How to Become a Top Value Added Reseller (VAR)

Greg Harrington
Greg Harrington
Director of Revenue

In the competitive landscape of business, every company is seeking out added value. This means they’re always looking for ways to close deals faster and sell more products. In order to become a top value-added reseller, you need to stand apart from the crowd, leverage your expertise, and maximize the benefits to your client.

How does one accomplish such a feat? Partner enablement starts with baby steps and some insightful tips. In this article, we’ll look at the best practices successful VARs are using to get ahead of the game and how you can stay up-to-date for maximum efficiency.

Reach Out

One of the easiest mistakes a VAR can make is leaving their clients in the cold. Keep the lines of communication open and running so that people remember and value you.

Don’t just wait for someone to present an issue, reach out first and ask. This shows that you’re willing to go above and beyond, and will also show customers your input is valuable.

Stay Hyper Focused

Many top VARs have found success by differentiating their brand and focusing on a niche/vertical. Start with specialization and then branch out. This helps to establish a strong reputation for what you do best. It also makes it easier to creatively adapt your sales approach and win new business.

A niche can be defined by things like:

  • Company size
  • Location
  • Market segment
  • Price range
  • Other factors

A VAR can also work to identify an emerging threat and/or opportunity and commit to being a ground-floor solution for a new, fast-growing class of clients.

Offer Convenience

Another way to add value is to make your business a “one-stop-shop” for clients. Working with multiple partners for a single solution can become a huge stressor for customers. Too many hands in the cookie jar wastes valuable time and money.

Provide clients with convenience and affordability, and communicate that you are a total solutions provider. It would be wise, in this case, to offer a solutions-based approach to sales. Do this by identifying the exact problems you can solve for them with one partner.

Measure Success

How can you know you’re successful… if you’re not measuring a baseline?

A successful VAR will always monitor the profitability of KPIs. There are thousands of metrics you could be tracking, but in order to promote growth, a VAR needs to be laser-focused on a set of carefully chosen KPIs (key performance indicators). These should be the ones most related to your bottom line.

A few KPIs that VARs find helpful include:

Margin by Service Offering

Which services result in the highest margins? This KPI reveals how much profit your business makes on each service offered. This helps to make more strategic decisions about which services to provide.

Margin by Service Offering is calculated with the following formula:

( [Revenue – Cost of Service] / Revenue ) x 100 = Service Margin Percentage

Effective Rate by Customer

We all know that certain customers eat up more hours than others—and the squeaky wheel often gets the grease. To properly allocate resources and maximize revenue, VARs need to understand which customers are profitable vs. which are draining resources. This KPI is called the Effective Rate by Customer.

The formula to calculate the Effective Rate by Customer is as follows:

(Total Customer’s Services Revenue / Total Hours Dedicated) = Customer Effective Rate

Margin by Product Offering

Just like the Margin by Service Offering, the Margin by Product Offering looks at which products are the most profitable, and which you may want to reconsider selling. This can help optimize your product strategy and give people more of what they want.

The KPI metric for the Margin by Product Offering is calculated as such:

( [Revenue – Cost of product] / Revenue) x 100 = Product Margin Percentage

Embrace Automation

Channel enablement needs a modern push. Recent research has shown that inefficiencies can cost a company between 20%-30% of its revenue every year, many of which go unnoticed. This means a successful VAR needs to find a way to automate menial and routine tasks.

These tasks can include everything from network scans to agent deployment. The idea is to give your team time to work on more high-value activities that generate the most revenue. In this case, a valuable tool is a PSA (professional services automation) solution, like a CRM (customer relationship management) platform.

When creating a partner enablement framework, it’s also important to offer solutions that help your client build recurring revenue and add to their ROI. One example is data analytics software. This will help them collect and utilize information to gain powerful customer insights. An automated inventory management system is another great idea for mechanizing manual tasks.

Evolve to the Next Level

One of the final differentiators of a successful VAR is the ability to adapt and evolve. As pricing becomes increasingly competitive, many VARs are looking to boost their bottom line.

Thus, some VARs are making the switch to an MSP (managed service provider). This is so they can deliver ongoing, proactive monitoring and management of customer IT environments, resulting in a variety of stable MRR streams.

The numbers make sense, especially for more traditional VARs. A reseller with a mix of 90% hardware and 10% services, is only looking at a 6% profit margin (maybe even lower). In comparison, an MSP can expect up to a 15% profit margin.

While the VAR model is structured for a single interaction, MSPs have a more unique opportunity to build long-lasting relationships. They become a trusted advisor in the eyes of clients, which increases loyalty, and ultimately, fuels a higher rate of retention.

Summing it all up

In the hyper competitive and ever-changing world of technology, value-added resellers must take a proactive approach or risk being left by the wayside.

This starts with staying informed about industry trends and best practices. The rise of freemium software, pricing wars, and competition from direct sales vendors are just a few challenges a modern VAR currently faces.

How can a savvy VAR adapt and thrive?

Reach out to your clients regularly and offer them a little something extra. Make yourself a one-stop shop for their needs, but also focus on your strengths. Always measure your success (and failures) and use that knowledge to better strategize. Ultimately, be prepared to evolve. Your growth as a VAR can only lead to happier clients, more ROI, and a solid approach to selling.

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