Monitoring Success

Schemes and incentive-based programs have become a rule rather than an

exception in the IT industry. And monitors as a product category are not left

behind. Most of the schemes being run in the market today are point-based. The

reseller collects points for every sale made. These points are then redeemed for

either back-end incentives or gifts.

Mystery discounts



Vendors are realizing that handing out back-end incentives does not really

help the channel community. The practice of offering discounts to deal with

stiff competition passes on the benefit from the vendor to the end-customer

instead. Vendors are looking at including conditions in the schemes to curb

this. The first effort in this direction was that of rewarding the customer

with mystery discounts on successful achievement of targets. When vendors agree

to pay the channel partners a certain percentage as a back-end margin on the

completion of a pre-specifies target, but do not disclose the percentage to

them, it is known as a mystery discount. "Mystery discounts have in no way

helped curb the menace of discounting," feels Anil Sachdeva, director,

Kadam Marketing and president, DCTA (Delhi Computer Traders' Association).

According to him, partners offered a higher discount compared to what they got

back as a mystery discount, losing money in the process.

Samsung has taken the lead in trying to instill discipline in the market and

recently came out with a program titled ‘Score with Samsung’. For the first

time, regularity of business has been made a basic qualifying criterion in an

incentive program. Says Sonal Anand, country product manager, Samsung, "A

basic tenet of the program is to ensure that the channel does business on a

regular basis."

Satisfactory margins



As Sanjay Wadhwa of Champion Computers of says, resellers are satisfied with

the margins. Adds Anil Kumar Singh, GM, LAMPO Computers, "We earn Rs 200 to

Rs 500 per unit sale of a monitor."

Margins in the case of monitors don’t get diluted because the after-sales

service of the failed units is taken care by the vendors themselves. So the

margins earned at the time of the transaction remain protected. Adds Singh of

LAMPO Computers, "Not much of the after-sales service is required, so the

margin is just perfect."

Pankaj Sharma, head, IT Sales, Sharp Business Systems, feels, "The

margins on LCD monitors are typically higher because of the low volumes today.

They also offset the need to run schemes on such products."

Delayed incentives



A gray area is the delay on part of the vendors in giving incentives to

their qualifying partners. The phenomenon of offering discounts in anticipation

of incentives to make good for the loss, leads to a peculiar situation of

negative cash flow for the partners. Going on the defensive, Sonal says,

"Barring a few instances of delays due to late submission on claims by

channel partners, most of our schemes are closed on time". Vendors also

attribute the delayed incentive to the submission of fake invoices by the

partners. The channel complains that when vendors don’t recognize and reward

less than 100 % achievement, it becomes difficult to operate in the market.

"The partner has already offered discounts to meet the 90% target. If the

vendor insists on 100%, it will threaten the survival of the channel

partner," explains Sachdeva of Kadam Marketing. A plausible solution to the

problem could either be to put an upper cap on the percentage of back-end

incentives offered or offer differential rates for different levels of target

achievements.

Warranty is another issue that dominates discussions in the industry. Vendors

and distributors are realizing that the need of the hour is a service

infrastructure with greater geographical reach. Domestic companies are also

establishing service facilities in the upcountry markets.

TPV Technology, the owner of the AOC brand, recognizes this and leverages on

its distributor Aditya Group’s infrastructure for the same. Says Mukesh Gupta,

country manager, TPV Technology, "Our warranty policies here are like

anywhere in the world." In LCD monitors, the warranty policy is even more

critical as there is not much that can be accomplished at the customer site

owing to the complexity of the product. Most partners are satisfied with the

levels of warranty that come with monitors.

MOHIT CHHABRA/DQCI in New Delhi (With

inputs from Sunila Paul in Bangalore)