Selling through a channel – leveraging a force of value-added resellers (VARs) to take your product to market – is an effective approach for many software developers and independent software vendors (ISVs). It’s a particularly smart move when your software must run on specialized hardware, for example, point of sale (POS) solutions.
Thought leaders with valuable channel insights participated in the “ISV Secrets of Building and Managing a VAR Channel” panel at the Retail Solutions Providers Association (RSPA) RetailNOW 2021 event. They shared their experiences and advice with ISVs in the POS space about choosing this business model, building relationships with partners, and finding the greatest success.
What to Consider Before Committing to a VAR Channel
Jeff Riley, CEO and Chairman of Retail Management Hero, says before you launch your channel program, you need to weigh the pros and cons. “Think through the types of products you have,” he says. “Do you offer a solution that’s well-established in your industry, such as POS software? It’s a strength, but it’s also a weakness. You’re joining a sea of competitors, and you’ll really have to articulate your value proposition for partners that would attract them away from the products they sell now.”
On the other hand, you face different challenges if you offer a new tool or ancillary product. “You have to have a different story to tell. It’s a challenge to get resellers mindshare and get resellers to commit resources,” Riley comments.
He adds that you also need to address the “tactical” side of establishing a channel, such as legal agreements, reseller policies, pricing, margin, and delivery model.
Tim Pincelli, Global VP, Partner and Channel Programs at Jolt, says establishing a channel has more moving parts and takes more work than you probably anticipate, “But once you check the boxes, you can run as fast as you can.”
Recruiting and Onboarding
Once you decide that establishing a VAR channel is the best strategy for your business, you need to sign resellers.
Pincelli says to prepare to invest some creativity, time and resources into courting the best VARs in your market. “Do your homework and have a story, and that story has to be filled with the words ‘margin,’ ‘traction,’ ‘pace,’ and ‘leads,’” he says.
Pincelli says it’s vital to communicate to your VAR channel what it takes to be a successful reseller – and, maybe counterintuitively, that may take first selling directly to users to understand that.
Jami Interdonato, President of RPOWER, advises creating as much documentation on your software as possible to provide to your VAR channel. “You don’t want to share tribal knowledge every day over the phone with a variety of resellers,” he points out.
“Understand that you’re responsible to the channel, and you have to have the documentation to back it up,” he says.
Getting VARs to Sell
With all of the products in a VAR’s portfolio, you may also find it challenging to get resellers to promote your product. “You have to show them it’s a lucrative opportunity,” Riley says. “You also have to explain who the perfect customer for your product is… Then (resellers) can pick and choose the customer who is a good fit.”
The panel also discussed whether ISVs should establish performance metrics for VARs – and hold them to those numbers.
Riley says, “It’s old school to hold them accountable. A more efficient way to approach this is to start a conversation with the new partner and see what is reasonable and what their goals are.” He says, then, you can monitor their sales to see if they’re working up to their expectations. “It’s more trust than control,” he comments.
Interdonato adds, “Understand who resellers are. Just because you want them to sell a certain amount doesn’t mean they’re capable of doing so.” He also points out that retaining your resellers, even if they aren’t top sellers each quarter, is more important than having them meet a goal you set for the entire channel.
Building a Relationship that Lasts
The panel also shared keys to solid vendor-partner relationships.
Evan Fytros, CEO of Soft Touch POS, says, “The market has changed tremendously over the past few years. The way we price is different for everyone. People are changing how they want to buy services. Some never change, and some bring ideas to us, and we’ve facilitated them,” he said. “Flexibility is a premium.”
Pincelli adds that you also need to build trust among your VAR channel partners. “It’s really important to say what you’ll do before you do it. Then, as the relationship unfolds and your actions match what you said you’d do, trust builds up.”