What is Value-Added Reseller (VAR)?

1. Introduction

A Value-Added Reseller (VAR) is a critical type of channel partner within a partner ecosystem. These partners do more than just resell a vendor's product. They enhance the original offering with their own services, software, or hardware. This creates a more complete and tailored solution for the end customer. For example, an IT VAR might bundle a software product with installation, configuration, and ongoing support. This transforms a basic product into a comprehensive service.

VARs are essential for vendors looking to expand their market reach and provide specialized solutions. They act as extensions of the vendor's sales and support teams. Their deep understanding of specific customer needs allows them to customize products effectively. This approach drives customer satisfaction and loyalty. Strong partner relationship management is key to success with VARs.

2. Context/Background

The concept of value-added reselling has existed for decades. Early examples include computer resellers who bundled hardware with operating systems and basic applications. As technology evolved, so did the complexity of VAR offerings. Today, VARs are vital across many industries. In the IT sector, they integrate complex software solutions, cloud services, and cybersecurity tools. In manufacturing, VARs might combine specialized machinery with custom automation software and maintenance plans. They fill a crucial gap between generic products and specific customer requirements. This model allows vendors to focus on core product development. It lets partners address diverse market segments with tailored solutions.

3. Core Principles

• Solution-Centric Approach: VARs focus on providing complete solutions, not just individual products.
• Customer Intimacy: They deeply understand specific customer needs and industry challenges.
• Value Creation: VARs add tangible value beyond the vendor's base offering. This value can be services, integration, or customization.
• Technical Expertise: They possess specialized technical skills to implement and support complex solutions.
• Market Specialization: Many VARs focus on niche markets or specific customer segments.

4. Implementation

Implementing a successful VAR strategy involves several key steps:

1. Define VAR Profile: Clearly identify the types of VARs that align with your product and market strategy.
2. Develop Partner Program*: Create a comprehensive program. It should include clear incentives, support, and certification paths.
3. Recruit & Onboard: Actively recruit suitable VARs. Provide thorough onboarding and training.
4. Enablement: Equip VARs with sales tools, technical resources, and partner enablement materials.
5. Joint Planning: Collaborate on business plans and market strategies.
6. Performance Management: Regularly review VAR performance. Provide feedback and support for growth.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Offer Differentiated Incentives: Reward VARs for adding significant value, not just for volume.
• Provide Robust Training: Ensure VARs have deep technical and sales knowledge of your products.
• Support Co-selling: Actively engage with VARs on joint sales opportunities.
• Streamline Deal Registration: Make it easy for VARs to protect their opportunities.
• Communicate Consistently: Keep VARs informed about product updates and program changes.
• Seek Feedback: Regularly solicit input from VARs to improve your program.
• Support Marketing Efforts*: Provide through-channel marketing materials and support.

Pitfalls (Don'ts)

• Treating VARs as Resellers: Failing to recognize and support their value-added services.
• Inadequate Training: Expecting VARs to sell complex solutions without proper education.
• Channel Conflict: Competing directly with your VARs for the same deals.
• Poor Communication: Leaving VARs uninformed or unengaged.
• Complex Programs: Overly complicated incentive structures or program requirements.
• Lack of Support: Not providing sufficient technical or sales assistance when needed.
• Ignoring Feedback: Disregarding VAR suggestions for program improvement.

6. Advanced Applications

For mature organizations, VAR partnerships can extend to several advanced applications:

1. Geographic Expansion: VARs help enter new regional markets without direct vendor presence.
2. Vertical Specialization: VARs develop deep expertise in specific industries like healthcare or finance.
3. Cloud Migration Services: VARs assist customers in moving on-premise solutions to cloud environments.
4. Managed Services: VARs can offer ongoing management and support as a recurring service.
5. Custom IP Development: Some VARs create their own intellectual property that enhances vendor products.
6. Solution Bundling: Combining multiple vendor products with their own services for complex integrated solutions.

7. Ecosystem Integration

VARs are central to the partner ecosystem lifecycle. In Strategize, they help identify market opportunities. During Recruit, vendors seek VARs with specific industry expertise. Onboard involves training VARs on product integration and service delivery. Enable provides VARs with tools for channel sales and marketing. Market sees VARs extending vendor reach through their own campaigns. Sell is where VARs close deals and deliver solutions. Incentivize ensures VARs are rewarded for their value-added contributions. Finally, Accelerate focuses on growing VAR capabilities and joint market share. Their role impacts nearly every partner program pillar.

8. Conclusion

Value-Added Resellers are indispensable components of a robust partner ecosystem. They transform generic products into tailored solutions, meeting diverse customer needs. Their ability to add services, customization, and integration drives greater customer satisfaction and market penetration for vendors.

Effective collaboration with VARs requires a well-structured partner program, strong partner relationship management, and continuous partner enablement. By understanding and supporting the unique value VARs bring, vendors can significantly expand their reach and achieve sustainable growth.