to the same efficacy and acceptability level as deal registration.

In the survey's results, deal registration is rated overwhelmingly as the best tool used by vendors and suppliers to minimise channel conflict and even the playing field for selling IT products and services. Deal registration is preferred by solution providers twice as high as the next highest conflict management method, co-selling and co-account management.

Deal registration is a staple in nearly every substantial channel programme. The details of deal registration programmes vary, but the basic workings of all systems are the same: Typically through an automated application hosted on a partner portal, qualified solution providers submit sales opportunities to secure exclusivity and price protection. Vendor channel management reviews registered deals and assign “protection” and “first rights” to the partner.

Vendors will often tout deal registration as a benefit to differentiate their channel programmes and demonstrate their commitment to working with partners, ensuring market equality and contributing to partner profitability. The effectiveness of deal registration, though, isn’t consistent. Caveats often come with deal registration, as opportunity protection is not indefinite. Solution providers are often given a certain amount of time to close a deal, or else risk losing the registration and the ultimate sales opportunity.

Forty-one per cent of solution providers say vendors will honour and protect their partners’ interests once a sales opportunity is registered and accepted. However, a near-equal number say vendors are just as likely to reject deal registration applications and divert the opportunity to another partner. One-third of vendors say they have rejected deal registration only to have their direct sales team hijack the opportunity, and one-quarter says vendors have used deal registration records for later direct sales outreach.

The inconsistency of deal registration as an effective channel conflict management tool is reflective of several endemic problems in the channel. Vendors are under tremendous pressure to continually improve performance and meet revenue expectations. While channel partners are a means for expanding their ability to cover the total addressable market, many vendors lack confidence in their partners’ ability to close and fulfill sales.

At the same time, vendors over-distribute channels to ensure market coverage and engagement in as many sales opportunities as possible. This invariably leads to channel populations of partners with inconsistent capabilities and capacities – which then contributes to the lack of confidence in partners’ ability to close sales.

Solution providers tell 2112 there’s little accountability in the deal registration system. The concept and systems work out of a shared interest in preserving balance between the vendors’ need for continual growth and the solution providers’ need for reasonable market access and account integrity. The reality, many solution providers say, is that deal registration works just well enough... but only well enough. ®

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