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WITI BUSINESS
Agents & Influencers: The Same yet Different
Influence: the power to sway or affect based on prestige, wealth, ability or position.Market and competitive factors are challenging companies to engage partners in innovative ways. And thus more companies are focusing on partners that influence sales by developing "agent" programs to reward demand generation. We see two factors driving a shift towards influencer and agent programs. The first is a move from shrink-wrapped off-the-shelf software to a subscription license model. A software license model emphasizes selling a long-term customer (2-year subscription is standard in the industry). The old packaged software model rewarded the delivery and installation of the product. Increasingly, software products are simply downloaded over the web. So with the growth of licensing models, channel compensation has focused on selling and managing customers rather than handling transactions. Declining margins is the second factor contributing to the interest in influencer and agent programs. As products become commodities and margins decline, channel partners are changing their business models to focus on services and new, higher margin emerging technologies. For our purposes of creating indirect channels to target end-customers, Agents are typically individuals or companies connected to a vendor, someone who does not take a title but "sells" products and services. Think of State Farm Insurance for a quick example of the agent model. In high technology, these agents are typically solution providers serving SMB customers with a mixed product and services model. These are "specialists" who lead with particular vendors' products, but who aren't high volume players and thus can't compete with a typical reseller. Vendors engage agents to drive demand; typically fulfillment is either directly from the vendor or from another "reseller" partner. Through educating and empowering agents, vendors hope to reach markets untapped by their direct and reseller channels. Agents are paid a commission on their sales (they have to close the business) - for example, 10 - 15% for new customers, 8 - 10% for additional business within a customer and 5% for renewal business. The agent model allows vendors to alter the commission structure or enhance the agents' earnings with additional incentives for a specific product focus, like a new product launch, specific timing, like year-end close, or around specific promotions, such as a new solutions bundle. To continue to drive new business generation, innovative companies like Cisco develop agent models to encourage resellers to recommend and sell Cisco technology. The Cisco e-Agent program improves a partner's bottom line indirectly by introducing new efficiency measures to the sales fulfillment and fee collection processes. In this model, the partner creates the demand for the product, directing the customer to order directly from the Cisco web site and indicate the partner they are working with. The partner earns an agency fee in lieu of margin. The distributor drop ships the product directly to end customer. This agent program allows partners to take the resale off their books and receive a fee for the hardware sale. This model also allows the partner to focus on its value-added services instead of tying up resources in hardware inventory and managing receivables, which are lower margin businesses than network architecture design services. Thus, Cisco's partners do not have to compromise their services-based business model by passing lower-margin hardware through their books. Cisco's own efficiency also benefits considerably from this totally web-based process. A company's complete go-to-market strategy should include several "channels" to end-users, including direct, OEM, resellers, influencers and agents. The goal of all influencer and agent programs is to reach target end-user customers through the channels they engage for advice and consulting services. Thus the influencer and agent programs should be consistent with the reseller channel programs. So, in building an influencer or agent program, we start by aligning customer needs and preferences with the channel partner type. We examine how different segments of end customers, from enterprises, to mid-size companies to small businesses and individuals, learn about technologies and products and who their "trusted advisors" are. This question might not always be as obvious as it sounds. Quite often the individuals within these organizations receive recommendations and influence from people that vendors don't typically consider part of the standard "channel." In addition to determining the target customers trusted advisors, which could be associations, friends, and service providers we evaluate the full solution need of the target customer. A large part of determining a multi-channel go-to-market strategy is understanding what other products and services a target customer typically purchases along with your products/services. The full solution often includes other hardware and software products as well as consulting services, implementation services and often maintenance. Understanding the full solution needs of the customer help you evaluate where to look for potential influence and agent partners. Influencers are individuals or companies responsible for influencing buying decisions. They are typically consultants or vendor-independent system integrators that have a service-centric revenue model. Influencers are usually "generalists" meaning they don't typically lead with a vendor, and they take pride in being neutral. The goal of an influencer program is to empower them to sell their services. The value proposition is that you're going to help them enhance their skills so they can increase their services business around your technologies. The compensation for the influencer program can be a cash rebate ranging from 10 - 15%. However that often conflicts with the influencers' desire to remain "unbiased" so pure influencer can be rewarded through an accrual of funds used for business building activities such as training, event passes, joint marketing activities, merchandising and demo/proof of concept licenses. BEA has been leveraging an influencer model with global and regional system integrators as their primary partner engagement model for the past four years. The goal of the program is to reward the influence partner for driving specific selling activities that tip the opportunity towards BEA. A partner must demonstrate one of the following to qualify for the influence reward:
In developing influencer programs, realize that your top partners will still need the attention and resources of strategic alliances. The top influencers are typically global system integrators such as EDS, Accenture, First Data and CSC or global vendors like IBM, Microsoft and Hewlett-Packard, which typically can not be effectively engaged in a traditional channel or "influencer" program. We're proponents of new business models that reward partners for value-added behaviors. As Heather Clancy with CRN said, "It seems logical to me that those who clearly have influenced the close of a sale should be compensated for it. Period."
What is your point of view? Please post your thoughts on the discussion board.
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Businesses have always formed partnerships, but there are a few new models attracting more attention these days within technology industry - "Agent" and "Influencer" programs. These two types of partnerships are so often discussed in the same breath, that one begins to wonder, aren't they really the same? Close, but not exactly. The differences between agents and influencers is often overlooked when developing programs, however there is a difference in how they are motivated that must be taken into consideration. From Dictionary.com: