News

'Big Easy' Subsidy Program To Put Dollars in Microsoft Partners' Pockets

• By Scott Bekker
• January 23, 2008

"If you go out to the Microsoft Incentives site right now, there are probably 20 plus promotions out there, of which there are four partner subsidy promotions," said Christopher Large, group manager for U.S. Sales Programs in the U.S. Partner Group. Large is currently running a series of six live Web seminars to introduce partners to the Big Easy program.

According to Large, the Big Easy program allows partners to focus on just one promotion. Microsoft is putting $10 million behind the subsidy program to start with, and Large says the amount could increase.

Designed for all Microsoft Partner Program members, it is aimed at SMB customers and will cover purchases between Feb. 1 and June 27. When the subsidy is granted, it comes to the customer in the form of a check from Microsoft made out to the partner of the customer's choice. The checks must be redeemed by July 31.

The promotion replaces partner subsidies for Microsoft Office, Windows Server, Windows Small Business Server and SQL Server that expire on Jan. 31. The Big Easy subsidy covers customer purchases of nearly all of Microsoft's main SMB-targeted products, with the exception of Windows Vista.

According to Large, partner subsidy programs have been extremely popular with partners because the checks act as a multiplier on future purchases.

"What we've heard from a lot of different partners is this actually enabled them to sell from five to eight times the amount in additional products and services" compared to the original value of the subsidy, Large said. Another reason the subsidies are popular is the full revenue sale. "The partner gets credit for the full revenue sale, whereas on a discount it would be a reduction in the revenue."

Since briefing some partners on the program earlier in January, Microsoft has added a wrinkle that will be explained in future partner briefings -- a subsidy for local system builders.

"Let's say somebody buys Office through a system builder on a new PC. First of all we're going to reward that with partner subsidy payments, which we've never done in the past. Then, if they sell Open Value Software Assurance on top of that, then they're going to get even more dollars," Large says. "For a system builder, it's about attaching."

An attractive aspect of the program is that multiple redemptions are allowed, and future purchases can increase the subsidies granted for previous purchases. In one example provided on the partner presentation slide deck, a customer buys one Exchange Server and 50 user CALs on Feb. 1 for a subsidy of $600. In the example, the partner goes back on May 1 and sells the customer CRM Professional Server with 25 CALs and SQL Server with 25 CALs. Because the partner has now made a cross-sale across three product groups, the original Exchange purchase now qualifies for an additional $310 in subsidies. At the same time, the new purchases from May are good for $4,169 in subsidies.

Large is advising partners to keep initial sales simple and then go back with the subsidy in a subsequent sales call. "If the customer is really interested in one thing, sell that customer that individual piece, because if you try and add on additional things initially, it could potentially stall the sale. My recommendation would be to wait, and then cross-sell the additional products."

With 11 product groups, six licensing options and upgrade SKUs, the Big Easy offer is definitely not easy when it comes to figuring out subsidy amounts. To simplify that end of it, Microsoft is providing online calculators so partners can simply enter the products the customer wants and find out what the subsidy amount would be. Also, if a customer makes multiple purchases on the same agreement number, Microsoft will automatically true-up the subsidy amounts at the end of the purchase period without the need to redeem a second time.

Microsoft has scheduled live Web seminars on the Big Easy offer for partners on Jan. 30, Jan. 31, Feb. 12, Feb. 14, Feb. 26 and Feb. 28. An on-demand seminar is also available as of Wednesday.