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Motivation - Simplicity Drives Success
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Motivation - Simplicity Drives Success

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  • 1. partners incentives cloud reporting insights simplicity drives success 2014 channel strategy study
  • 2. table of contents
  • 3. executive summary 5 methodology 6 key findings 7 partner insights 8 incentive insights 12 cloud insights 16 reporting insights 19
  • 4. do something different: simplify
  • 5. executive summary I’m pleased to present the parago 2014 channel strategy report. We’ve proven that the channel is alive and well, but there are important opportunities to consider in the next 12 months. dare to simplify The good news? Vendors are doing a great job of offering a broad array of essential engagement solutions. However, they’re not offering unique services that simplify their partners’ go-to-market programs. The opportunity? Innovate and differentiate. The key is simplification. Most partners engage in more than six channel programs, so they want — and actually need — easy and creative incentives. the cloud challenge is here It’s no surprise that the cloud is a critical factor for future success. Now is the time to get serious about developing an agile strategy to help partners migrate to a recurring revenue model. smarter reporting is critical Our research revealed that most vendors — even those with over $1 billion in annual revenues — have limited insight into the impact of their partner incentive investments. They need a seamless channel platform that aggregates data across the board. Enjoy this report. I’d like to hear your thoughts about our discoveries. Feel free to reach out to me directly. Dan Hawtof VP of Business Solutions, Global Channel and Employee 972.538.4017 dan.hawtof@parago.com parago.com/channel @paragochannel
  • 6. methodology survey participants vendor annual revenue Small Vendors < $100M in revenue 52% Mid-size Vendors $100M – $1B in revenue 22% Large Vendors > $1B in revenue respondents’ titles 26% other respondents’ titles Senior Manager or Manager 45% Senior Director or Director 24% Vice President 16% Executive or Senior Vice President 10% Other 5% • CEO • Channel Consultant • Analyst • Global Key Account Manager • Global Channel Program Manager
  • 7. key findings good thoughts Great news: our research shows that the channel is stronger than ever. In fact, 2014 vendor strategies include plenty of growth initiatives. channel investment is growing 34 vendors of 95% of vendors will increase or maintain partner incentives in 2014. over 75% of vendors will add new sales enablement tools in 2014. increased or maintained their partner incentive participation in 2013. today’s goals, tomorrow’s vision only 1 in 10 3 5 vendors in vendors currently gets more than 90% of revenue from the cloud. 1 # are adding cloud services in 2014. The cloud is coming, and hybrid models will be the norm. most important 2014 vendor initiative: simplifying the identification and recruitment of new partners. 1 in 5 vendors still offer only a legacy model.
  • 8. partner ecosystem a diverse partner base is important  1 # VARs 2 # 3 # Distributors System Integrators The most common partners across all vendor revenue profiles. 4 # Rank of Managed Service Providers by Large and Mid-size Vendors. who are your partners? (Please select all that apply.) mid-size vendors $100M – $1B in revenue small vendors < $100M in revenue value-added reseller (VAR) direct market seller (DMR) distributor magaged service provider hosting-service provider system integrator (SI) other 76% 38% 54% 24% 33% 9% 14% 100% 38% 54% 54% 31% 77% 0% total large vendors > $1B in revenue value-added reseller (VAR) direct market seller (DMR) distributor magaged service provider hosting-service provider system integrator (SI) other value-added reseller (VAR) direct market seller (DMR) distributor magaged service provider hosting-service provider system integrator (SI) other 100% 63% 92% 71% 42% 88% 0% value-added reseller (VAR) direct market seller (DMR) distributor magaged service provider hosting-service provider system integrator (SI) other 90% 49% 72% 49% 35% 55% 5%
  • 9. partner engagement channel investment is increasing 75% of all vendors will invest more in partner enablement tools. 60% of all vendors will increase partner incentives. 90% of Large Vendors will add new partner enablement tools. 70% of Small Vendors will increase partner incentives. how do you see your channel engagement model changing in the next 12 months? (Please select all that apply.) small vendors < $100M in revenue increase incentives decrease incentives offer new sales tools eliminate sales tools introduce business planning mid-size vendors $100M – $1B in revenue 67% 5% 62% 0% 29% 62% 15% 69% 0% 23% total large vendors > $1B in revenue increase incentives decrease incentives offer new sales tools eliminate sales tools introduce business planning increase incentives decrease incentives offer new sales tools eliminate sales tools introduce business planning 50% 0% 92% 0% 42% increase incentives decrease incentives offer new sales tools eliminate sales tools introduce business planning 57% 7% 75% 0% 32%
  • 10. partner identification partner recruitment is essential engaging new partners vendors is the most important 2014 initiative, especially for Mid-size and Small Vendors. want help shifting partners from legacy to recurring revenue incentive models. please rank, in order of importance, the changes you anticipate in your channel in the next 12 months. 5  = Most Important small vendors < $100M in revenue identify new partners help shift to recurring shift incentive budget narrow partner base mid-size vendors $100M – $1B in revenue 4.5 3.6 2.9 2.3 4.5 3.6 2.9 2.3 total large vendors > $1B in revenue identify new partners help shift to recurring shift incentive budget narrow partner base identify new partners help shift to recurring shift incentive budget narrow partner base 3.9 4.0 2.8 2.5 identify new partners help shift to recurring shift incentive budget narrow partner base 4.3 3.8 2.7 2.6
  • 11. partner ease partners want simple-to-use programs No vendors rated their own partner incentive programs as “very easy.” discounts promotions MDF, points and rebate incentives partner engagement needs to be easier. how easy do you think it is for partners to participate in your incentive programs? 5 = Very Easy small vendors < $100M in revenue MDF points rebates promotions discounts mid-size vendors $100M – $1B in revenue 3.0 3.2 3.0 3.6 4.2 large vendors > $1B in revenue MDF points rebates promotions discounts MDF points rebates promotions discounts 3.2 2.9 3.2 3.7 3.8 total 3.0 2.9 3.2 3.7 3.8 MDF points rebates promotions discounts 3.1 3.0 3.0 3.6 3.9
  • 12. incentive participation partners want more incentives > 75% 58% 10% of vendors maintained or increased their partner incentive participation in 2013. Large Vendors saw the greatest growth. Small Vendors had the only decrease. how has partner participation in your incentive program changed in the last 12 months? key small vendors < $100M in revenue 10% 43% 38% 10% i don’t know participation increased participation same mid-size vendors $100M – $1B in revenue participation decreased no answer 15% 38% 38% 24% large vendors > $1B in revenue 25% 17% 58% total 2% 18% 47% 28% 5%
  • 13. incentive preferences all incentives make an impact A combination of all incentive types is essential for 2014 strategies. MDF and Discounts lead by a very slim margin. Vendors think all partner incentives impact the bottom line equally. please rank the incentives provided to your partners in order of impact to your business. 5 = Most Important small vendors < $100M in revenue MDF discounts rebates promotions points mid-size vendors $100M – $1B in revenue 3.3 3.3 2.8 2.7 2.9 3.8 3.3 2.9 2.7 2.3 total large vendors > $1B in revenue MDF discounts rebates promotions points MDF discounts rebates promotions points 3.2 3.4 3.1 2.9 2.4 MDF discounts rebates promotions points 3.4 3.4 3.0 2.7 2.5
  • 14. refocus incentive create recurring revenue models 1 # shifting to recurring revenue incentives is the top financial focus for all vendors. It beats deal registration and lead generation combined. driving training and certification is the top financial focus for Mid-size Vendors. what is the number one shift that you plan to make in your channel? small vendors < $100M in revenue recurring revenue deal registration drive training drive MDF lead generation drive case studies other mid-size vendors $100M – $1B in revenue 49% 31% 10% 0% 10% 0% 0% 23% 0% 31% 23% 15% 0% 8% total large vendors > $1B in revenue recurring revenue deal registration drive training drive MDF lead generation drive case studies other recurring revenue deal registration drive training drive MDF lead generation drive case studies other 34% 26% 9% 18% 9% 4% 0% recurring revenue deal registration drive training drive MDF lead generation drive case studies other 36% 21% 15% 13% 11% 2% 2%
  • 15. incentive challenges budgets are not a problem 2X transitioning to a recurring revenue model is the greatest challenge for all vendors. 2X as many of them identified this change as their primary pain point. Small and Mid-size Vendors are focused on incenting partner participation what is the greatest challenge to your incentive program in the next 12 months? small vendors < $100M in revenue transitioning recurring reporting partcipation budget other mid-size vendors $100M – $1B in revenue 29% 26% 26% 14% 5% 62% 8% 22% 8% 0% total large vendors > $1B in revenue transitioning recurring reporting partcipation budget other transitioning recurring reporting partcipation budget other 43% 30% 18% 9% 0% transitioning recurring reporting partcipation budget other 43% 22% 21% 12% 2%
  • 16. cloud revenue the cloud is growing hybrid models are what all vendors must develop to maintain legacy business while managing transition to recurring revenue programs. over 2 3 40% vendors expect >11% growth in their 2014 cloud revenue. of Large Vendors expect > 20% growth. out of please estimate how much you expect your company’s cloud services revenue to increase/decrease over the next year. small vendors < $100M in revenue mid-size vendors $100M – $1B in revenue no growth increase 1% – 10% increase 11% – 20% increase 21% – 30% increase > 30% i don’t know 24% 5% 14% 5% 52% 0% 0% 60% 0% 19% 27% 27% 19% 8% 0% large vendors > $1B in revenue 60% total no growth increase 1% – 10% increase 11% – 20% increase 21% – 30% increase > 30% i don’t know  0% 20% 25% 38% 4% 13% 0% no growth increase 1% – 10% increase 11% – 20% increase 21% – 30% increase > 30%  i don’t know 60% no growth increase 1% – 10% increase 11% – 20% increase 21% – 30% increase > 30% i don’t know 10% 14% 22% 23% 23% 8% 0% 60%
  • 17. driving the cloud vendors need hybrid models 25% 30% = Half of vendors will dedicate up to 25% of budget on servicing their cloud. Half of vendors expect to get up to 30% of revenue from the cloud. vendors are aligning cloud budgets to expected cloud revenue. what percentage of your channel budget will be focused on driving your cloud business in the next 12 months? small vendors < $100M in revenue mid-size vendors $100M – $1B in revenue 0% 1 – 10% 11 – 25% 26% – 50% 51 – 75% 76 – 100% i don’t know 19% 24% 10% 10% 14% 19% 4% 0% 40% 0% 15% 23% 9% 23% 15% 15% 0% large vendors > $1B in revenue 40% total 0% 1 – 10% 11 – 25% 26% – 50% 51 – 75% 76 – 100% i don’t know 0% 29% 33% 4% 4% 8% 22% 0% 0% 1 – 10% 11 – 25% 26% – 50% 51 – 75% 76 – 100% i don’t know 40% 0% 1 – 10% 11 – 25% 26% – 50% 51 – 75% 76 – 100% i don’t know 7% 23% 22% 7% 8% 19% 14% 0% 40%
  • 18. cloud services plan your cloud transition 1 5 3 5 1 5 in the cloud is coming, vendors focus only on legacy model. but the channel is still in transition. in vendors are adding cloud services. in vendors have fully migrated to the cloud. describe your product/sales model (Please select all that apply.) small vendors < $100M in revenue product only model adding cloud services selling some cloud provide cloud offer hybrid model migrating to cloud fully in cloud mid-size vendors $100M – $1B in revenue 31% 54% 46% 31% 23% 0% 15% product only model adding cloud services selling some cloud provide cloud offer hybrid model migrating to cloud fully in cloud large vendors > $1B in revenue product only model adding cloud services selling some cloud provide cloud offer hybrid model migrating to cloud fully in cloud 25% 75% 50% 25% 63% 3% 25% total 18% 71% 7% 52% 34% 3% 13% product only model adding cloud services selling some cloud provide cloud offer hybrid model migrating to cloud fully in cloud 26% 65% 60% 39% 36% 3% 15%
  • 19. reporting matters simple reporting is required Surprisingly, the Large Vendors — who probably have the most resources — have the least visibility into quantifiable incentive effectiveness. 4 out of 5 vendors have limited or no insight into the impact of their partner incentive investments. are you able to effectively measure the impact of your incentive investment? small vendors < $100M in revenue no insight limited insight complete insights mid-size vendors $100M – $1B in revenue 10% 71% 19% large vendors > $1B in revenue no insight limited insight complete insights no insight limited insight complete insights 15% 54% 31% total 5% 80% 15% no insight limited insight complete insights 9% 72% 19%
  • 20. channel as simple as possible parago simplifies channel engagement for greater ROI with industry leading insights and flexible technology through global and local incentives, marketing, and partner relationship management. At parago, we: • serve over 20 channel clients with 3 million partners worldwide • deliver $2 billion in rewards to 50 million people annually • launched 29 industry firsts and hold 4 patents • are ranked by Ad Age as the 16th largest promotional agency and the 42nd largest digital agency Dan Hawtof VP of Business Solutions, Global Channel and Employee 972.538.4017 dan.hawtof@parago.com parago.com/channel @paragochannel © 2013 parago, inc. All rights reserved.