4 Ways a Deal Registration Program Impacts Your Market Performance
A good Deal Registration Program: The practice of allowing a partner to “register” an opportunity and providing additional financial, sales and marketing support.
Now a standard program component in tech, a good deal registration program recognizes the cost of a partner’s efforts in working and closing a specific deal. In addition, it helps to protect that partner from one who comes in at the last minute and offers a lower price.
Before deal registration went mainstream, vendors only had special pricing. This was usually managed on spreadsheets, in emails and on partner phone calls to their “buddies” who gave whatever discount it would take to win the deal. There was no formal way to identify when partners were bidding against each other in a race to razor-thin margins. This had a negative impact all round:
- Partners weren’t making any money, especially on complex, competitive deals.
- Customers weren’t getting the level of support they wanted and needed.
- And vendor margins and brand image were vulnerable.
Today, the greatest challenge a vendor’s channel management team faces is demonstrating the deal registration program’s ROI to the company’s finance team.
In this blog I’m offering some options for measuring market impact. In a follow up post, I’ll discuss how an automated program can amplify and expand the benefits (Part II). And Part III will identify key factors to consider in successful deal registration program design.
Four Measures of Deal Registration Program Value
1. Grow Revenue and/or Expand Market Share
A good Deal Registration Program helps vendors by impacting two key components of the market share equation: presence to the addressable market and win rate. With a well-designed and managed deal registration program:
- You will “see” more deals through your partner network. With additional vendor support, partners are more willing to recommend or specify the vendor’s offer, so vendors should expect to participate in more of the partner’s opportunities. In technology markets, where partners can control 80%+ of the brand decision, a good deal registration program is a powerful way to capture partner mind share and sales effort. Conversely, if you don’t have a deal registration program and your competitors do, you must rely on your end-users to “pull through” your brand.
- Partners presenting your brand will win more often. The program improves the partner’s ability to compete on price while maintaining a margin that adequately covers the cost of the sale. It works to prevent the kind of sales short-cuts that result in confused and dissatisfied customers. Your partner (and your brand) are far less likely to be eliminated in the early stages of the sale. Your win rate should therefore improve to match or exceed the industry standard.
The net result of improvement on the above two performance metrics is sales and market share growth. You can model several scenarios to estimate what your specific improvement is likely to be in percentage points. Then translate to real numbers. Then answer this question: “What is an extra point of market share worth to your company?”
2. Stabilize or Improve Margins
Once you’ve modeled the top line improvement, there’s one more question to answer. “What are you willing to pay for that gain?” Deal registration programs help you keep within the cost parameters you set. The benefits impact all levels of the pricing/margin structure:
- You will take a managed “hit” on margin in the form of additional discount and/or rebate for your partners. The value you set reflects both the partner’s cost and the competitive environment. Initially, the program’s funding can be a carve-out from the overall incentive budget. But as you gain a history, the level can look back to reflect a percent of the previous year’s revenue improvement. Or it can be a forward-looking investment, essential to helping your company execute on a strategic initiative.
- Your partner has enough room to offer the end-user a competitive price knowing that other partners will not have this advantage for a time you determine – typically about six months. Of course, the partner retains the flexibility to reduce his margin to fulfill a quota requirement or to “pay” to enter a high-potential account.
- Street price (the partner’s price to the end-user) is competitive without falling to an unsustainably low value.
3. Improve Channel Partner Satisfaction and Loyalty
One of the most consistent criticisms that I hear partners voice about their vendors is: “They don’t understand my business” . But an effective deal registration program demonstrates that you do. In fact, not only do you understand their business, but you are ready to invest in helping your partners stay financially healthy. Therefore, you should definitely see an improvement in your channel partner satisfaction scores. But only if the deal registration program is designed correctly.
To learn more on how market leading vendors automate and manage their Deal Registration Programs, check out the Channel Mechanics capabilities page
4. Improve Customer Satisfaction
Although it may be difficult to demonstrate a one-to-one correlation between a deal registration program and improved customer satisfaction, you should see your customer satisfaction scores begin to rise. By compensating the partner for the required sales effort, the program helps ensure that the steps of the sales process (for example thorough needs assessment, demo, end-user training and support, etc.) can be completed in a quality and timely manner.
Next week, part II in the series “The Art of the Deal Registration Program” will examine How Automation Can Amplify and Expand Deal Reg Program Benefits. Followed by the third and final article “Deal Registration Best Practices“.