The decision to engage with resellers and value-added resellers (VARs) can pivot a company’s trajectory toward success or setbacks. However, crafting a robust channel marketing strategy necessitates a deep dive into the multifaceted roles of VARs and the strategic fit they present.
The key lies in balancing risks with relationships while eyeing the rewards – a trifecta that can define market penetration and revenue growth.
So, let’s explore the critical elements of channel marketing strategies and insights into making informed decisions that align with your business goals.
Understanding the Value of Resellers and VARs
So what exactly are resellers and VARs, and why do they hold such significance in a channel marketing strategy?
Resellers act as intermediaries, selling products to end customers, while VARs add their own services or features to a product before resale, creating a unique offering. Their value lies in extending a company’s reach into markets and segments that might otherwise remain untapped.
This can be particularly crucial for mid-size startups looking to scale quickly without the extensive resources needed to establish a direct sales force in every potential market.
However, the decision to employ a VAR or reseller model isn’t without its challenges. Executives often grapple with concerns over the potential for resellers to gain enough revenue and customer relationship leverage to force renegotiations on terms or, worse, defect to competitors, triggering significant customer churn.
Addressing these concerns head-on with strategic legal terms and solid relationship management can mitigate such risks.
Co-Seller vs. VAR: Finding the Right Fit
Considering the concerns and strategic implications, let’s examine the scenarios where a company might opt for a co-seller agreement over a VAR arrangement and vice versa:
Co-Seller Agreements
These are preferred when companies want closer control over the sales process and customer experience. Co-selling allows for:
- Joint selling motions where both the original vendor and the reseller engage with the customer, often leading to a more cohesive sales approach.
- Clear delineation of responsibilities, with the vendor typically taking the lead on product updates and support.
- Closer alignment on pricing and discounting strategies to avoid channel conflict.
Value-Added Resellers
VARs are chosen when the product needs additional services or customization to meet specific market needs. VAR partnerships can be beneficial for:
- Accessing markets where the vendor has a limited presence allows resellers to localize the offering effectively.
- Enabling resellers to bundle the product with their own services or other products to create a more comprehensive solution.
- Leveraging the VAR’s existing customer relationships and expertise in specific industries or sectors.
Protecting Your Relationships with a Master Services Agreement (MSA)
It’s also crucial to solidify these relationships legally and strategically through an MSA. This legally binding document can help protect both parties by outlining terms like customer ownership, responsibilities, and procedures for conflict resolution.
Here are some key points to include in an MSA:
- Ownership Clauses: Define who owns the customer relationship—this could be based on who brought the customer to the table or funded the acquisition efforts.
- Exit Strategies: Provide clear exit terms for both parties, ensuring a fair process if the partnership dissolves.
- Conflict Resolution: Establish processes for resolving channel conflicts, especially if multiple resellers are in the same market.
The MSA becomes the backbone of the partnership, ensuring that both parties have a clear understanding of their roles and responsibilities and a path forward should disputes arise.
Three Components of a Successful Reseller Program
No matter what model you choose, you must set the stage for a productive partnership that extends your market reach and strengthens your brand. Here are three key things to consider for your channel marketing strategy:
1. Training and Accreditation
A reseller’s proficiency in presenting and supporting your product is crucial to their success—and yours. Establishing a comprehensive training and accreditation program ensures that resellers are well-equipped to handle customer queries and demonstrate the value of your product effectively. This might include:
- Detailed product knowledge sessions to keep resellers informed about features and updates.
- Sales and technical training to help resellers understand how to market the product and address potential technical concerns.
- Accreditation or certification processes that qualify resellers to assure customers of their expertise.
2. Vetting and Compliance
Choosing the right resellers is as crucial as the channel marketing strategy itself. This means a rigorous vetting process in line with your company’s standards and international regulations, such as anti-bribery and corruption laws. Considerations should include:
- Background checks to ensure resellers have a history of ethical business practices.
- Compliance with legal requirements in both the reseller’s and your own country to safeguard against legal repercussions.
- A clear understanding of the reseller’s market presence and ability to reach your target customer base.
3. Post-Sales Support and Policies
After the sale, the customer’s journey continues, and the quality of support they receive can make or break their experience—and your reputation. A successful reseller program must therefore include the following:
- A defined process for post-sales support, whether handled by your team or the reseller’s.
- Policies that outline the level of support customers can expect, ensuring consistency and quality.
- Mechanisms for feedback and continuous improvement, allowing you to address any gaps in the customer support experience.
Leveraging Cloud Marketplaces
Cloud marketplaces have become pivotal platforms for channel marketing. They offer streamlined processes and are often customer-driven, allowing businesses to draw down on their Enterprise Discount Programs (EDP) efficiently.
But what additional value can a reseeler provide that a cloud marketplace cannot? Here are some considerations:
- Customization and Personalization: Resellers can tailor solutions to fit the unique needs of customers, something cloud marketplaces typically don’t offer.
- Expertise and Specialization: Resellers often have specialized knowledge in certain industries, providing insights and support that are specific to that field.
- Relationship and Trust: A reseller can build and maintain long-term customer relationships, offering a level of trust and personal service that a marketplace might not replicate.
While cloud marketplaces are efficient, resellers can offer a personal touch and deep expertise, enhancing customer satisfaction and loyalty.
Channel Conflict and Price Consistency
The specter of channel conflict is a reality in channel marketing strategies that can’t be ignored. When multiple resellers are in the fray, especially if they are competitors, the risk of conflict escalates. To maintain harmony and trust among channel partners, businesses must address these conflicts proactively:
- Transparent Pricing Strategies: Ensuring product and pricing consistency is maintained across all channels to prevent undercutting and dissatisfaction among partners.
- Clear Guidelines: Establishing and enforcing rules that govern how and where products are sold can help manage conflicts effectively.
- Regular Communication: Keeping open lines of communication with resellers to discuss and resolve potential conflicts as they arise.
When executed well, these strategies can preserve partner trust and foster a healthy, competitive marketplace that benefits all parties, including the end consumer.
Conclusion
Channel marketing demands careful consideration of partnerships, legal safeguards, and market dynamics. As the landscape evolves, those who balance elements with agility and foresight will turn the risks into enduring rewards, paving the way for a successful and scalable market presence.
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