What is a Resell Model?

1. Introduction

The resell model is a fundamental commercial strategy where a company, known as the vendor or producer, grants permission to independent third-party entities, called channel partners or resellers, to sell its products or services directly to end customers. In this arrangement, the channel partner typically acquires the vendor's offerings, often at a discounted wholesale rate, and then marks them up for sale. This model empowers partners to act as an extension of the vendor's sales force, broadening market reach and customer acquisition without the vendor needing to build out extensive direct sales operations in every territory or niche.

A key characteristic of the resell model is that the partner often takes ownership of the customer relationship. This includes managing the sales cycle, handling invoicing and payment, and frequently providing initial customer support. Vendors typically support their resellers with resources accessible via a partner portal, including sales collateral, training materials, and technical documentation. Effective partner relationship management is crucial for the success of this model, ensuring that both the vendor and the partner achieve their business objectives.

2. Context/Background

Historically, the resell model emerged as businesses sought efficient ways to scale their distribution and sales efforts beyond their direct capabilities. In the early days of computing, hardware manufacturers relied heavily on resellers to assemble, customize, and install complex systems for businesses. This allowed manufacturers to focus on product development while partners handled localized service and support. Today, in the highly competitive IT and software industries, the resell model remains pervasive, enabling software vendors to penetrate diverse markets and reach specialized customer segments that would be difficult or costly to access directly. For example, a specialized accounting software vendor might partner with VARs who understand specific industry regulations and can bundle the software with relevant consulting services.

3. Core Principles

• Partner-Owned Customer Relationship: The reseller manages the direct interaction with the end customer, from initial contact to post-sales support.
• Wholesale/Retail Margin: Partners purchase products at a wholesale price and sell at a retail price, earning a margin.
• Market Expansion: Enables vendors to reach new geographies, industries, or customer segments more efficiently.
• Specialized Expertise: Partners often bring industry-specific knowledge, technical integration skills, or localized support capabilities.

4. Implementation

1. Define Partner Profile: Identify the ideal characteristics of a reseller (e.g., technical expertise, market reach, existing customer base).
2. Develop Partner Program: Establish clear terms, pricing, support levels, and benefits for resellers.
3. Recruit Partners: Actively seek out and qualify potential resellers that align with the defined profile.
4. Onboard and Enable: Provide comprehensive training, access to a partner portal, sales tools, and technical resources.
5. Manage Performance: Set clear sales targets, track performance, and provide ongoing support and incentives.
6. Optimize Processes: Continuously review and refine the partner program based on feedback and results.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Clear Communication: Establish regular, transparent communication channels with partners.
• Strong Enablement: Provide robust sales training, product knowledge, and marketing support.
• Fair Compensation: Offer competitive margins and incentives to motivate partners.
• Dedicated Partner Manager: Assign a specific individual to manage each key partner relationship.

Pitfalls (Don'ts)

• Channel Conflict: Competing directly with partners for the same customers.
• Lack of Support: Failing to provide adequate training, tools, or technical assistance.
• Poor Communication: Leaving partners uninformed about product updates or strategic changes.
• Inadequate Margins: Offering insufficient profit opportunities, leading to partner disengagement.

6. Advanced Applications

For mature organizations, the resell model can be extended through:

1. Multi-tier Reselling: Utilizing distributors who then sell to smaller resellers.
2. Solutions Bundling: Partners combining the vendor's product with their own services or other vendor products.
3. Co-Selling Initiatives: Joint sales efforts where vendor and partner sales teams collaborate on opportunities.
4. Global Reseller Networks: Establishing a worldwide network of partners for international market penetration.
5. Managed Services Providers (MSPs): Partners offering the vendor's software as part of a recurring managed service.
6. Value-Added Resellers (VARs): Partners adding significant value through customization, integration, or specialized support.

7. Ecosystem Integration

The resell model deeply integrates with several pillars of the Partner Ecosystem Orchestration Model (POEM) lifecycle:

• Recruit: Identifying and attracting suitable resellers is foundational.
• Onboard: Providing initial training, contracts, and access to the partner portal is critical.
• Enable: Continuous provision of sales tools, product updates, and technical training ensures partner effectiveness.
• Sell: The core activity of the resell model, often supported by deal registration processes and co-selling initiatives.
• Incentivize: Rewarding partners for performance through margins, rebates, and other programs.
• Accelerate: Optimizing partner performance and growth through advanced partner relationship management strategies.

8. Conclusion

The resell model remains an indispensable strategy for companies aiming to expand their market reach, leverage specialized expertise, and scale their sales operations cost-effectively. By empowering channel partners to own the customer relationship and manage the sales process, vendors can focus on product innovation and strategic growth.

Success in the resell model hinges on robust partner relationship management, a well-defined partner program, and continuous investment in partner enablement. When executed effectively, it creates a symbiotic relationship where both the vendor and the partner thrive, ultimately benefiting the end customer with broader access to products and specialized services.