Making value add schemes work

1) Pay rebates, not discounts
The Cisco scheme works because the resellers get a rebate which is dependent upon customer satisfaction surveys. As they can’t be sure they will get it at the time of the sale, they can’t give it away to the customer as a discount!

2) Be targeted
One major supplier who is considering value add schemes is worried that they will simply mean giving extra discounts to those intermediaries who are already adding value. 

One answer is to define the goals very precisely. Cisco, for instance, is using value add schemes for a closely defined set of new products and new customers.  This degree of precision also keeps down the price tag for Cisco.  As one source commented: "Even on a voice over IP installation, maybe half the kit sold will be infrastructure products which will not qualify for the extra premium."

3)  Define value add clearly and carefully
Many partners will seek to do the absolute bare minimum to achieve any extra rebate which is going. So it is vital to define precisely what you mean by value-add very clearly and to have systems in place to measure it objectively.

Cisco uses a third party to conduct customer satisfaction surveys before paying the value-add rebate.  This makes the process measurable, independent and ties it into the ultimate arbiter of value add – the customer!

4) Try, try and try again
Julian Dent at VIA says: "With these programmes there will often be unforeseen implications that you can’t anticipate. You have to be willing to change." After less than 18 months, Cisco is already on the third iteration of its first value programme.  Marinelli says that you have to be ready to tweak such schemes several times to maximise effectiveness. Cisco, for instance, has doubled the reward for resellers selling voice over IP products.

HP has also made several changes to its programme.  Such changes are not a sign of weakness, but of a willingness to make value add schemes work.

It is important to recognise that there almost certainly will be further changes and to present these to your channel as a sign of evolution and commitment rather than panic!  Marinelli says it is vital to pilot schemes, maybe in one or two countries, before full launch.