Backpay –estimating the program resultsBased on Participants Survey
and Sell Out Analysis
Done on a base of my real report
BackPay™ program is designed to handsomely reward those resellers who increase both the volume of products and the number of product categories they sell.” – Official Program Brochure
Primary success indicators: Program motivates participants to increase amount of sold
Partnumbers and number of product categories Evaluation of program success:
Analysis of resellers’ survey results to see if participants confirm changed buying behavior and have positive attitudes towards BackPay Survey of 400 BackPay resellers from 8 EMEA
countries was conducted. Analysis of resellers’ purchasing patterns prior and after
BackPay enrollment to estimate motivational effect Analysis will be based on sell out reports; Only BackPay resellers signed up in Q1, Q2, and Q3
will be considered to ensure at least 1 year of pre- and post-signup history;
Analysis findings and identified patterns will be applied to all enrolled resellers
Has the BackPay program motivated you to increase your overall sales?-Survey Question
Bars show percents
Yes No Don't know/Won't say
Q14a. Has the PayBaX programmemotivated you to increase your overall sales?
0%
20%
40%
60%
Perc
ent
n=118
30%
n=259
65%
n=23
6%
95% of these confirmed
increased sales of Products
Most frequently mentioned obstacles to increased sales were:•Limited market demand;•Low priority given to products (“non-core business”);•Complicated rules and delayed rebates
Average of 17 units per active reseller prior to BackPay enrollment
Average of 19 units per active reseller after BackPay enrollment
12% increase in average quarterly # of Partnumbers
Sergey Sleptsov
Sales reports show consistent increase in average amount of Partnumbers per active program participant after program enrolment;
Observed average increase in quarterly Partnumbers ranges from 2 to 6 units or from 12% to 40%;
At least part of that increase is caused by the program motivation as confirmed by the surveyed resellers;
To estimate Program’s incremental revenue we will use optimistic and pessimistic approaches as outlined further
Sergey Sleptsov
Optimistic Approach:•Average quarterly number of Partnumbers per active IT reseller remained steady in EMEA throughout obseved period so any increase among BackPay resellers should be associated with Program’s motivation;•This can be illustrated by trending average Partnumbers per non-BackPay reseller in countries with stagnating IT markets (see chart below)•Here we’ll assume quarterly incremental Partnumbers increase of 4 units per active BackPay reseller
Pessimistic Approach:•Average quarterly number of Partnumbers per active IT reseller in EMEA increased by 1-2 units in observed period;•This can be illustrated by trending average Partnumbers per non-BackPay reseller in countries with healthy IT markets (see chart below);•Here we’ll assume quarterly incremental Partnumbers increase of 2 units per active BackPay reseller
Region 1 NonBackPay Resellers
7 6 6 6 6 7 6 8 6 60
1
2
3
4
5
6
7
8
9
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Part
num
bers
per
Act
ive
Res
elle
rr
Region2 Non BackPay Resellers
14 15 14 14 15 13 16 19 17 150
2
4
6
8
10
12
14
16
18
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Part
num
bers
per
Act
ive
Res
elle
r
Sergey Sleptsov
Pessimistic EstimateAt average price of a sold Partnumber of € and assuming average increase in quarterly sold Partnumbers per active BackPay reseller at 2 units Program’s incremental revenue in EMEA up to Q3 is estimated at € :
Optimistic EstimateAt average price of a sold Partnumber of € and assuming average increase in quarterly sold Partnumbers per active BackPay reseller at 4 units Program’s incremental revenue in EMEA up to Q3 is estimated at € :
Qtr # of Resellers Signed up
Quarters in Program
Activity Factor: applied to calculate
average # of quarters reseller
is active
Active Quarters
Since Program Signup
Est. Incremetal Partnumbers (at 4 Qtrly
Units per Active BackPay Reseller)
Incremetal Revenue at
€ per Partnumber, OPTIMISTIC
estimate
Est. Incremetal Partnumbers (at 2 Qtrly
Units per Active BackPay Reseller)
Incremetal Revenue at
€186 per Partnumber, PESSIMISTIC
estimate
Q1 10 0.6 6 Q2 9 0.6 5.4 Q3 8 0.6 4.8 Q4 7 0.6 4.2 Q1 6 0.6 3.6 Q2 5 0.6 3 Q3 4 0.6 2.4 Q4 3 0.6 1.8 Q1 2 0.6 1.2 Q2 1 0.6 0.6
Sergey Sleptsov
Has the BackPay programme motivated you to increase the number of categories of products you sell?-Survey Question
24% of these began selling Accessories; 21% - began selling Racks; 9% - mobiles and cables
Most frequent obstacles to increased sales were:•Limited market demand – sell only “what’s required by customers”;•Relatively high prices for some products;•Complicated rules and delayed rebates
31% of BackPay resellers confirmed sales of new categories during a similar survey
Bars show percents
Yes No Don't know/won't say
Q15. Has the BackPay programme motivated youto increase the number of categories
of products you sell?
0%
25%
50%
75%
Perc
ent
n=66
17%
n=324
81%
n=103%
Sergey Sleptsov
Chart shows what shares of active resellers buy racks comparing patterns of BackPay participants to non-BackPay resellers;
Greater shares indicate greater acceptance of the category by the segment;
Shares of resellers buying racks notably increase for all observed, but the rise is much steeper among BackPay members;
“Penetration Rate” was generally higher with BackPay participants even prior to their sign-up for the program;
Observed upward curve among BackPay members is likely to be a combination of program motivation and of their “rack-friendly” attitude
•Source: Sell Out Reports;•Samples (Depending on Quarter):
EMEA BackPay Resellers: 189 – 235 companies; Non-BackPay Resellers: 2,085 – 5,293 companies;
Share of Active Resellers Buying Racks
0%
2%
4%
6%
8%
10%
12%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
BackPay Members Non-BackPay Resellers, Region 1 Non-BackPay Resellers, Region 2
Sergey Sleptsov
Error Bars show 95.0% Cl of Mean
Category
3.0
3.5
4.0
4.5
5.0
4.0 3.93.7
3.9 3.9
3.5
ease of the registration
process
clarity of information in
describing the overall
program
clear information on who is eligible for
the BackPay program
timely notification of
when you have been
accepted into the BackPay
program
clear information on
how the rebate is
calculated
1=Very dissatisfied 2=Dissatisfied 3=Neither satisfied nor dissatisfied
4=Satisfied 5=Very satisfied
Rebates calculations are too complex; Overall satisfaction with the program is quite low suffering from
delayed rebate checks and lack of timely status information
Overall satisfaction
with 's BackPay program
Most of the areas rated below
satisfaction level!
Sergey Sleptsov
“a statement as to what the heck its all about …never received anything since signing 2 years ago”
“clear definition of what you get for what” “explanation of calculation and timing of payment” “feedback is too slow. Often we don’t know how we are doing” “need to receive payments in good time and need info on how they are calculated
on the actual sales - have not received a cheque since last November” “rebate-calculation should be simpler than what it is, I find it a bit difficult” “too late to have the result” “make it simple” “information on what its all about and how it works” “like to know how it works … what they pay … when … and why” “More explanation more clear program” “Provide feedback and more information about what I should sell”Sergey Sleptsov
Resellers are not getting the desired attention from – 40% of them did not speak to an rep in a year:
Frequency of Contacts with Company Rep.
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Twice a month
Once a month
Twice a quarter
Once a quarter
Twice a year
Once a year
Never
Ideally, how frequently would you like to talk to or see your representative?Within the last year, how often have you spoken with or seen your representative?
Sergey Sleptsov
“contact people - communication do not hear from them about anything”
“ maybe a little bit more hands on from account managers - we chase them rather than them contacting us”
“having more contacts with the 's Reps” “I do not have any Rep. or any contact name to help me out
for a better understanding of the program” “I never got any contact, maybe that's why I never
proposed/pushed on to my clients” “I never spoke to any Rep. maybe if I could see/talk to
somebody will help my sales” “more contact between and the reseller to explain and give
some news” “more contacts such as Reps coming around the office for
example”
Sergey Sleptsov
Training events availability is not meeting the demand either – majority of BackPay resellers did not have any in a whole year despite claimed interest:
Bars show percents
0 1-2 3-4 5-6 7-8 9-10 Over 10
Q8. How many training eventshave you participated in within the last year
(including face to face, web seminar, live seminar / eXpo)?
10%
20%
30%
40%
50%
n=192 n=142 n=33 n=11 n=4 n=2 n=9
Bars show percents
Twic
e a
mon
th
Onc
e a
mon
th
Twic
e a
quar
ter
Onc
e a
quar
ter
Twic
e a
year
Onc
e a
year
Nev
er
Q9. How often would you like toreceive training on solutions?
0%
10%
20%
30%
n=11 n=75 n=4 n=63 n=63 n=123 n=60
Sergey Sleptsov
10% 20% 30% 40% 50%
Other
Self-study
Don't know
Videos
Web-based training
Web seminars
Live seminars / eXpo
2%
8%
11%
15%
23%
35%
50%
Majority of Resellers prefers live events:
Sergey Sleptsov
0.0% 25.0% 50.0% 75.0%
OtherAir & DC products
Mobile / Cables products3 Phase UPS productsAccessories products
Services productsManagement software products
Rack & Rack Accessories productsSurge products
Power and ElectricityData Center Power Infrastructure
Networking OverviewUPS products
7.5%
18.5%
20.8%
22.0%
22.8%
24.5%
26.3%
27.8%
29.3%
32.3%
33.5%
33.8%
84.3%
Channel is still heavily focused on market – not more than 1/3 of resellers is looking outside the boundaries of the traditional business despite the available product range and program’s motivational appeal:
Ranked #2 at 42%
Sergey Sleptsov
“A good idea having few private lessons about the Products starting from the Low Level up to the High Level products”
“ training closer to my city” “Having more training on Racks and other high level
products categories” “I would like having more information about the high
levels products” “more info and training” “more training over web-cast for reseller”
Sergey Sleptsov
BackPay showed only limited success in changing buying behavior of the program participants – 30% of them confirmed motivation to sell more units and just 17% - motivation to increase Partnumber breadth;
These relatively low results as well as generally low satisfaction with the program are primarily caused by the combination of the following factors: Rebate calculations rules are quite complicated for an average reseller and lack
clarity in showing what exact reward is given for a particular action. This is an issue that was widely expressed by respondents;
Program's motivational appeal is damaged further by ’s inability to provide up to date rebate status to participants and even to deliver rebate cheques in a timely manner. These problems caused by the state of our internal processes become a great de-motivator to the involved in promoting the program ;
Resellers – much more than their counterparts - are still heavily focused on the side of business paying little attention to (or having little knowledge of) the incremental revenue opportunities offered by the continually expanding portfolio. That conservative attitude creates extra barrier to the program objective of increased product range. Resellers express unfulfilled need for a greater support from reps that can become crucial in gaining the product knowledge.
Even that limited progress resulted in a positive ROI generated by the program. Sergey Sleptsov