General economic conditions and technology purchasing trends continue to impact partners’ revenue outlook for better or worse for 2013, according to results of the 2013 Channel Partners Compensation Survey.
Luckily, for almost half (45 percent) of respondents to the online poll fielded in October 2013, customer demand and business model transformation are translating into higher-than-expected earnings.
But for another 23 percent of partners, financial results are coming in lower than hoped, with blame laid on decreasing commission and margin structures, among other factors. Meanwhile, 32 percent of partners report revenue on target with expectations.
Those are just a couple of the takeaways from the latest survey, with master agents and agents/subagents once again forming the majority (59 percent) of respondents. Notably, however, voice/data VARs, systems integrators and MSPs comprised nearly a third (31 percent) and consultants rounded out the pool at 9 percent.
Despite a tough year from a macroeconomic perspective, the partners reporting revenue ahead or slightly ahead of expectations cited three key reasons:
Bigger Clients. To the first point, “Our per-order compensation has increased because the average size of our client has increased,” said one consultant. Indeed, many IT and telecom partners that traditionally have served small and medium businesses are finding the more midmarket companies (100-1,000 employees) no longer have time or internal resources for handling technology. Outside pressures such as government sequestration and the shutdown, a weak housing recovery, debt ceiling negotiations, still-high unemployment and more are forcing these companies to do more with less, and one important way they’re doing that is by outsourcing technology requirements to partners.
Bigger Bandwidth. There’s another component at play as well. “Even though prices are coming down on bandwidth, we are selling much more bandwidth, along with multiple carriers, because of redundancy demands,” one agent said. Redundancy in the form of network connections has grown more important as SMBs deploy cloud services and as workers, no matter their location, require access. Plus, natural disasters such as 2012’s havoc-wreaking Hurricane Sandy have made clear to organizations the need for more than one way, or even two ways, to connect to applications. So, while commissions on circuit sales have fallen, savvy partners providing more than one type of access method from coax to Ethernet to T1s say they are making more money.
Bigger Deals. Finally, other partners credit an entire business model shift for their higher-than-expected revenue. “We have seen an increase in the per-order compensation over the last year primarily because we have been moving up the stack by selling more application- and business process-driven services,” one partner said, highlighting hosted voice, enterprise SIP, IaaS, hosted mobility, cloud backup and managed NOC as some of those areas. To be sure, more partners are embracing cloud and IT technologies for their own survival, as a network-centric focus has proven too narrow in an evolving channel.
But even as half of respondents say they are thriving, another chunk is having difficulty. Nearly one in four (23 percent) said 2013 revenue was tracking behind or slightly behind expectations. Affected partners say there are various causes including:
Certainly it’s no secret that hardware and network-services margins are dwindling. And the reductions are hitting hard for the partners who count on that revenue. For example, “as retail prices drop, we are not meeting our prior revenue quotas based on dollars, and our comp has been slashed nearly in half by several carriers,” said one solution provider. Another partner, a VAR, agreed. “My incentives are much lower and my sales have dropped as a result.”
Kelly Teal is senior editor of Channel Partners.
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January 27 2020 @ 23:00:02 UTC