How to Ace the Value-Added Reseller Marketing Model

value-added reseller is written on the road next to a yellow line

Are you looking to reach a broader audience with your products? The value-added reseller (VAR) marketing model can help increase your customer base. Use VAR marketing to partner with a reseller who has first-hand experience in customer service and makes their revenue from adding their services and hardware to your products.

Today we will look at some specific examples of value-added resellers in action and dive into strategies to help you succeed in this profitable marketing model.

Key Takeaways:
  • Value-added resellers make their revenue by marking up your products and selling add-ons.
  • Resellers tend to have more market knowledge and a closer relationship with their customers than most manufacturers.
  • Your reseller should reflect your business values and have aligned marketing goals to improve your business partnership.
  • Ecommerce is quickly growing, making it an ideal market to tap into using resellers with an established eCommerce audience.

Understanding VAR Marketing

A value-added reseller (VAR) is a third-party organization that adds value to a manufacturer’s products before selling the products at a higher price. The original manufacturer will often sell their goods to a VAR at a discounted price in return for the reseller performing all the sales and marketing for the product.

Value-added reseller marketing is most common in IT industries, where resellers can add on hardware or software for existing products. However, nearly any industry can also have value-added resellers. Here are a few value-added reseller examples.

  • Computer retailers sell technology from a manufacturer but add on warranties, service contracts, hardware, and installation services.
  • Automotive dealerships offer vehicles alongside extended warranties, accessories, and custom parts.
  • Home and furniture stores also offer interior design, installation, and space planning services.

VAR Marketing Benefits

Value-added resellers help manufacturers by taking a product from a highly competitive market and adding value that makes the product unique. This allows them to sell more of the product and increase both the manufacturer and their revenue.

Value-added resellers are also more closely connected to customers than manufacturers, giving them firsthand insights into what works and what customers don’t respond to. This advantage helps them improve their sales techniques for a more personalized experience than if customers purchase directly from the manufacturers.

VAR Marketing Challenges

Value-added resellers are often at the manufacturer’s mercy when it comes to price and the quality of the product. They base their price on the amount they originally paid for the product. However, this can lead to low-profit margins. That’s why they focus on their value-based add-ons to raise their profits.

5 Strategies to Succeed with Value-Added Reseller Marketing

If you are considering working with a value-added reseller, use these five strategies to ace your marketing and maximize your revenue.

1. Connect with the Right Reseller

When you are looking for a value-added reseller, think of the long term. You will want to develop a partnership, not just a business transaction. Therefore, you will need to find someone aligned with your company’s vision and mission. You will also want to find an organization that is scalable and can grow along with your company.

Just remember that your reseller will be the face of your product. This means that their actions will reflect directly back on you as a manufacturer. If your values aren’t fully aligned with your reseller, the partnership might hurt you as a company. Conversely, when you do find someone who reflects your business values, they can help strengthen your business’s reputation.

The top four deciding factors for customers when choosing a brand is:

  • Cost
  • Experience
  • Quality
  • Consistency

Those qualities should also be deciding factors when choosing a reseller that matches your brand and will meet customer expectations.

2. Add Value to Your Product

The value-added aspect of reselling is the foundation of VAR marketing. It’s how your resellers make a profit despite a low-profit margin.

You can help your resellers succeed by working with them to create value for your products. However, be careful that what they are adding to your goods is beneficial and isn’t an excuse to raise the item’s price as that will hurt your business in the long run.

Instead, find ways to make your product more marketable in competitive fields. For example, extended warranties will encourage more customers to invest in expensive electronics because of the lower risk factor.

Below is an example from the value-added reseller CDW. On their page, they sell products from popular brands like HP then add value through warranties and accessories for the product.

Product page of an HP monitor with add-ons from the reseller, CDW

Source: CDW

3. Offer Flexible Pricing

Previously, we looked at the reseller’s challenge of selling products when they are reliant on your prices. You can set your resellers up for success by addressing this challenge and offering ways for resellers to buy products at discounted prices.

If you sell your products for too high of a cost to the reseller, you force them to resell the product at an even higher rate, which will dissuade many customers. Therefore, you will benefit your business and help support your reseller by offering flexible pricing options.

4. Use Omnichannel Strategies

Your reseller should align with current market trends in your industry. For example, retail eCommerce sales are forecasted to grow 50% over the next four years. Therefore, you should work with resellers tapping into this growing market and can use it to expand your customer base.

Rise in global eCommerce sales

Source: Statista

A huge benefit of using resellers to sell to eCommerce customers is that they will usually have an established customer base. This allows you to focus on producing the products instead of building an eCommerce brand from the ground up.

5. Implement Automation

If you work with multiple resellers, you can quickly become overwhelmed with all the data you receive and the number of communication channels. That’s why automation is essential for connecting your marketing channels and resellers in one convenient platform.

Automation also ensures your resellers align with your brand by creating a seamless, consistent consumer experience. Brand consistency has increased business revenue by 33%.

Connect to Your Partners with an All-in-One Solution

Are you ready to ace your value-added reseller marketing strategy? Then you should start implementing automation tools to help handle all your data behind the scenes so that you can focus on high-value tasks.

Our platform will help you organize and manage your marketing channels and resellers without losing any leads. Instead, you will improve your conversion rate because your network is unified at every touchpoint, allowing your partners to deliver timely service.

Schedule a demo to learn more about our multi-location marketing automation platform.

 

Feature Image: istockphoto

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