As a manufacturer operating within the sales channel, your channel partners quickly become your greatest asset. Be it distributors, dealers, or value-added resellers, promoting your product across various avenues increases marketing reach and brand exposure, all without having to manage a sales team or cover distribution costs.
The key to successfully leveraging the sales channel begins with identifying the channel partners who hold the greatest influence at the point of sale. The challenge lies in getting those partners to sell your product over your competitors.
Today’s blog features a channel partner known for connecting products with the end-user, the value-added reseller. As we define their role within the sales channel, begin to ask yourself the following questions: what role does the value-added reseller play in my industry? How can my business benefit from a partnership? And how can I begin to develop a stronger business relationship?
What is a Value-Added Reseller (VAR)?
A value-added reseller, or VAR, is a business that purchases a product from the original manufacturer, bundles it with additional products or services, and sells it to the end consumer. These additional services, such as installation, training, or recommended product bundling specific to the consumer’s needs, enhance the product value. By making a product more consumer friendly, VAR resellers increase the likelihood of a sale.
The Value-Added Reseller Business Model
According to a 2017 survey of North American and European IT professionals,
- 59% of respondents stated that price made them more likely to purchase from a value-added reseller; and
- 49% cited an existing, positive relationship with a reseller as a main reason for purchase.
While value-added reseller companies do not have control over the quality of product or the cost, they do have a choice in which products to sell.
In order to generate a profit within a value-added reseller business model, companies charge the consumer for the additional products or services. As shown by the above statistics, price points set by the value-added reseller have a large effect on the consumer’s purchasing decision. In order to keep prices down, resellers are more inclined to buy product from manufacturers offering a deal, such as a discount for bulk orders, or alternate incentives that help increase profit margin.
Investing in Value-Added Reseller Relationships
As mentioned earlier, when a value-added reseller assists in the sale of your product, your company is essentially hiring a marketing and sales professional without having to pay a salary. For manufacturers who cannot afford to staff these positions in-house, this is a saving grace.
The downside to free marketing is that VAR companies have no reason to be loyal to your brand, and will be willing to sell competitor products if it means completing a sale. How can manufacturers guarantee that a product will remain top of mind when directing the end-consumer? By enlisting the help of a VAR incentive program.
At its most basic, an incentive program motivates VAR resellers to purchase and promote your product, increasing sales and benefiting both parties. At its best, with the help of channel incentive technology, it is an online loyalty and marketing platform where VAR resellers can claim rewards and participate in product education for a better consumer sales experience. CRM integration services can funnel incentive program data directly into your existing sales platform, making it easier for manufacturers to not only organize partner data, but better analyze it. The more data collected on VAR partners via program enrollment and activity, the more manufacturers are able to personalize their value offering and maintain high levels of engagement.
Adding Value by Recognizing Value
Strong channel partnerships require an investment of energy and resources to be successful. By recognizing the role your partners play in the success of your business, you can begin to properly leverage your resources. With the right incentive program provider, you can successfully manage and measure the value, for both you and your channel partner.
Looking for more information on channel incentives? Check out these resources!
- Channel Incentive Playbook (E-book, Free Download)
- 10 Types of Channel Incentives and How to Use Them
- Using Your Incentive Program as a Complete Channel Software Solution