What is a Value Added Reselling?

TL;DR

Value Added Reselling is when a channel partner enhances a vendor's product with additional services. This creates a more complete solution for end customers. It expands market reach for vendors within their partner ecosystem, often supported by partner enablement and a strong partner program.

Key Insight

Value Added Reselling transforms a basic product into a tailored solution. This deepens customer relationships and creates significant differentiation in competitive markets. It's not just about selling; it's about solving complex problems with integrated offerings.

1. Introduction Value Added Reselling (VAR) represents a key business model where a channel partner enhances a vendor's core offering. Adding extra features, components, or specialized services creates a complete solution for end customers. This model allows partners to offer more complete solutions, increasing their value within the partner ecosystem.

For example, an IT channel partner might bundle software, adding installation, training, and ongoing support. Similarly, a manufacturing channel partner integrates a vendor's component, building it into a larger custom machine. Vendors benefit from expanded market reach and also gain specialized expertise from their partners, often supported through a strong partner program and partner enablement efforts.

2. Context/Background The VAR model developed as technology became more complex. Early computer hardware required expert setup, prompting resellers to add services like installation, which made products easier for customers to use. Over time, the model expanded to software and other industries. Today, VARs are crucial for many businesses, bridging the gap between complex products and customer needs, helping vendors scale without hiring all the necessary specialists.

3. Core Principles Enhancement: VARs add significant value beyond the base product, creating a more complete offering. Integration: VARs often combine multiple products or services, forming a unified solution. Specialization: VARs typically focus on specific industries or customer segments, building deep expertise. Customer Focus: Solutions are tailored to solve specific customer problems, improving the customer experience. * Profitability: VARs generate revenue from both the product and the added services, increasing their margins.

4. Implementation 1. Identify Niche: Select a specific market or customer need, understanding their unique challenges. 2. Select Vendor: Choose a vendor whose products fit your niche, ensuring their partner program supports VARs. 3. Develop Value-Add: Design services or components to enhance the vendor's product. This could be customization or support. 4. Build Expertise: Train your team on both the vendor's product and your value-add, ensuring strong partner enablement. 5. Market Solution: Promote your integrated offering, not just the vendor's product, highlighting the added benefits. 6. Deliver and Support: Provide excellent implementation and ongoing customer support, maintaining strong relationships.

5. Best Practices vs Pitfalls Best Practices: Deepen Expertise: Becoming a specialist in your chosen solution area. Focus on Outcomes: Selling solutions based on customer benefits, not just features. Invest in Training: Keeping your team updated on product and service developments. Use Partner Portal: Using vendor resources for training, marketing, and deal registration. * Strong Customer Service: Building long-term relationships through excellent support.

Pitfalls: Selling Just Products: Failing to differentiate with value-added services. Lack of Specialization: Trying to be everything to everyone, diluting expertise. Poor Partner Enablement: Not investing in continuous learning and skill development. Ignoring Vendor Programs: Not fully using benefits like co-selling support or incentives. * Inconsistent Service: Providing uneven customer experience, damaging reputation.

6. Advanced Applications 1. Managed Services: Offering ongoing management and optimization of solutions. 2. Industry-Specific Solutions: Developing highly specialized offerings for vertical markets. 3. Cloud Integration: Bundling cloud services with on-premise solutions. 4. IoT Solutions: Integrating vendor hardware with custom software and analytics. 5. Digital Transformation: Guiding customers through complex technology shifts. 6. Custom Manufacturing: Incorporating vendor components into bespoke industrial systems.

7. Ecosystem Integration VARs are central to the partner ecosystem. They fit into the Strategize phase by identifying market gaps. During the Recruit phase, vendors seek VARs with specific expertise. Onboarding ensures VARs understand products and programs, and partner enablement is critical for VARs to develop their value-add. Marketing involves VARs using through-channel marketing to promote solutions. Selling includes VARs closing deals, often with deal registration. Incentivizing rewards VARs for their value and sales, and Accelerate focuses on growing VAR capabilities and market reach.

8. Conclusion Value Added Reselling is a powerful channel partner model because it allows partners to create complete solutions. Combining vendor products with their own expertise and services enhances customer satisfaction and expands market reach for vendors.

Successful VARs deeply understand customer needs and continually invest in their own capabilities. Using vendor partner program resources, this strategic approach drives mutual growth while strengthening the entire partner ecosystem.

Frequently Asked Questions

What is Value Added Reselling?

Value Added Reselling (VAR) is a model where a partner sells a vendor's product or service. The partner adds extra features or specialized services. This creates a more complete solution for the customer. It goes beyond just selling the original item. VARs enhance offerings, increasing value for end-users. This model helps partners stand out in the market. It builds stronger customer relationships through comprehensive solutions.

How does Value Added Reselling work in IT?

In IT, a VAR might bundle software with installation and training. They could also offer ongoing technical support. The VAR integrates these services with the vendor's core software. This creates a full solution for the client. It solves specific IT challenges. This approach provides customers with a single point of contact for their needs. It simplifies technology adoption and management.

Why do businesses use Value Added Reselling?

Businesses use VARs to reach new markets. They also gain specialized expertise from partners. VARs offer tailored solutions that vendors cannot provide alone. This expands sales channels and customer base. It helps vendors focus on core product development. Customers get comprehensive solutions. This saves them time and resources finding multiple providers.

When is Value Added Reselling most effective?

VAR is most effective when products need customization or specialized integration. It works well for complex solutions requiring expert setup. This includes specific software implementations or industrial machinery. When customers need more than just a product, VARs fill that gap. It is also effective when a vendor wants to enter niche markets quickly.

Who benefits from Value Added Reselling?

Everyone in the ecosystem benefits. Customers get complete, tailored solutions and better support. VARs earn higher margins by adding their services. Vendors expand market reach without direct investment. This creates a win-win situation for all parties. It fosters stronger relationships across the partner network. This collaborative approach drives growth for all.

Which types of value can a reseller add?

Resellers can add many types of value. These include installation, customization, and integration services. They might offer training, consulting, or ongoing maintenance. For manufacturing, this could be custom fabrication or assembly. For IT, it could be data migration or cybersecurity services. The added value makes the core product more useful.

How does VAR differ from a traditional reseller?

A VAR adds significant services or components to a product. A traditional reseller mainly focuses on distributing the product as-is. VARs transform the original offering. Traditional resellers simply support the sale. VARs often have deeper technical expertise. They create more integrated solutions for end-users. This distinction is key for partner ecosystems.

Can Value Added Reselling apply to manufacturing?

Yes, it applies to manufacturing. A VAR might integrate a vendor's component into a larger machine. They could engineer custom parts around a core product. This creates a specialized industrial solution. They might also provide installation and maintenance for complex equipment. This helps manufacturers offer complete operational systems to clients.

What is a partner program in Value Added Reselling?

A partner program supports VARs. It provides resources like training, marketing materials, and technical support. Vendors offer incentives and certifications through these programs. This helps VARs effectively sell and support the vendor's products. It ensures quality and consistency across the partner network. Strong programs are essential for successful VAR relationships.

How do VARs increase their profit margins?

VARs increase margins by selling their added services. They charge for installation, customization, and support. These services have higher profit margins than the core product. Bundling these services creates a more valuable package. Customers are willing to pay more for a complete solution. This strategy boosts the VAR's overall profitability.

What skills do successful VARs need?

Successful VARs need strong technical expertise in their niche. They must understand customer needs deeply. Sales and marketing skills are also crucial. They need good project management abilities. Excellent customer service ensures client satisfaction and repeat business. These skills build trust and deliver comprehensive solutions effectively.

How do vendors find good Value Added Resellers?

Vendors find good VARs by defining clear partner profiles. They look for partners with relevant industry expertise and customer bases. Partner recruitment events and industry conferences are helpful. Strong partner programs attract quality VARs. Referrals from existing partners can also lead to new collaborations. Vetting potential partners is very important.