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Microsoft and the Q4 Incentive: How Long Will This Go On?

As Microsoft shifts its revenue mix from on-premise to cloud, you might expect the transition to change the company's calendar emphasis on closing deals from the end of the fiscal year -- June for Microsoft -- to the beginning of the year a month later.

After all, an Office 365 contract signed on July 1 means 12 months of revenues for Microsoft, while a deal closed in May is only worth two months of subscriptions.

That makes the fourth-quarter campaigns to get the partner sales teams out on the streets a bit anachronistic, but here they come anyway.

Microsoft this month highlighted a Cloud Solution Provider (CSP) Power Up Reseller Incentive good through June 30. The deal offers U.S. CSP partners incremental incentives up to $50,000 for selling Office 365, Enterprise Mobility + Security (EMS), Dynamics 365 and Azure. Partners interested in participating must register before June 1, and managed resellers could be eligible for an additional incentive.

Despite the changing dynamics of its business, Microsoft has a few logical reasons for keeping the Q4 promotions going aside from the inertia of always doing it that way. It's still got annual numbers to hit and, after all, a deal closed in Q4 will bring revenues for the next year (and the year after that, et cetera). The fiscal year close also creates that artificial sense of urgency that's so important to driving action among buyers.

In this specific instance, the CSP promotion gives Microsoft something positive to talk about (free money!) in a blog post that soft-pedals the transition from the Advisor model -- which used to be the mainstay of partner cloud sales but is being sunsetted in favor of CSP.

Those factors aside, it will be interesting to see how long Microsoft continues with the Q4 promotion treadmill as more and more of the business is built on recurring revenues through the cloud.

Posted by Scott Bekker on May 17, 2017 at 11:34 AM