Microsoft revamps distributor rebates

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Microsoft revamps distributor rebates

Paul Kunert

Microsoft has increased the complexity of its rebate programme for volume distributors by tripling the number of targets partners need to meet but it is too early to say if the changes are positive, negative or neutral.

Back-end rewards will no longer be solely paid on the breadth of reseller customers, but also on the frequency of reseller purchases and software sales targets for security, SharePoint and management tools which the vendor said are realistic.

Changes to the scheme were expected, as revealed by Microscope in May, and are the first in four years designed to make Computer 2000, Ingram Micro, Bell Microproducts and Westcoast more proactive in the SME market said Simon Aldous, Microsoft partner group manager.

"We are moving to more of a pay for performance model in terms of working with our distributors to drive certain objectives, we have a more targeted approach and a rebate structure that reflects that," he said.

The pot of funds will not be reduced Aldous insisted but split evenly between the three areas (reach, frequency and product category targets) with an ability to "over-achieve where that was not previously possible".

Microsoft said it will make more MDF available for distributors to create campaigns that increase the frequency of purchases and broaden market adoption in the three product areas.

Aldous refused to detail specific targets however revealed the aim is to grow Microsoft's UK sales 15 per cent. He did not agree the rebate changes would force distributors to work harder.

"They need to work smarter, we can segment the reseller and end user market far more effectively and will target those groups in a more efficient way," said Aldous.

The breakdown in components made the scheme more complex to manage said Alice Smitheman, product marketing director at C2000, though she agreed with the aim of the latest restructure.

Cathi Low, director of value business at Ingram Micro, agreed large vendors typically have a level of complexity in compensation schemes "designed to drive the right behaviour."

With eight key performance indicators across three areas, Microsoft may struggle to drive the right behaviour among distribution but partners will need to wait till the end of this quarter to analyse the impact.

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