NA Channel Program & Strategy. Distribution Partners

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1 NA Channel Program & Strategy Distribution Partners Tim Egan March 2013

2 Channel Program - Agenda Channel Goals and Objective Ceragon NA Go To Market (GTM) and Coverage Model Channel Program Overview: Program Framework Benefits: Sales & Marketing Incentives Technical Incentives Financial Incentives Program Tiering Program Differentiation Launch strategy and phases Backup Opportunity Registration Process Certification/Competency Technical Support and Entitlements MDF and Marketing

3 Channel Goals and Objective Enhance coverage by geography & vertical market segments Enlist and invest in small number of partners that add value in the marketplace Not interested in brokers but partners with a services practice Partner coverage model that includes (Recruit, Retain, Retire) Significantly increase consideration rates for Ceragon solutions Grow profitably while maintaining strong gross margins for our partners 15 to 20% GM for distribution channel Invest in partner enablement and self sufficiency Target and incent new business and creating demand Ensure we deliver Customer/Partner satisfaction through the channel Recognized as premier channel program in microwave industry that enables Predictability, Trust and Profitability to our Partners

Coverage Model Direct Accounts (Carriers/SP) Vertical

4 Low - Transactional High Touch - Value Direct Relationship with Manufacturer Ceragon NA GTM and Coverage Model Direct Accounts (Carriers/SP) Vertical Mkts Public Safety Utilities Oil & Gas Geographical DI R E C T CHANNEL 4

5 Channel Program Framework Benefits Financial Technical Sales & Marketing Tiering Premier VAR (PVAR) VAR SMEU Distributor Certification Sales Technical Installation Ecosystem Distributor VAR Valued Added Reseller SI Systems Integrator SMEU Self Maintained End User Services Only 5

6 Sales and Marketing Benefits Benefits Channel Account Director Sales Engagement Principals Lead generation programs Vertical Market incentive Partner Portal Press release and case studies Sales Training Details Designated Channel Account Manager to help drive Partners GTM strategy through the development of a business plan. GTM commitment and sale engagement principals to protect partners sales opportunities and margins. Facilitated through Opportunity Registration Process. Formal lead generation programs provided by Ceragon and our distribution partners. Co-op marketing funds for targeted events, campaigns, etc. Marketing incentives targeted at strategic vertical markets Marketing resources including collateral, sales tools, etc. PVAR positioned on Ceragon web page Joint reference and co-branded case studies. Sales training and certifications on Ceragon portfolio and solutions. 6

7 Technical Benefits Benefits Pre-sales support directly with Ceragon Technical Tools Technical Certification Program (CCSA) Product Management access Technical Support Maintenance Services and SLA Offerings Details Designated Presales resources only available to PVARS Configuration and design tools to speed up development and quality of BOM Certification training to enable and authorize VAR s to implement and manage Ceragon product. Delivered by Ceragon and through distribution partners Access to global product management for technical support and product development feedback Technical support on-line to VAR and Distributors via Partner Portal Wholesale services portfolio from manufacturer to augment VAR solutions for maintenance and implementation services. 7

8 VAR Financial Benefits Incentive Details Value Incremental Discount Opportunity Registration Market Development Funds Vertical Market Promotions Developed to reward partners who are investing in the development of a Ceragon Practice. This incremental discount provides greater margin flexibility and competitive advantages to our top partners Opportunity Registration Program to reward new sales and new customer acquisition Protects VAR investment in creating new opportunities Sales support from Ceragon direct and channel sales and technical teams Initiated and managed through distribution Discretionary funding based on business case to generate mutual business growth Jointly funded with Partner (50%/50%) Developed to reward partners who sell into targeted strategic verticals offered via additional discounts. Incremental Discount on List Price. 3% rebate. Paid off POS as a % of list price Discretionary based on business case Additional discount off List Price. Demo Purchase Program Demo Purchase program offers low cost demo equipment Try it or Buy It 8

9 Distribution Financial Benefits Incentive Details Value Opportunity Registration Market Development Funds Volume Rebate Program Vertical Market Promotions Opportunity Registration Program to reward new sales and new customer acquisition Protects VAR and distributors investment in creating new opportunities Incents VAR s to provide funnel visibility for better forecasting Sales support from Ceragon direct and channel sales and technical teams Initiated and managed through distribution Discretionary funding based on business case to generate mutual business growth Jointly funded with Distributor (50%/50%) and 100% reimbursed through a claims process. Use it or lose it financial bucket Incremental discount based on revenue performance and volume. Minimum revenue requirement Developed to reward partners who sell into targeted strategic verticals offered via additional discounts. 3% rebate. Paid off POS as a % of list price Split between Ceragon and Distributor (1.5% each) 2% of Revenue based on annual performance 1% Quarterly Rebate Additional discount off List Price. Demo Purchase Program Demo Purchase program offers low cost demo equipment Try it or Buy it 9

10 Channel Program VAR Requirements Tier Requirement Annual Measure: Revenue (Product/Services) $350,000 Premier VAR (PVAR) Certifications/Competency: Certified Sales Resources Certified Pre-Sales Resource Technical Certification (CCSA) Business Plan with quarterly review Annual Revenue (Product/Services) $50,000 VAR Certifications/Competency: Certified Sales Resources Certified Pre-Sales Resource Technical Certification (CCSA)

11 Channel Requirements Self Maintained End User Type Requirement Annual Measure: Revenue (Product/Services) $250,000 Self Maintained End User (SMEU) Certifications/Competency: Technical Certification (CCSA) 2 SMEU questionnaire and approval process based on specific requirements to ensure SMEU is self sufficient. Need approval annually 1 1

12 Channel Program Distribution Requirements Type Requirement Annual Measure: Revenue (Product/Services) $4,000,000 Distributors Certifications/Competency: Certified Sales Resources Certified Pre-Sales Resource Technical Certification (CCSA) Business Plan with quarterly review Annual 1 2

13 Program Tiering How Determined? Partner levels are determined at the beginning of each calendar year coinciding with Ceragon s Fiscal Year January to December Partners will be grandfathered into program based on current distinction once new program is launched. Partner levels will be effective for a period of one (1) year Partners can move up a level once higher level criteria is met during Fiscal Year Minimal Partner Requirements 1. Minimum volume/revenue performance 2. Adhere to Sales Engagement Principles 3. Positively represent Ceragon brand with customers

14 Channel Program Benefits VAR by Tier Benefits VAR PVAR Availability Sales and Marketing Channel Account Director No Yes Today Sales Engagement Principals Yes Yes Launch Lead generation programs No Yes 2013 Partner Portal Yes Yes 2013 Press release and case studies No Yes Today Technical Pre-sales support directly with Ceragon No Yes Today Configuration Tools Yes Yes 2013 Technical Certification Program (CCSA) Yes Yes Today Product Management access No Yes Today Incentives Incremental Discount No Yes Today Opportunity Registration Yes Yes Launch Market Development Funds No Yes Launch Demo Purchase Program Yes Yes Launch Vertical Market Promotions/Discounts Yes Yes 2013

15 Channel Program Benefits SMEU & Distributor Benefits SMEU Distributor Availability Sales and Marketing Channel Account Director No Yes Today Sales Engagement Principals Yes Yes Launch Lead generation programs No Yes 2013 Partner Portal Yes Yes 2013 Press release and case studies No Yes Today Technical Pre-sales support directly with Ceragon No Yes Today Configuration Tools No Yes 2013 Technical Certification Program (CCSA) Yes Yes Today Product Management access No Yes Today Incentives Opportunity Registration No Yes Today Market Development Funds No Yes Launch Volume Rebate Program No Yes Launch Vertical Market Promotions Yes Yes Launch Demo Purchase Program Yes Yes 2013

16 Program Differentiation Ceragon long history of high quality, innovative and reliable products Industry leading gross margins in the channel Program focuses on value and not over-distribution of the market Focused on self sufficiency and enablement Financial levers to generate demand and incent investment in Ceragon portfolio Formal business planning with top partners annually. 16

17 Launch Strategy & Phases Phase 1 Partner Launch (March 1, 2013) Launch and announce Program and Framework Introduce programmatic we can deliver TODAY: Communicate initial program tiers and partner segmentation Supported by promotions to drive initial demand Phase 2 Mid year program enhancement (July 2013) Operationalize program and enhance based on feedback We reserve the right to get smarter. Formalize and enhance certification program Introduce new tools and enhancements Phase 3 January 2014 Partner tiering based on full year program. Additional enhancements including more self sufficiency and tools Co-delivery options for support and managed services 1 7

18 18 BACKUP

19 Opportunity Registration

Ceragon Opportunity Registration Flow Chart VAR Distributor

to support customer opportunity Update monthly Load

and position inventory Validate and approve registration

20 Ceragon Opportunity Registration Flow Chart VAR Distributor Ceragon Identify opportunity Submit to distributor Continue to support customer opportunity Update monthly Load registration into Salesforce Portal Update monthly Forecast and position inventory Validate and approve registration Review monthly updates Issue credit to distributor and discount to VAR 2 0

21 Opportunity Registration Benefit and Requirements BENEFITS OF OPPORTUNITY REGISTRATION Incremental 3% discount to be paid via a rebate by the distributor. The discount only applies to IDU s/odu s. Antenna s and accessories are not eligible Account control and sales protection for approved opportunities by Ceragon Sales support and engagement from Ceragon Sales Directors and Pre Sales resources locally Reduced channel conflict RULES OF ENGAGEMENT In order for an opportunity to qualify it must be a unique, unknown to Ceragon and not currently being pursued by Ceragon authorized reseller (VAR, System Integrator, etc). Open bid RFP s and RFI s are not eligible for Opportunity Registration In order to qualify for the discount incentive the opportunity must be greater than $50,000 in Ceragon Product Costs (approximately 5 Links). If less than minimum threshold all other benefits still apply. As qualified reseller identifies projects, they notify their distributor of choice using the registration process and distributors are responsible to manage the interface with Ceragon. Ceragon qualifies opportunity to ensure the deal is not currently registered or known and will provide written approval and a registration number. Registration must be updated monthly to distributor to maintain registration status. Distributor must forecast and position orders to ensure having proper inventory when deal is purchased. Margin incentive will be paid in arrears when product is shipped to customer via a distribution rebate. Opportunity registration is valid for 90 days from date of approval. 2 1

22 Opportunity Registration Form - Salesforce 2 2

23 Marketing

24 Lead Generation Programs Program Process Delivery Availability Website Leads Ceragon Web Portal to Partner Now Trade Show Support VAR specific demand generation programs Vertical market campaign Work with Distributor to identify strategy tradeshows focused on verticals GTM Strategy Develop specific marketing plan supported by business case Case study driven Participate and fund tradeshows jointly As per business plan to end user customers and issue to publications Now Now Now 2 4

25 MDF Eligible marketing deliverables Marketing materials CD's and Brochures Co-branded Marketing call-out programs Co-Branded Webinars to verticals or end users Regional/local trade show reimbursement Certificates for course completion Wall Plaques for PVAR status Co-branded mailers Portal Access (need to determine what is on here) Banners, display kits, other collateral Lead dissemination from direct Ceragon Marketing events

26 Certification and Competency

27 Certification Program Competency Program Delivery Costs Availability Status Sales Certification Pre-Sales Certification Technical Certification (CCSA) 1 Course exam On-Line Free Q To Develop 2 Courses - Technical training - Configuration Tool 2.5 day course - Exam - IP10G and RFU - Advance feature and functionality including NMS. (1) On-Line Virtual or On-site Instructor lead at partner location Free Free Q Q To Develop To Develop $5,000 Now Update content to include new products, and additional ½ day elements 2 7

28 Technical Support and Maintenance

29 Channel Technical Support Offerings & Entitlements Product Warranty Maintenance Offerings Warranty Extended Warranty Advanced Replacement Prime Package Prime + Extend Svc Help Desk 8x5 8x5 NA 8x5 24x7 CRM/Web Portal NO NO NA Yes Yes Remote Diagnostics 8x5 8x5 NA Yes Yes HW Repair Yes Yes Yes Yes Yes Advanced Replacement No No Yes No Yes * Excluding Discontinued Product SW Repair/Fixes Yes Yes NA Yes Yes SLA Best Effort Best Effort 24 Hours Yes Yes Term 1 Year 1 5 years options 1 5 years options 1 5 year options 1 5 year options Fee Included in price of product 3.5% of sale price/year 3.5% of sale price/year Priced by component with tiered discounts Priced by component with tiered discounts Availability Available Discontinued March 31, 2013 Discontinued March 31, 2013 January 1, 2013 January 1, 2013

partner advantage program shared trust shared experience shared success

partner advantage program shared trust shared experience shared success Table of Contents (page 1) Shared Trust, Shared Experience, Shared Success!................................................... 1