Microsoft Mea Culpa: ‘Employee Didn’t Follow’ Process In Direct Sales, Vows To ‘Bolster’ Training

‘We’ve taken steps to reinforce our protocols and bolster on-boarding training and oversight to avoid situations like this from happening in the future,’ Microsoft says in a statement.

Microsoft is blaming a rogue employee who failed to follow protocols for emails that sidestepped solution providers of record and launched a sales pitch directly to their customers, angering several partners in recent weeks.

“We have an internal process in place for reps to confirm whether or not a customer is already engaged with a partner,” according to a statement provided by a Microsoft spokesperson. “Unfortunately, a new Stores employee didn’t follow this process. We’ve taken steps to reinforce our protocols and bolster on-boarding training and oversight to avoid situations like this from happening in the future.”

The statement, provided to CRN after Microsoft refused multiple requests for interviews, also makes clear that ultimately it’s up to the customer to decide whether it purchases from a Microsoft partner or buys direct from the company.

[RELATED: Partners Feel ‘Betrayed,’ ‘Taken Aback’ By Microsoft’s Direct Calls To Customers]

“We value our partners and the services they provide customers building on our cloud solutions. Customers who collaborate with partners also have the choice to purchase products directly from Microsoft Store, and we will be reinforcing our standard process internally for when a customer already has a partner of record,” the Redmond, Wash.-based software giant said.

Microsoft addressed the issue after multiple solution providers aired their frustrations in online forums and to CRN that the company had sent emails directly to their customers with offers of free training. Some of the solution providers described feeling “betrayed” by the missives.

Microsoft derives 95 percent of its commercial revenue from its partner ecosystem, which includes a wide range of partner types, including massive integrators such as Accenture, according to a February 2019 blog post by Microsoft channel chief Gavriella Schuster.

Some partners, particularly those who target SMB customers, fear the software giant is bent on selling directly to its customers.

One MSP who spoke with CRN intercepted emails that offered to provide “free training” to customers with a registered partner. The emails from Microsoft were sent by [JF6] employees [JF7] [JF8] who would have been laid off from closed retail stores, but had been transitioned to software sales. While Microsoft said “a Stores employee” was to blame, the emails to customers that were intercepted by MSPs came from more than one person at the company. Microsoft has not yet responded to requests for clarification on its statement.

The targeting of customers drew the ire of a Microsoft partner who posted to Reddit. According to a recording of a call between the MSP and a Microsoft sales manager, store employees were given a list of 43,000 customers to contact. They were told the list had been vetted by higher-ups and Microsoft, the sales manager said on the call.

That same sales manager—who had been a cosmetics floor manager at Bloomingdale’s prior to the pandemic—told the MSP that his customers were Microsoft’s customers.

“’No,’” said the MSP. “‘These are not Microsoft customers. Now we’re getting real sideways. This is my customer. I drove them to Microsoft. You had no relationship with this customer until I brought them to you. You are treating them like they are your customer, you own the relationship and that’s not going to fly.’”

That MSP, who has been a Microsoft reseller for 25 years, said an email, which he intercepted before it could reach the customer, was clearly a sales tactic. After he shared a synopsis of the call on Reddit, more MSPs shared similar experiences.

Around the same time, Amy Babinchak, a Microsoft MVP who runs two technology businesses, wrote a blog post titled, “Microsoft Really Is Coming For Your Customers” after one of her customers was contacted by the vendor.

Babinchak owns Harbor Computer Services in Royal Oak, Mich., as well as Third Tier, which provides IT support services and high-skilled IT staff to midsize businesses. She has sold Microsoft for 20 years.

Babinchak said in her case, one of her customers was emailed directly about Microsoft Azure training. She said the customer did not have Azure, meaning it could only be a sales call.

Several days after her blog posted, Babinchak said Microsoft had contacted her and explained the error, promising to her satisfaction that steps would be taken to stop the problem from occurring again.

Babinchak said a Microsoft executive, whom she declined to identify, provided details of two sales outreach programs the company is running to target SMB customers. Microsoft did not reply to emails asking it to clarify if there was one error in one sales program, or more than one sales program at work.

“Every six months or annually they re-emphasize their goal, and right now Microsoft’s goal is to increase the depth of product usage by customers,” she said. “It’s not enough that [customers] are using email and they bought 365, or they’re now using email and OneDrive; [Microsoft wants] them to use some of the other 30 programs that come with that suite.”

Microsoft also described to Babinchak its strategy for building interest in its Azure cloud services.

“What they’re doing is, they’re contacting customers and saying, ‘He, we have this tool. It’s free. No cost to you. We want to run it in your network locally and also in your 365 environment and it will spit out an audit,’” Babinchak said. As it was explained to Babinchak, Microsoft will then disclose whatever security issues or vulnerabilities the customer might have and offer a cost estimate for moving on-premises workloads to the cloud via Microsoft Azure.

The Microsoft executive reassured Babinchack that partners were supposed to be included in the initiative, but were left out.

“I think she understood my point of view,” Babinchak said of the executive. “I’m not asking Microsoft to stop this program. I’m asking Microsoft to include me in this program. I know the realities of how Microsoft works. I just want to be included, not shut out. We were able to come to that in a cooperative way. I don’t know that all partners will be happy with it, but I am. There’s going to be plenty of partners who are going to say, ‘I don’t want Microsoft contacting my partners for any reason,’ but that’s part of the deal. That’s how it works.”

Following her call with Microsoft, Babinchak posted a follow-up to her blog, which she also discussed with CRN. In the post, she advises fellow solution providers to develop a plan on how to make Microsoft’s initiatives work for them, even if they don’t agree with the vendor’s strategy.

“Ranting on Reddit isn’t going to cut it,” Babinchak said in the blog post. “We can’t make Microsoft stop or change, but we can figure out how to best leverage what they are doing.”

Mark Essayian, another veteran MSP executive who sells Microsoft, said this is part of the ebb and flow of the channel. He said this has happened with several other channel vendors, which dip into the partner’s customer list only to retreat after pushback reaches a critical mass.

“It’s a bad decision that can be reversed into a positive,” said Essayian, president of KME Systems in Lake Forest, Calif. “I don’t like it, but if one of my customers was sold by a nontechnical, retail salesperson from Microsoft, that’s on me.”

Microsoft partner Zac Paulson, CEO of True IT in Fargo, N.D., said while he likes Microsoft’s products, the move comes as no surprise to him.

“I almost think like they’re on a cycle, every two or three years they decided to try something like this, again,” he said. “It’s probably just new people in charge. And I’m a big Microsoft fan but, man, they make some faux pas sometimes. I think what happens is some new executive comes in, they think, ‘Man, we have all this customer data. Why don’t we go direct to the source?’ No. No. No. That’s not how the channel works.”