While providers (especially public ones) look quarter to quarter, they expect agents to think and act long term. “Stop going with the lowest price or the highest Spiff!” Oh, okay. Since you want to tell me how to run my agent business (particularly when most have never been an agent or partner), then allow me tell you what we are thinking.
“How does a partner choose a vendor for a client?”
The jaded tend to presume the answer is the SPIFF. “Partners will choose the vendor that pays the most” is what the jaded say (maybe to deflect on why partners are ignoring their company. It is easier to blame it on partners selling on price or commission.) Partners will tell you that they choose the best fit for the customer.
In network services, there is not much difference in pipe or ping. The factors that may come in to play are which carrier has network in the area and how soon does the customer need it to turn up.
In unified communications (and cloud services), the compensation varies greatly, but the differences between providers are negligible. Providers will argue that point, but unless a customer is looking for something specific (like account codes or integration into a specific software) the providers of unified communications have about the same feature sets.
In addition, there isn’t much differentiation in service deployment. The providers are trying to save money; they have not invested in PMO (project management organization) or white glove deployment services.
This leaves the partner with deciding which provider to work with. The factors can include which channel manager is better; which provider has the least friction; and yes even which one pays better. There is another component though. Many partners want to develop a significant book of business with one provider in order to get better service or more attention. This model is help over from Microsoft and Cisco partners who would continue their business model in order to maintain a service and support level (and discount tier) with the vendor.
Another consideration is MDF. If the partner has taken marketing funds from a provider, the partner will want to push some orders to that vendor. A quid pro quo, if you will.
There are quite a few instances where a partner firm would sell a provider despite the compensation being lower. One instance may be that the vendor provides leads or has a co-sale program. If a partner gets leads from a vendor, there is a tacit obligation to sell that vendor’s services.
Another reason may be the Opportunity. The partner may think that one offering has a market advantage. The partner might actually like one product over another. There have been cases attributable to a partner choosing to sell a product line for the exclusivity (or at least that not many other firms would be selling it).
Vendors have said that selling based on compensation is wrong and at least short sided. It isn’t in the customers’ best interest. Well, partners have to eat. Compensation is the revenue. With most things being similar, why not sell the vendor who pays the most?
In many cases, the deciding factors are features and price. If those factors are similar, what are the criteria for choosing? Since no service provider is known for its stellar customer service or its remarkable deployment, doesn’t the choice land on the partner, who, in fact, has to bridge the gap on both deployment and customer service shortfalls of the provider?
Partners get a rap for selling on compensation. And that may cost them customers and referrals down the road if they choose poorly and solely based on revenue. Let’s reiterate that to the marketplace, the features, deployment, customer service and service quality are about the same. So what criterion should the partner choose?
One more point to make: as partners transition to a recurring revenue model, their business may still be running on a hardware sale model. In this case, they need the SPIFF money to cash flow the business until the recurring revenue hits a point to be sustaining – which may take a year or two!
To conclude, vendors that complain about this usually pay less and are not remarkable in service delivery. It is CX (customer experience), price, compensation or feature that go into the determination.
SIDE BAR TO THE CEO:
Note: most CEOs right now are focused on #4: feature, when that is only a component when it is exclusive AND the customer has to have it! CEO’s SHOULD be focused on CX! Instead of adding more services to the catalog, get better at delivering what you have. Instead of focusing on #4 (and dismissing everything else I wrote, remember that customer retention starts with service delivery!)
I have written numerous times about the lack of branding, differentiation and marketing (good story-telling) in telecommunications. Marketing is Every Touch of the Customer. Marketing is CX.
To be Remarkable means that the customer thinks it should be talked about – Word of Mouth!