What is a VAR?

TL;DR

VAR is a Value-Added Reseller. This channel partner enhances original products with their own services. They create a complete, customized solution for end-users. VARs are vital in a partner ecosystem for delivering specialized offerings and expanding market reach. They often use partner relationship management tools.

Key Insight

VARs are more than just resellers; they are solution architects. They bridge the gap between generic products and specific customer needs. Their ability to customize and integrate drives significant value. This makes them indispensable for vendors seeking deep market penetration and specialized service delivery.

1. Introduction

A Value-Added Reseller, or VAR, is a fundamental type of channel partner in many industries. VARs take existing products or services from a vendor, then enhance these offerings with their own unique contributions. This might involve integration, customization, or adding specialized services, creating a more complete and valuable solution for the end customer.

VARs play a critical role in a vendor's partner ecosystem by extending market reach beyond what a vendor could achieve alone. Tailored solutions meeting specific customer needs are also provided, and this added value makes the original product more attractive and effective.

2. Context/Background

The concept of a VAR emerged as technology products became more complex. Early hardware vendors needed partners to install and configure systems, and these partners began adding services like software installation, training, and ongoing support. A basic product was transformed into a full solution. In manufacturing, VARs help adapt standard equipment for niche applications, providing specialized tooling, programming, and integration services. This historical development highlights the enduring need for customization and localized expertise.

3. Core Principles

• Enhancement: VARs add features, services, or integrations to base products.
• Specialization: Often, VARs focus on specific industries, technologies, or customer segments.
• Solution-Oriented: VARs sell complete solutions, not just individual components.
• Customer Intimacy: Strong relationships with end-users are built, understanding their unique challenges.
• Value Creation: The primary function of VARs is to increase the perceived and actual value of a vendor's offering.

4. Implementation

Implementing a successful VAR strategy involves several key steps:

1. Define Target VAR Profile: Identify the types of VARs that best fit your product and market.
2. Develop a Complete Partner Program: Outline clear terms, benefits, and requirements for VARs.
3. Create a Partner Portal: Provide VARs with access to product information, training, and deal registration tools.
4. Offer Robust Partner Enablement: Deliver technical training, sales collateral, and marketing support.
5. Establish Clear Communication Channels: Maintain regular contact with VARs to share updates and gather feedback.
6. Implement Performance Tracking: Monitor VAR sales, pipeline, and customer satisfaction to measure success.

5. Best Practices vs Pitfalls

Best Practices:

• Provide extensive training: Ensure VARs deeply understand your products and their value.
• Offer competitive margins: Incentivize VARs to prioritize your solutions.
• Share qualified leads: Support VARs in generating new business.
• Maintain open communication: Foster a collaborative relationship with your VARs.
• Simplify deal registration: Make it easy for VARs to protect their opportunities.
• Develop co-marketing resources: Help VARs promote your joint solutions effectively.
• Recognize and reward success: Celebrate top-performing VARs to encourage continued effort.

Pitfalls:

• Treating VARs like direct sales: Failing to recognize their independent business model.
• Inadequate enablement: Leaving VARs unprepared to sell and support your products.
• Channel conflict: Competing directly with your VARs for the same customers.
• Complex partner agreements: Making it difficult for VARs to understand terms and conditions.
• Lack of consistent support: Leaving VARs feeling unsupported after initial onboarding.
• Ignoring VAR feedback: Missing opportunities to improve your program and products.
• Poor communication: Failing to keep VARs informed about product changes or program updates.

6. Advanced Applications

Mature organizations use VARs for more than just basic reselling.

1. Solution Co-creation: Working with VARs to jointly develop new industry-specific solutions.
2. Geographic Expansion: Using VARs to enter new regions without direct investment.
3. Vertical Market Penetration: Using VAR expertise to target niche industries.
4. Managed Services: Enabling VARs to offer your technology as part of their managed service offerings.
5. Custom IP Development: Encouraging VARs to build their own intellectual property on your platform.
6. Global Systems Integrator Partnerships: Collaborating with large VARs for complex enterprise deployments.

7. Ecosystem Integration

VARs are integral to several POEM (Partner Ecosystem Orchestration Model) lifecycle pillars. During Recruit, vendors identify and attract suitable VARs. Onboard involves integrating VARs into the vendor's systems and processes. Enable focuses on providing VARs with the tools and knowledge to sell effectively, often through a dedicated partner portal. Market includes providing through-channel marketing materials. Sell is where VARs drive revenue through co-selling and deal registration. Incentivize ensures VARs are rewarded for their performance. Finally, Accelerate involves optimizing VAR relationships for sustained growth.

8. Conclusion

Value-Added Resellers are vital contributors to any robust partner ecosystem. They transform standard products into tailored solutions, meeting diverse customer needs. By understanding and supporting VARs, vendors can significantly expand their market reach and deliver enhanced customer value.

Effective partner relationship management is key to a successful VAR strategy. Investing in strong enablement, clear communication, and fair incentives allows VARs to thrive. This creates a mutually beneficial relationship that drives growth for both the vendor and the VAR.

Frequently Asked Questions

What is a VAR in a partner ecosystem?

A VAR is a Value-Added Reseller. They take another company's product and add their own services to it. This creates a more complete solution for the end customer. For example, an IT VAR might bundle software with installation and support. A manufacturing VAR could add custom programming to a robot. VARs help deliver tailored solutions to specific customer needs.

How does a VAR add value to a product?

A VAR adds value by bundling products with their own services. This can include installation, customization, training, and ongoing support. For IT, they might configure software for a client's specific workflow. In manufacturing, they could integrate a machine into a production line with custom tooling. This creates a comprehensive solution beyond the original product.

Why are VARs important for software companies?

VARs are important for software companies because they extend market reach. They provide specialized expertise that the software company might not have in-house. VARs can tailor generic software solutions to fit unique customer needs. This helps software companies sell to diverse industries and customer segments more effectively. They act as trusted advisors to end-users.

When should a manufacturing company work with a VAR?

A manufacturing company should work with a VAR when they need specialized integration or customization. If a standard machine needs custom programming or unique tooling, a VAR can provide this. They are useful for complex installations or when specific industry expertise is required. VARs help ensure new equipment works seamlessly within existing operations.

Who benefits from a VAR relationship?

Everyone in the chain benefits from a VAR relationship. The original vendor gains expanded market reach and specialized sales. The VAR earns revenue by adding services and expertise. The end customer receives a tailored, complete solution that meets their exact needs. This makes the overall process more efficient and effective for all parties involved.

Which types of services do IT VARs typically offer?

IT VARs typically offer a range of services beyond just selling software or hardware. These include system integration, custom software development, network configuration, and data migration. They also provide training, technical support, and ongoing maintenance. Their goal is to ensure the IT solution works perfectly for the client's business operations.

How do VARs handle deal registration?

VARs typically handle deal registration through a vendor's partner portal. They submit details about potential sales opportunities. This process helps prevent channel conflict and protects their sales efforts. Successful registration often grants the VAR special pricing or support for that specific deal. It ensures they are recognized for their sales efforts.

What is the difference between a VAR and a reseller?

A reseller simply sells a product as is, often at a discount. A VAR, however, adds significant value to the product before reselling it. They integrate services like installation, customization, or support. This transforms a basic product into a complete, tailored solution. VARs provide more comprehensive offerings than a standard reseller.

Can a VAR offer products from multiple vendors?

Yes, a VAR can absolutely offer products from multiple vendors. In fact, this is a common practice. They often combine products from different companies to create the best solution for their clients. For example, an IT VAR might bundle hardware from one vendor with software from another. This provides flexibility and comprehensive options to customers.

How do VARs contribute to customer satisfaction?

VARs contribute to customer satisfaction by providing highly customized solutions. They understand specific customer needs and tailor products accordingly. Their added services, like installation and support, ensure smooth implementation and operation. This leads to better performance and a more positive experience for the end-user. They bridge the gap between generic products and unique customer demands.

What kind of support can a VAR expect from a vendor?

A VAR can expect various types of support from a vendor. This includes sales and marketing resources, technical training, and product documentation. Vendors often provide competitive pricing, lead generation, and access to a partner portal. This support helps VARs effectively sell, implement, and maintain the vendor's products. It fosters a strong partnership.

How do VARs stay competitive in the market?

VARs stay competitive by continuously enhancing their expertise and service offerings. They specialize in niche markets or specific technologies. Building strong customer relationships and providing exceptional support is key. They also adapt to new technologies and expand their portfolio of value-added services. This ensures they remain relevant and valuable to their clients.