The distribution of a point of sale offering is a persistent challenge that every point of sale developer (ISV), with the hope of scaling their business, needs to contend with. Regardless of POS architecture, a network of value-added resellers (VARs) often makes the difference between a point of sale company that grows and one that slowly (or not so slowly) dies on the vine. But, building a network of VARs isn’t all that straightforward, so here are a few mistakes to avoid when building a reseller channel:
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Present a non-profitable offering
Over 50% of VARs in the POS industry offer three or more unique point of sale solutions. Price and service level are often driving factors, but VARs will generally gravitate toward the offering that best fits the merchant’s needs and will yield the most margin over the long-term. Too many ISVs try to squeeze their dealers on price, not realizing that they’re choking their forward revenue opportunity by incentivizing their VAR partners to install a more profitable (for the VAR) solution from a competitor.
So, keep in mind that you’re competing against the other point of sale solutions in your VAR partner’s bag, and build a pricing model that includes plenty of revenue opportunity. Healthy margins, SaaS-based pricing models and support for value-added services from third parties that VARs can upsell to each merchant are a great start to building a strong and loyal VAR channel.
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Create conflicts of interests by selling direct to merchants
VARs need to have the tools to land and support large installs with the support of the ISV. While it can certainly be tempting to pull that large merchant chain away from one of your VARs for a direct sale, it only means that the next large merchant opportunity will go to one of the other POS options the VAR carries. Stay involved and provide any and all support that your VAR requires and internalize that poaching accounts from VARs is a short-term strategy that only leads to lost sales in the future.
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Skimp on dealer support
Keep in mind that VARs are the face of your product. If they’re not provided with the tools and education required to adequately install and support the POS once they’ve made the sale, the resulting subpar support reflects on the point of sale solution as a whole more so than it does the individual VAR. Successful VAR programs include ongoing education, consistent communication and opportunities for product and program feedback. Encourage your VAR partners to network and learn from each other by hosting workshops and ongoing VAR meetings.
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Relinquish complete control to the VAR
To avoid a convoluted product offering that varies by VAR/region, ISVs should consider approaching their VAR partners like franchisees. On-site and in-depth training should be an absolute requirement for new VAR partners. Instead of allowing the VAR to build their own marketing materials and campaigns, the ISV should consider standardizing those materials and providing them to VARs to ensure that messaging is on-point and consistent across VAR partners. The same strategy can be employed for merchant sales/service contracts. The more turnkey the solution, the easier it is for prospective VARs to add the POS offering to their line-up. If the VAR is placed in a position to thrive with adequate training, materials, ISV support and a VAR-friendly sales model, they’ll be given the incentive they need to push more merchants to your point of sale platform.
