IBM Sets Neutral Commissions on Power, Storage Channel Sales

For the remainder of this year, IBM will compensate its client and brand teams equally regardless of whether the channel is involved in sales that include Power Systems and/or Storage Systems to midmarket companies, according to an IBM executive.

In a letter to midmarket channel partners, Bill Donohue, IBM North America vice president, Business Partner & Midmarket Sales, wrote, “IBM is making a bold change to neutralize IBM commissions on Business Partner transactions.”

By treating deals fulfilled by its direct sales teams and channel partners equally, measurements and compensation for the internal IBM teams supporting the Power and Storage brands will be the same whether the sale was consummated directly or through the channel, Donohue wrote.

“With this change, a transaction occurring in the channel will have the same commissions impact as an identical transaction fulfilled directly by the IBM team,” he said.

Under the new commission plan, direct sales and channel sales will have the same impact on IBM sales teams’ quotas both for revenue and profit and will drive equal earnings on both revenue and profit, Donohue said. The new compensation methodology triples the uplift previously applied to channel partner sales, he added.

The change affects all IBM client, brand and channel teams, including sales reps and managers for midmarket, general business, federal government sales and other select accounts.

For now, the compensation restructuring is confined to IBM’s Power and Storage brands for the second half of 2012 but the company said it will consider other brands going forward. IBM did not elaborate which of its other brands it may involve in the neutral compensation plan.

In the letter, Donohue noted IBM is making the change “in order to further demonstrate our commitment to the channel, our IBM Business Partner Charter, and enhance IBM Business Partner satisfaction.”