Selling through B2B Reseller Channels

In the B2B market establishing the correct sales channels can be just as important as having the right products. Enough companies have foundered for want of sales brought on by a lack of distribution. One of the ways to create a conduit for effective sales of your product is through VARs (Value Added Resellers).

VARs can be a great tool if used in the right situation. They can also be a distraction and a nightmare of unfulfilled potential if they are not managed.

So what are the main Advantages of VARs?

1. Low upfront cost. Theoretically you only pay them when they sell something, so you are not bearing the costs of salaries and overheads, so the costs of hiring and training staff in the initial stages are no borne by your business.
   
   
2. Scalable.  If your market grows dramatically (hopefully), you don’t have to go and find sales force in a hurry. On the other hand, a shrinking market for whatever reason means that you don’t have to deal with lay-offs..

3. Existing Relationships. If they are established then they already have customers who they can sell your product to, so growth in the initial stages has the potential to be fast.

The disadvantages, however, can be taxing to say the least.

1. Focus. Or lack thereof. They sell other products and trying to get them to concentrate on yours and yours alone, especially in the early stages, can be difficult. The piece of paper you signed with them isn’t really worth anything unless you get them to push your product.

2. Information Sharing. Trying to get a VAR to open up and tell you about their specific customers is not easy. It takes years to build up that level of trust and even then the sharing that you may get can only be cursory. Their value is in the relationships and subsequent sales that they bring so they will keep this information sacred. This can often mean that you don’t know who is buying your product and why and this can have a detrimental effect on your marketing and product development for the future.

3. Conflict in the Sales Channel. The more VARs you have, the more likely they will collide. You then become the arbiter, which is never a good place to be, although it is commonplace so there are methods to deal with it; this can be overcome with guaranteed and protected territories but that creates its own problems.

4. Competitive Products. A big one. If the VAR is selling into a vertical and have a specialty product focus they may often have competitive product offerings. If you are the last to sell through a particular VAR, then you have an uphill battle ahead of you. If you are the incumbent, then you have to be constantly concerned with new offerings coming into play and distracting the VARs sales teams.

There are distinct pros and cons to selling through VAR channels. It’s the disadvantages you have to concern yourself with though. You have to get their interest and keep it. And there are only two ways to do this – Hearts and Minds, and Money.

Money because that’s what they are in this for. But be aware that there are two layers to this. Money for the VAR as a Business (“what are the margins for the company?”) and money for the VARs sales Reps (“What’s in it for me?”). Don’t get them confused. I have successfully sold my product to a company and got a commitment and not shifted a single unit because I don’t focus on the sales teams as individuals. Spiff programs come in handy at this point.

Hearts and Minds. You need to keep pestering the sales teams with training, marketing materials and constant contact, especially in the early days to keep them interested in selling your products. Typically a VAR salesman will take the easiest possible route to success and unless you have trained them well and continuously, they will shy away from promoting a product they are not confident about.

VARs are not a sales channel that you can set up and then sit back and wait for orders. It just won’t happen. Just like your own sales team, they require cultivation and motivation to keep them interested in your product. They generally only get excited if they see that your product is really selling. So put the time investment into them and if you do it correctly, it will pay off.