There are very few things in the channel that are either all bad or all good and Special Incentive Investment Funds, otherwise known as SPIFFs, are no exception.
The best thing about a SPIFF is that it gives sales people incentives to sell something. Like it or not, most sales activity is coin operated and we all know that incentives drive behavior. But a lot of times solution providers don’t have the funds available to provide SPIFFs to their sales people, so they rely on vendors to do that for them. The sales people are generally happier with the additional compensation, and many solution providers are more than content to quietly condone the practice in the interest of keeping their sales people motivated.
On the other hand, SPIFFs are also viewed by many solution providers as an unwanted intrusion into their operations. From their perspective, the SPIFF winds up driving sales people to push products that may not be in the strategic best interest of the solution provider or the end customer. This can be especially complicated when the solution provider is carrying multiple brands in the same product category, and their participation in different vendor channel programs is directly tied to the volume of sales generated for each vendor.
Against that backdrop many solution providers will be considering this week the implications of a new Blue Carpet Sales Promotion Ivestment Fund (SPIF) rewards program that Hewlett-Packard is rolling out in the U.S. Based on a program that HP has been using in Canada for several years, the HP Blue Carpet is an ambitious effort to directly compensate the salespeople working for solution providers using monies set aside by HP. The Blue Carpet program, which replaces an less robust set of HP SPIF programs, not only includes sales training provided by HP to help accomplish that goal, it allows salespeople to accrue benefits that they can take with them when they shift jobs be re-registering a credit card issued to them by HP.
According to Mike Parrottino, vice president and general manager, U.S. channel sales and marketing for the HP Personal Systems Group, HP is trying to reward individual sales people for behavior that is in line with the overall goals of the company’s PartnerOne program. Because most HP partners are trying to meet their PartnerOne goals, HP views the Blue Carpet SPIF programs as a vehicle through which solution providers can more easily meet their PartnerOne goals.
It’s no secret that HP has been pushing product attach rates very hard in the channel. Given the recent reorganization of the company’s PC and printer operations, efforts to get solution providers to sell multiple HP product lines will only intensify as the year goes along. If you’re a solution provider that is heavily committed to HP that’s probably a good thing. But for solution providers that prefer to bundle third-party products with HP PCs, the Blue Carpet program could be construed as an attempt to usurp control of their sales staffs.
Of course, the degree to which that may be a potential issue will vary. Half the time the monitor or printer that might be bundled with a PC is six of one or half dozen of another as far as either the solution provider or the end customer is concerned. But in those instances when it’s not, some solution providers may view the HP rewards program as not only an incursion of their corporate authority, but also a potential threat to their balance sheets should an HP bundle of products prove to be not as profitable as selling a solution that combines HP PCs with, for example, any number of other third-party peripheral products.