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As an ISV looking to get involved in the channel, there are many things you’ll need to know about how to best grow your company. You will need to have dedicated resources to support your reseller program and a plan to navigate the channel efficiently. Competition is tough, and many VARs resell more than one type of software, so you’ll have to differentiate your product and get ahead of your competition. There are many different factors that go into working with the channel, but once you’ve mastered your strategy, the channel will help your company achieve real growth for your participation.
What is the Channel?
The Channel is an ecosphere of value added resellers (VARs), distributors, and hardware manufacturers. Through this ecosystem, relationships are developed between members to help increase business and foster growth. The Channel helps manufacturers, software developers, resellers and distributors to connect with one another and generate. The biggest opportunity of being a member of this channel lies in leveraging these folks to grow your business and your revenue.
Top Details to Consider in Looking for VAR Partners
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Pricing
It’s important to determine margin stacks based off of discounts from the manufacturer’s suggested retail price (MSRP). If you plan to use a distributor, you will need to plan for two margin stacks – one for the VAR and one for the distributor. Keep in mind that you can always lower a price, but it can be very difficult to raise prices. Determine whether you intend to use a SaaS payment plan, license pricing, or a combination of the two. Most partner programs have multiple levels based on some criteria or key performance indicators (KPI) established at the onset of the partner program.
Consider whether you’d like to implement a system based on sales goals or KPI; can commitment, amount of demos, number of quotes, or amount of training certifications qualify the reseller for a higher discount from MSRP? How will you control internet pricing models of various resellers, like true VARs and direct market resellers (DMR). What should you agree upon for your minimum advertised price (MAP)?
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Training
This is one of the most important details to consider, since the reseller is an extension of your business and thus your reputation. Resellers boast a vast array of skill sets: Some are more like a sales and marketing company, while others are more focused on technical side of installation and support. Your partnerships will need to support many types of resellers to be successful. Additionally, be sure to identify the difference between training and comprehension; training is absolutely worthless unless you test what you’re training. Consider developing a fully fleshed out training and certification program.
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Support
Consider the structure and need for support within your reseller channel. You will require dedicated resources to assist the new resellers with demos, sales tactics, integration, installation, and a help desk for pre- and post-sale questions. This is where having a strong training program in place becomes crucial. The weaker your training and certification programs, the stronger your help desk must be to accommodate additional post-sale questions. Consider whether you will offer first level support to the end users, or second level support to only the resellers. Examine how your plan to train and support your resellers on future product enhancements, including features and functionality. How will you support different types of hardware platforms and peripheral wraps?
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Sales Territories vs. Open Market
Should resellers expect to receive all of the business for a particular region, city, county, state, or country? Should the reseller expect to be able to sell anywhere in the country, continent, or world? If your product supports multiple verticals, such as field services and healthcare, will you have different resellers support separate solutions in the same sales area based on core competencies with their respective verticals?
Avoid Common Mistakes
Like with any new step forward in business, it’s important to learn from the mistakes of those who came before you. There are several common mistakes many ISVs make during their first launch of a VAR partnership, and keeping an eye out for these mistakes can help you to streamline your experience and make it flow much more smoothly.
Pricing can often be a road bump in many VAR programs, particularly when the participating ISV has not allotted two margin stacks. This is important for calculating and fleshing out interactions, sales and pricing. Additionally, ignoring the need for agreed-upon minimum advertising prices for items, or internet pricing models can cause hitches along the way.
One major mistake that can easily grow into a larger problem is ignoring the need for strong and continuing training sessions within the program. Without proper training sessions that focus on comprehension and understanding of your products, a VAR and its employees will not be able to adequately show off or sell the software you have worked so hard to produce and market. Additionally, it is important to have continuing education and testing of training materials to ensure that everything is fully understood and adequately portrayed by the VAR.
Continuing support throughout your VAR partnerships and programs is crucial to ensuring that your product is performing well. One mistake that is often made is neglecting to make a large enough investment into the infrastructure, management or staff necessary to support a reseller channel.
Sales strategies can seem complicated and varied within the channel, and navigating this can come with pitfalls if done wrong. It’s important to define your preferred sales strategies clearly and cohesively, highlighting crucial verticals, regions and industries that your product is intended to serve. A software program designed for one vertical, for example, should not be sold to another vertical that can make little use of the features within your product.
For more in-depth information, download our free ebook, The ISV’s Guide to Navigating the Channel:
