Axis Secretly Paid Anixter Sales People To Push Axis NVRs

By John Honovich, Published Sep 26, 2016, 12:12pm EDT

Internal Axis communication shows how Axis paid Anixter and Tri-Ed sales people with secret bonuses to push Axis NVRs.

In this report, we examine the practice, how this distorts sales activity and how this is part of Axis strategy to compete with its VMS 'partners'.

Axis / *******

**** ****** ** *** Anixter *** ***-** ***** people $*** ***** *** each **** *** **** sold, ** ********* ** their *************:

******* ***** **** ** paid ** ****** (***** can ** ******** *** merchandise) *** ********* **** ******.

***-** ***** **** ** paid *** ****** ** the ****** ******.

$*** (*,*** ******) *** every*******

*** **** *** ** Axis *** ****** ********* with **** ****** ******* VMS ********. *** ********* was *** ******* ***** and ****** ****.

************, ******* ***** *** December ****, **** ******* an "***** *-** ***** ******** off ****" *** *** registered *****.

******

******, ** ********* ** the **** *************, *** direct ******** **** ************* to ***** ****** *** selling ******** ********. ****** have **** ****** *** a **** ****, ********* in *** ********, *** they *** ****** ***** disclosed ** ****** ** acknowledged ********.

*** ******* / ***-**, spiffs *** * *** to ******** ***** *** sales ****** ************ ******* them ****** ** *** more **********. *** * manufacturer **** ****, ****** motivate *********** *********** ** favor ***** ******** **** rivals *** ******** ******.

******* / ***-********

***** ******* / ***-** declined *******, ******** ************* confirmed ** ** **** spiffs *** * ****** practice *** ******* / Tri-Ed, ****** **** **** mentioned **** $*** *** a ***** *** ** the **** ****.

*** **** ***

*************, ****** ******* / Tri-Ed, *** **** *** allow ******, ** ***'* president ********* ** **:

*** **** *** ***** direct ****** ** ************ Reps ******, ** *** cash ********** **** ** electronics, *****, ***.*** ********* *** ***** staff ************ ******* *** normal ******* ******.

**** ********* ******* ******** of ******** *** ********** of ***** ****** ** push ******** **** ******* are ******** *** ******* extra ****** *** **** period.

******** ****** ** ******

*********, ****** ********** **** distributors **** ***** *** selling ******** *********. *** spiffs *** ** ********** hidden, **** **** ************* buyers ***** ********* *** know **** * *********** is ******* ***** ******* direct **** ************* *** certain ******** **** ***** impact *** ***********'* ***************. Anixter / ***-** ******, at *** **** *****, disclose **** ******, ** not ***** **** ** ADI ****.

****

**** ************

*******, *** **** *** NVR ***** ** **** evidence ** **** ************ promoting *** *** ********* at *** ******* ** its *** ******** (******* **** *&* ****). **** ***** ******* the ***** ** ***** "partners" **** **** **** are **** ***** **** for ***** **** **** it, *** **** ********* payoff, ***** **** ** Axis ********* **** ******** touting "**** *.* ******** * Solutions ******** *******" **** that **** ************ ***** own *** / **** is *** ** ****' future.

Comments (44)

Decades old practice, more about getting stuck with inventory they can't move as the others subsidize the race to the bottom.

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In this case, Axis S10s are new so the motivation is more likely to jumpstart sales for a product with no track record, rather than clear out old inventory.

I do agree with you that clearing out inventory is one common use case for spiffs.

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This is nothing new... but hell, if you think that's a big deal, Tri-Ed has been getting paid by Sony for YEARS to have....

[IPVM note: The original comment was wrong and 2 agreed that it was wrong.

The fact is that many manufacturers, including Sony, Axis (many others), pay / subsidize distributors having distributor employee who is the product champion / specialist for that manufacturer. Obviously, having a distributor employee dedicated to a single manufacturer's product helps that distributor think of / recommend / support the manufacturer better, but requires the manufacturer to pay extra for.]

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2, thanks. Keep it coming, I think it would be great to hear elements / issues like that.

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Sony among many others... Several major brands support distribution sales by offering to supplement the cost of an on-staff "Product Champion" who is in place to assist in dealing with the factory for things like Project Registrations, stocking and inventory issues and sales assistance. Product Champions rarely, if ever, engage directly with the customer.

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Ingram Micro uses/allows spiffs as a matter of course. There's a spiff column on the line item detail screen that only your agent sees.

From what I've noticed they are often used by a manufacturer to stave off what would otherwise be a large return.

I agree they are not the normal choice for a new product introduction, as the agent will sell at low or no margin just to get the spiff. Also, the agent will begin to expect them on future new introductions.

Maybe the S10s are dogs?

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Maybe the S10s are dogs?

The S10 is a combination of Axis Camera Station and OEM'ed Dell hardware. Because of ACS mediocrity (relative to mainstream VMSes) and that Dell OEMs are commonplace, it is not that highly differentiated.

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There was an in-house Sony BDM at Norbain here in the UK for many years.

its not in place now, but it's cost was approx. £75k per annum - all paid direct to Norbain, who paid approx. 50% of that sum to the employee.

Think there are some manufacturers still with this arrangement to this day. Whether they will keep this going now Norbain is going 'full Hikvision' we shall have to see.

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I find it quite humorous that ADI claims no spiffs now...they were traditionally the kings of asking for them from every manufacturer who wanted to boost sales!

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I don't see ADI claiming no spiffs. I see the comment as them saying no DIRECT spiffs to ADI sales people. They probably just take them corporately and pay it out their normal payroll systems as they see fit.

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I don't see ADI claiming no spiffs.

I spoke with a number of manufacturers on this point. All of them said ADI does not allow / take spiffs from manufacturers. Actually, that was my motivation for emailing ADI and getting that quote.

ADI may certainly have other internal bonuses / mechanisms / rewards but, they do not appear to do spiffs from manufacturers.

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Spiffs were common in security distribution in the 90's, and a significant source of income for me. But mine were more on the order of five bucks per motion or glass break detector.

At issue is that manufacturers and distributors work at cross purposes to each other. Manufacturers don't care where you buy their products (which distributor), just that you buy THEIR products. Distributors don't care what product you buy (which manufacturer), just that you buy it from THEM. What incentive does a distributor salesperson have in switching a customer from one manufacturer to another? If anything, he/she may make life more complicated pushing a customer into a new product. Spiffs made the case. I didn't know they were still around.

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Sales Agent: "Hi, I'm Mark, your personal security product consultant, how can I help you?"

Customer: "Let's just save both of us some time and bs ok, what's on spiff today?"

Sales Agent: "I don't know what you mean..."

Customer: "Sure you do... hey, how about we go 50/50 on the spiff, or I go to your boss and demand "spiff pass-thru"?

Sales Agent: "Sorting by spiff amount, one moment..."

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I think we'd call that a kickback, not a spiff at that point.
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It's been a while since I've been involved in distribution, but at least a few years ago everything was open to the highest bidder. Not only spiffs, but the signage in the distributor's office, the hallways and even the break room. (I don't remember seeing ads in the bathroom but that wouldn't surprise me.)

The even charged manufacturers to put their products in the test/support lab. What this means is that only the manufacturers who paid extra would get their products physically in front of the employees who are recommending the products.

Catalog placement was also up to the highest bidder (like I said it was a few years ago.) You want your products first in the listing, just pay more. Want your product to have a color photo? Pay more.

This is just the way it works (or at least it used to.) You have to pay to play.

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the signage in the distributor's office, the hallways and even the break room.

7, yes, there's that too.

Related: Funny Distributor Story

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I honestly don't see this as a huge deal (since it has been commonplace for a while), but I do see one potential drawback. While Anixter and it's subsidiaries are pushing Axis products to get their $150 spiff ADI has been pushing Hikvision. The Hikvision products are so low cost that the $150 is more costly than half their products sell price. In order to subsidize this spiff Axis has to sell the product for a greater price to the distributor, which in-turn passes down the line making them less attractive to the end user.

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when your NVR costs so much, a $150 spiff is a pretty small loss on the percentage of the sale.

I think this is genius by Axis, i dont blame them.

But If I were Anixter, I would just ask Axis to sell the NVR's to me at $150 less.

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But If I were Anixter, I would just ask Axis to sell the NVR's to me at $150 less.

They did during the promotion by giving an extra 8-10% off for a combination of spiff to salespeople and more margin to Anixter / Tri-Ed corporate.

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Im talking initially. No spiffs. When the initial purchase is made from Anixter to Axis

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I don't think the manufacturer would offer the spiff/discount unless it was going right to the guy with the relationship.

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This is true, axis has always been good with offering incentives of some sort to the sales guys.

there were three or four during my tenure at Anixter

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I don't see any issue with Spiffs. It's part of sales. I don't know why a sales person would need to disclose his compensation for a given sale. That is his personal business and the buyer has no right to that info.

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That is his personal business

By definition, it is not personal since it is a business transaction.

the buyer has no right to that info.

The buyer has the right to whatever he can negotiate. The seller can refuse to sell, the buyer can refuse to buy.

But disclosing that info would make for a fairer and more transparent sales process.

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I disagree. It would be the same if the distributor asked the integrator how much markup he was adding to the sale. None of the distributors business.

Would you demand to know the compensation of the guy selling you a car?

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Would you demand to know the compensation of the guy selling you a car?

Some people do. You start with the factory invoice and go from there. Its a shell game on both sides, they try and hide how much they are making, you try and hide how much you can afford.

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So you believe them when they show you the "Invoice"? Lol

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Would you lie to me?

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Comes with the territory of auto sales. Cutthroat business.

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JD, it is directly the integrator's business because it impacts how much the integrator should trust the distributor's recommendation.

Distributor says "Yeah this Axis NVR is much better than the Milestone Husky." Knowing that the distributor was getting an extra $150 per Axis NVR vs Milestone Husky would help the integrator significantly assessing how much confidence he put in the distributor's recommendation.

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If you are relying that much on your sales rep for product selection, shame on you.

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If you are relying that much on your sales rep for product selection, shame on you.

Spiffs work based on the premise that the sales rep does have influence on product selection (if not, no benefit from spiffing), so you can look down upon it but it is a real factor.

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While I know that "spiffs" are the issue being discussed, I think it should be noted that Anixter is one of the few distributors that will sell directly to the end user. I think that combined with spiffs is a toxic combination from an integration contractor point of view.

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Yes, but, in Asia pacific they do seem to prefer not to sell to end users, at least for small jobs

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Anixter is one of the few distributors that will sell directly to the end user

Yes, we have covered that element too: Anixter Touts Selling to End Users and Does Anixter Sell Direct To End Users? YES

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...disclosing that info would make for a fairer and more transparent sales process.

Ethics aside, spiffs simply don't work if people know about them.

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Ethics aside, spiffs simply don't work if people know about them.

Unless they follow your 50/50 tactic above :)

That said, I agree with you. The fact that spiffs would not work if the other party in the transaction knew about it is a strong signal that the setup has ethical problems.

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Meh, We almost never rely on a distributor for product recommendations and will make up our own minds based on evidence and testing. Most the time the Distributors are not product experts anyway and we always assume they have their own motivations and drivers. This is nothing new and IPVM have over-sensationalised a common practice in many industries. It would be nice to know that a disty has a higher margin or cut if they sell one product over another but I can see why they wouldnt disclose such. Most of my Disty's will tell me openly if they are prefer product A over Product B because their mark-up is better or there is an incentive on.

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Most of my Disty's will tell me openly if they are prefer product A over Product B because their mark-up is better or there is an incentive on.

Isn't that called a sales flyer? ;)

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I have worked under the assumption for years that this was a normal practice. I have seen distribution push some products of questionable quality and practicality for years.

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Spiffy aside, what's most interesting is the further demonstration by Axis to push E2E while telling their VMS "partners" no such programs exist

Axis is getting as bad at Lying as Hik

Nice work on this John

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I do not understand why Axis is playing this game with their partners.

Related to the spiff, Axis simultaneously spiffed their access controller, the A1001, but I focused on the NVR since it related to the key trend of Axis moving to end-to-end video.

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It always serves best for the installing dealer to vet his product decisions with installed testimonies from the factory and other installers before asking distributor opinions. This because in more cases than anyone wants to admit, a dealer will reverse course due to a casual comment from a distributor salesperson that the vendor in question "is difficult to work with or that is a special order for us" when in most cases it would be the better solution, but due to corporate agreements, HikVision type vendors are the predominant ones stacked high in the showroom, hogging up the sales flyers AND offering employee rewards whether it be outright spiffs or a redemption program (back end incentive for sales reps.

This can certainly skew the honest, hard working factory rep's efforts, especially those conducting the job walk and doing the BOM suggestions for receptive dealers.

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Spike Anderson was AXIS Canada National Business Development Manager, New Solutions - now his Director of Global Security Integrators, Anixter

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