Sage Software has made changes to its channel structure to offer more incentives and margin opportunities to solution providers in the CRM space.
According to Tom Miller, Sage channel chief, the company wants to better position SalesLogix against the competition by adding the right mix of incentives that will match current market drivers.
Jeff Gregorec, vice-president of sales and strategic alliances for Sage, said that the new structure will be tiered so that channel partners can make margin off product sales in ERP, Human Resources and CRM. SalesLogix is mostly a mid-market package for CRM and targets organizations of 200 employees. “This market is critical to us so primary incentives, margins and leads we hope will be a big driver for us in the channel and reduce barriers in each tier level by as much as 40 per cent,” Gregorec said.
He added this move is the best news he has ever delivered to the channel in his tenure at Sage. “For sales people with a quote; I’ve now reduced it by 40 per cent,” Gregorec said.
These changes were motivated by three things: the competitive landscape as Sage competes with 12 other vendors, how customers are buying software, and that the old system proved to be too hard for Sage channel partners.
In the first area, Gregorec said Sage wants to lower the bar for entry and promotion for channel partners. Currently Sage has five tiers to its channel program: Bronze, Silver, Gold, Platinum and Diamond. A solution provider can move up each tier easier through a combination of new product sales with total product sales. “This is not a perfect 40 per cent, but it’s a 40 per cent reduction on five tiers to help them move up and it will positively impact most of our channel,” Gregorec said.
In the new structure, a Bronze level solution provider would earn 25 per cent on products and 10 per cent on maintenance and support contracts. Moving up would net them 35 per cent in Silver with 12 per cent on maintenance and support.
Also customers are buying software in a hosted model and on premise. In on-premise the customer would pay up front, but more customers are looking to buy in a pay-as-you-go or on-demand way, said Miller. “There are many more transactions at a smaller price value and it became hard for the channel to meet the old requirements to get the same level of margins,” he said.
On premise does provide better long term return on investment, but more customers are apt to save on cap-ex costs. The buyer has also changed, according to Gregorec, as more vice president-level executives in what he called an “emotional buy” scenario are becoming customers.
For channel partners this trend has led to business issues. Gregorec said that many of Sage channel partners have had to decide to build their business from cash flow up front with services revenue or from on-demand transactions. “Sage will pay margins upfront for the total contract value,” Gregorec said.
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