Dive Brief:
- IT distributor ScanSource is reallocating sales incentives to reward partner recruitment and new orders in its Intelisys tech services distributor business, executives told investors Thursday, during an earnings call for the three months ended Sept. 30.
- Large deals boosted net sales in ScanSource’s hardware-focused specialty technology segment 28.8% year over year. The integration of value-added reseller MicroAge into the Intelisys and solution services segment grew net sales 85.9%, while Intelisys net sales grew 3.2%.
- “We have decided that we need to take market share,” ScanSource Chairman and CEO Mike Baur told Channel Dive. “In some cases we have allowed these other companies to take deals that maybe we didn't take in the past. This is a much more aggressive strategy.”
Dive Insight:
In the decade since ScanSource acquired Intelisys, Telarus has gained ground in the tech services distributor industry. Challengers Avant Communications and Sandler Partners continue to grow at double digits, according to Omdia, a Channel Dive sister company.
Competitors have lured away Intelysis partners and Baur doesn’t want to play defense any longer.
“We want new partners no matter where they're coming from,” he said. “We believe we can give them a better relationship than what they're getting today, and more value.”
Financial incentives for internal Intelisys’ sellers will reward them for onboarding new agents and getting agents to book deals.
“I think it's getting more sellers, more people on the street representing Intelisys, and then really going back to those customers and understanding why aren't we getting 100% of your business, and what can we do differently to make that happen” Senior EVP and CFO Stephen Jones told Channel Dive.
Commission splits are one of the tools Intelisys will use to attract partners. In the agency model, the agent will sell an Intelysis solution to a customer using the TSD’s contract. ScanSource will pay the sales commission to the TSD, who then passes the majority of it to the agent.
Baur told Channel Dive last year that rival TSDs have been passing on higher commissions, to the point of unprofitability. Intelisys had chosen in most cases to not compete on price, Baur said.
Being aggressive now means being willing to match or beat commission splits from rivals.
Financial incentives are not the only tool in Intelisys’ arsenal.
The company intends to use MicroAge to help agents sell hardware and software from vendors that previously weren’t in their portfolio. Baur said Intelisys has recently closed hardware deals with agents.
“[Agents] just basically would tell the customer, ‘No, you go buy it from somebody else,’” Baur said. “No other TSD has hardware to offer, so we believe in selling hardware and recurring revenue as a solution to the end user. Our partners win more market share for them that way.”
