Cisco Beefs Up Financial And Marketing Incentives for VARs

The networking vendor outlines an initiative that provides financial incentives, marketing strategies and best-practice guidance to help its channel partners weather the current financial storm.

February 13, 2009

Al Senia

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Cisco (NASDAQ:CSCO) has become the latest channel vendor to roll out new programs designed to help channel partners improve their business profitability during lean economic times.

At its Velocity 2009 partner conference in Miami this week, Cisco offered several programs as part of its Navigate to Accelerate initiative that provide financial incentives, marketing strategies and best-practice guidelines to its expanding global channel partner base.

"This is our effort to work with partners and step forward and help them weather this economic storm, " said Wendy Bahr, Cisco's senior vice president of U.S. and Canada channels.

In outlining the program, Bahr noted that channel partners are being buffeted by margin pressure, cash-flow concerns, tighter credit, fluctuating exchange rates, changing customer priorities and delays in customer purchasing.

"We are definitely seeing customers delaying purchasing," Bahr said. "We're seeing that it is taking longer to close sales. Partners are not necessarily losing the business, but customers are being caught in the tightening credit situation."

Financial Incentives

To address that issue, Cisco is now providing customers through its partners a no payment-no interest option for 90 days on Cisco hardware, software and bundled services. Cisco is providing its more elite Select Partner base with 90-day (instead of 30-day) extended-term financing through Cisco Capital. In essence, once a deal is signed by a partner and authorized, Cisco Capital provides financing that allows partners to offer payment deferrals

"We are trying to make it easier for customers to make the buying decision," Bahr explained. "This also gives our partners more breathing room in the current capital-constrained environment."

Cisco also launched what it termed a "core acceleration promotion" which allows channel partners to perform a network assessment and receive between $1,000 and $3,000 from Cisco to defer the cost. The aim, according to Bahr, is to discover opportunities to upgrade or replace customers' networking, routing and switching gear that might be at the end of its lifecycle. Bahr said Cisco has pumped $3 million into the effort; she anticipates as many as 3,000 channel partners will be part of the promotion.

Bahr estimated that 30 percent or more or the current installed network core is growing obsolete. The promotion entices channel partners to go after that product replacement opportunity.

Partner Rebates

Cisco is encouraging its partners to register for a rebate of 5 percent for router equipment and 10 percent on switching equipment. This rebate is on top of the existing margin for partners on such products that ranges around 10 percent.

Bahr said Cisco is also targeting a "Partner Practice Builder" effort with its channel partners to build business in the small and midsize business (SMB) market. A pilot effort initially launched with 35 channel partners around the Unified Communications  (UC) specialty will be expanded to Cisco's 2,000 Select Partners and will eventually include other specialties such as wireless and security.

It is a web-based program that allows partners to identify the opportunity, their own readiness and then provides them an implementation strategy for the specific technology. The program focuses on two small-business market segments: The sub-100 employee company and the sub-250 employee company. "In a modular way we are trying to build best practices around services," Bahr explained.

She said some partners engaged in the pilot UC specialty reported a 400 percent increase in deals.

(Al Senia is managing editor of ITChannelPlanet.com.)

TAGS: wireless,networking,Cisco,unified communications,channel program

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