Key Learnings

1. After incurring a loss of over $20 billion dollars for the 2001 fiscal, Cisco
cut the following expenditures
All the acquisitions were put on hold
8500 employees were cut from the payroll
Number of suppliers reduced from 1300 to 420
The number of channel partners were cut by half to 3000
The new models were reduced to 24000 from 33000
2. Due to these reduced operations in 2003 Cisco clocked a net profit of
$18 billion.
3. The growth target was set at 20% YoY after the company had
recovered.
4. This posed a great challenge as Cisco had to strategize it go to market
evolution
5. The customers were divided in to 5 segments:
Top 1-100 enterprise accounts: A global customized Sales Model
Next 101-10000 customers: Collaborative Channel Partnership
Next 10000-100000: Significant channel activity and marketing
support
1 million small business: Low level of interface but high level of
marketing
10 Million consumer Accounts: To be served through retail and/or
web, with heavy marketing and promotional support
6. Earlier there was just one channel for routes to market for Cisco. This
was the direct sales. 10% of Ciscos sales was made through this
channel
7. Next Channel two was added which specifically targeted the IT
consultants and system houses like IBM, HP and Accenture.
8. Channel 3 were large telecommunications service providers. They
maintained voice, video and data pipes for their customers.
9. These two channels accounted for 25 to 30% of there sales
10. Channel 4 consisted of the traditional value added resellers, which
were focused on networking products and services
11. Due to this Cisco captured a market share of 85% in router market
and 75% in switch market.
12. Channel 5 was targeted at dispersed small customers. They had to
efficiently manage their supply chain by roping in centralized
distributors like Tech Data which handled their entire inventory and
door to door logistical support.
13. Channel 6 was introduced when Linksys was acquired. This was
targeted at home networking supplier.
14. Channels 5 and 6 accounted for less than 10% of Ciscos sales in
2003.
15. Cisco also instituted the Value Added Reseller(VSR) pyramid.
16. There were three layers
Gold: 42% Discount
Silver: 40% Discount
Premier: 38% Discount

17. The eligibility requirements were assessed at regular intervals and

whenever required the criteria were raised.
18. In 2001, Cisco changed the requirements from volume based to
value based. This was done by setting up a point based assessment.
19. The assessment was done on the basis of new technology
specialization, engineering expertise and customer satisfaction levels.
20. Also there was a visible change in the coordination with its resellers.
Cisco would try to involve its resellers at a very early stage of lead
generation. This would help Cisco help its resellers earn profits by
discussing the pricing early on.
21. In the serve provider initiatives, Cisco set up one-stop shop in which
solution providers combined a carrier contract, network management,
e-Commerce storefront, solution design services and hardware into one
point of contact.