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Channel Conflict Study: Deal Registration Is Just ‘Good Enough’ Protection


By Lawrence M. Walsh

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 a vendors or suppliers arsenal. However, deal registration itself is not always effective, according to the new Channel Conflict Study from The 2112 Group.

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 more than double the next highest conflict management methodologies, co-selling and co-account management.

On a scale of 1 to 10, channel partners participating in The 2112 Group study gave deal registration a score of 6 in reducing channel conflict and protecting partner profitability. This highest rating as a tool and its moderate rating in effectiveness seems a contradiction, and it is. Deal registration is a staple of channel management and frequently is cited as a source of channel conflict and contention. The hard reality is that deal registration is the best tool, despite its flaws, in the absence of a viable alternative.

Since the dawn of the channel, conflict has been an inherent part of vendor-partner relationships. Even the most channel-centric vendors and suppliers periodically will 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 partners.

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. Of all the tools for managing conflict, none rise to the same effectiveness and acceptability level as deal registration.

Deal registration is a staple in nearly every substantial channel program. The details of deal registration programs 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 register deals and assign protection” and first rights” to the partner.

Vendors often will tout deal registration as a benefit to differentiate their channel programs and demonstrate their commitment to working with partners, ensuring market equality and contributing to partner profitability. The effectiveness of deal registration, though, isnt 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 percent of solution providers say vendors will honor 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 say vendors have rejected deal registration only to have their direct sales team hijack the opportunity, and one-quarter say 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 The 2112 Group theres 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 well enough, but only just. 

Lawrence M. Walsh president and CEO of The 2112 Group, a channel services company, and editor-in-chief of Channelnomics, a blog on channel business models and trends. He also is  executive director of the

Cloud & Technology Transformation Alliance

.  You can reach him at

lmwalsh@the2112group.com

.


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