The PC maker took the wraps off the program Dec. 5—nearly seven months after announcing that it would create such a scheme—during a formal launch and "town meeting" in New York and simulcast to partners online. The move marks a sea change for Dell, which built its business on a direct-only model that cut out the reseller channel.
The longtime "religion" of direct-only led to much ill-will by VARs towards Dell, and now the Round Rock, Texas-based company is faced with winning over at least some of those VARs to its new program. Greg Davis, Dell's channel chief, said that the company's goal is to double its number of channel partners, now at 15,000, over the next three years. With that in mind, the company has neutralized compensation for its direct sales teams.
Neutral Compensation for Direct Sales
"Direct sales will get paid the same amount whether a partner closes the deal or not," Davis said. "I'm not saying we won't have issues, but we've been working to get these off the table."
However, there is no specific remedy VARs can seek if a Dell sales rep takes a deal direct. Dell will discipline the sales rep, but the VAR is not entitled to any compensation.
"Our short-term goal is to address channel conflict," said Davis. "Our long-term goal is to enhance closing deals for channel partners."
Dell's primary tool to manage channel conflict is its new deal registration program that is offered through its Salesforce.com portal. Dell has developed the portal over the last 60 days and chose Salesforce.com to complement its existing Salesforce.com CRM installation used by its own internal sales force. Partners can register their deals on the partner portal and Dell will turn around an answer about whether the deal is protected in 24 to 48 hours. Davis said that the initial $75,000 deal registration minimum was set so high to ensure that the company could handle the initial volume. He hopes to eventually bring the minimum down to $0.
Information about deals that partners enter into the portal will not be visible to the internal sales force at Dell, Davis said. The system is designed to help teams work together but to also protect partner leads. Dell is training its sales force on the new processes.
In addition, "we are talking about a partner ombudsman for when there are complaints," Davis said. "I've led parts of our direct business, so I know where the roadblocks are."
That said, Dell is not averse to sharing some leads with partners and is looking for help in selling through to about 1,000 accounts, according to Davis.
Tiers and Competencies
Dell's new channel program will offer two tiers of partners, Registered and Certified. There is no minimum invoice for Registered partners, but Certified partners will have a minimum depending upon their certified competency. Dell plans to offer six to eight competencies for certification but will launch with two: Managed Services and Enterprise Architecture. The company did not have specifics about invoice size for either of these at launch time.
In terms of benefits, Certified partners can use a special Dell Certified logo in their marketing material. They also can have more deals registered at any one time. In addition, they will be eligible for 45-day financing versus 30-day financing for Registered partners. Certified partners will also get enhanced technical support and account-based deal teams to provide lead-generation with Dell's direct sales team, Davis said.
Dell currently works with 15,000 channel partners, and Davis said he expects to be spending the bulk of December registering current partners for the program "so they can begin taking advantage of the things we put in place, and then working with us to pursue certification."
Davis said that in the next two to three years, Dell wants between 6,000 and 8,000 partners to pursue certification.
Is It Available Here?
Dell's channel partner program and deal registration will initially be available in the United States only. Davis said the program should be available in Canada within 30 to 45 days and in Europe in the first quarter of 2008.
"We are still working on a timeline for Japan and Australia, but I would expect something by the end of next year in those countries," Davis said.