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Analysis: Technology Manufacturers’ Channel Incentive Programs Waste Hundreds of Millions of Dollars

Apr 09, 2015

Ten Percent of Tech Channel Incentive Payments are Lost to Lack of Channel Visibility

REDWOOD SHORES, Calif. – April 9, 2015 – Analysis by a major global consulting firm reveals that high-tech companies frequently and significantly overpay their resellers across a broad range of incentives programs, including coop marketing, partner compensation, and rebates.

A report entitled "Improving the ROI of Indirect Sales Channel Incentives," by Accenture, the world's largest consulting firm, estimated that as much as 10 percent of a typical high-tech company's channel partner incentive payments are duplicated, unqualified, or generate insufficient demonstrable returns to justify the expense.

"Given that over 70 percent of a typical high-tech company's revenue comes through indirect sales channels, overpayments represent hundreds of millions of dollars of wasted expense in the tech sector alone," noted Ken Edwards, VP, Professional Services for Zyme (www.Zyme.com), the global leader in Channel Data Management (CDM) solutions and services.

The management of channel incentives requires that companies get access to highly accurate data about sales, movement, and returns of their products – an activity made even more complex by the standard multi-tier sales channel model. Zyme, an innovator in the rapidly growing discipline of cloud-based Channel Data Management, empowers dozens of global tech companies with more complete and accurate channel sales and inventory data.

Zyme delivers true "channel intelligence" to customers by cleansing and structuring data received from the nearly one million resellers around the world who are part of Zyme's Global Channel Directory Service. This valuable business intelligence helps companies eliminate overspending on channel and sales incentives, and supports important decisions in supply chain management, finance, product planning, manufacturing utilization, and more.

"The conclusions reached in the Accenture report are completely consistent with what we hear from our enterprise customers every day," Zyme's Ken Edwards added. "Without a reliable CDM platform, it is impossible for manufacturers to know how to effectively apply their incentive dollars, or measure the effectiveness of incentives in motivating the channel partners. Only recently have tech companies begun to understand the costs they have incurred and revenue they are losing due to poor channel data."

Dr. Andrew R. Thomas, co-author of "The Customer Trap: How to Avoid the Biggest Mistake in Business,"* agreed with Edwards.

"The sales channel has always been resistant to transparency – it's an ancient method of selling, and "incentive programs" have largely been "back of the envelope" efforts based on the gut feeling of sales and channel managers, with little or no hard data to justify them. No company can maintain vibrant relationships with customers without detailed, real-time knowledge about the movement of products through the channel to the customer, yet systems to illuminate it have only recently come into existence. Channel Data Management, as a discipline, appears to us to be the key to unlocking the mysteries of the channel and saving tech companies huge amounts of wasted incentive payments," Dr. Thomas wrote.

About Zyme

Zyme is the global leader in the emerging channel data management (CDM) space, empowering the New Smart Channel™, a proven approach to creating visibility to actionable knowledge that manufacturers need to accelerate partner sales and optimize marketing program ROI. Zyme's flexible, cloud-based offerings facilitate enterprise-grade decisions by responding to real-time, granular channel intelligence. Benefits include better-targeted MDF, co-op, and rebate programs, plus improved segmentation. Zyme replaces outdated, ad-hoc systems with a state-of-the-art, cloud-based platform, data steward services, and a worldwide channel directory of more than 900,000 partners for guaranteed database quality, support for a wider range of formats, and best practices that enhance reporting compliance. Industry leaders like Dell, VMware, Fujitsu, Plantronics, Xerox, Symantec, SanDisk, GoPro, and Seagate rely on Zyme. Headquartered in Redwood Shores, CA, Zyme has offices in Texas, Pennsylvania, China, India and the UK. For more information, visit www.Zyme.com.

*Dr. Thomas and Dr. Timothy Wilkinson co-authored "The Customer Trap: How to Avoid the Biggest Mistake in Business” as a follow-up to their book "The Distribution Trap: Keeping Your Innovations from Becoming Commodities," which earned the 2010 Berry-American Marketing Association Book Award."The Customer Trap" is available now from Apress Media and online booksellers.

Media Contact:

David Wright
MediaBridge Public Relations®
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