Cisco lets customers decide back-end rebates

A new incentive laden program is coming out of Cisco Systems Canada that is intended to increase margins and solve current channel conflicts. But Cisco has added a unique twist to this program called the Value Incentive Program.

For Cisco partners to qualify for the back end rebate they first

must meet stringent customer satisfaction quotas.

Specialized Cisco IP telephony and VPN partners will get paid a 10 per cent back end cash rebate, which will be given at the end of a six month period.

Edison Peres, vice-president, emerging technologies, worldwide channels for Cisco, said the company wants to make sure it is not paying within the current accounts/receivable period because people tend to want to use it to drive more business.

“”The objective here is to keep profitability and not take it to the street,”” he said.

The twist is that Cisco has added customer satisfaction criteria to the program, which requires partners to attain a minimum of 4.16 out of five rating. Cisco developed a customer and partner satisfaction program with a scoring system late last year. (See story “”Cisco can’t get enough VAR satisfaction on

That score is currently for U.S.-based partners only. A minimum customer satisfaction score for Canadian partners is still in the works, but Frank Sullivan, Cisco’s channel account manager for worldwide channels indicated that it would be close to the U.S. number.

“”It is not guaranteed that you will get the 10 per cent if you did not make the customer satisfied,”” Peres said.

Also, the rebate will be an all or nothing. Partners who score 4.15 or less will get nothing, Peres added.

The Value Incentive Program will also deal with the issue between Cisco’s solution provider partners and telecom service providers that offer deep discounts on Cisco products and thusly bring the price and reseller margins down.

“”We added a level of risk to the program. If you don’t know you are going to get it you are apt to not give it away,”” Peres said. With this aspect in place, Cisco is trying to ensure that there is a strong level of price protection for these partners.

In the U.S. Cisco has lopped off half of its authorized specialize partners from 450 down to 220. In Canada, Cisco didn’t have as a dramatic reduction because they managed which partners it wanted up front, Peres said.

According to Sullivan, Canada has 17 IP specialized partners and only 27 others who hold valid specialized VPN authorization.

“”In Canada in terms of this whole emerging IP communications area since the beginning of the year and going back two fiscal years we have had a team deployed that spent a lot of time educating partners to raise their skills sets in this technology. Also, we have assisted our enterprise sales force, our high touch guys, increasing their competency in managing deals from inception to close. We have a team in place and the channel piece

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Jim Love, Chief Content Officer, IT World Canada

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