What is a VAR?

1. Introduction

A Value-Added Reseller, or VAR, is a fundamental type of channel partner in many industries. VARs take existing products or services from a vendor. They then enhance these offerings with their own unique contributions. This might involve integration, customization, or adding specialized services. The goal is to create a more complete and valuable solution for the end customer.

VARs play a critical role in a vendor's partner ecosystem. They extend market reach beyond what a vendor could achieve alone. They also provide tailored solutions that meet specific customer needs. This added value makes the original product more attractive and effective.

2. Context/Background

The concept of a VAR emerged as technology products became more complex. Early hardware vendors needed partners to install and configure systems. These partners began adding services like software installation, training, and ongoing support. This transformed a basic product into a full solution. In manufacturing, VARs help adapt standard equipment for niche applications. They provide specialized tooling, programming, and integration services. This historical development highlights the enduring need for customization and localized expertise.

3. Core Principles

• Enhancement: VARs add features, services, or integrations to base products.
• Specialization: They often focus on specific industries, technologies, or customer segments.
• Solution-Oriented: VARs sell complete solutions, not just individual components.
• Customer Intimacy: They build strong relationships with end-users, understanding their unique challenges.
• Value Creation: Their primary function is to increase the perceived and actual value of a vendor's offering.

4. Implementation

Implementing a successful VAR strategy involves several key steps:

1. Define Target VAR Profile: Identify the types of VARs that best fit your product and market.
2. Develop a Comprehensive Partner Program: Outline clear terms, benefits, and requirements for VARs.
3. Create a Partner Portal: Provide VARs with access to product information, training, and deal registration tools.
4. Offer Robust Partner Enablement: Deliver technical training, sales collateral, and marketing support.
5. Establish Clear Communication Channels: Maintain regular contact with VARs to share updates and gather feedback.
6. Implement Performance Tracking: Monitor VAR sales, pipeline, and customer satisfaction to measure success.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Provide extensive training: Ensure VARs deeply understand your products and their value.
• Offer competitive margins: Incentivize VARs to prioritize your solutions.
• Share qualified leads: Support VARs in generating new business.
• Maintain open communication: Foster a collaborative relationship with your VARs.
• Simplify deal registration: Make it easy for VARs to protect their opportunities.
• Develop co-marketing resources: Help VARs promote your joint solutions effectively.
• Recognize and reward success: Celebrate top-performing VARs to encourage continued effort.

Pitfalls (Don'ts)

• Treating VARs like direct sales: Failing to recognize their independent business model.
• Inadequate enablement: Leaving VARs unprepared to sell and support your products.
• Channel conflict: Competing directly with your VARs for the same customers.
• Complex partner agreements: Making it difficult for VARs to understand terms and conditions.
• Lack of consistent support: Leaving VARs feeling unsupported after initial onboarding.
• Ignoring VAR feedback: Missing opportunities to improve your program and products.
• Poor communication: Failing to keep VARs informed about product changes or program updates.

6. Advanced Applications

Mature organizations use VARs for more than just basic reselling.

1. Solution Co-creation: Working with VARs to jointly develop new industry-specific solutions.
2. Geographic Expansion: Using VARs to enter new regions without direct investment.
3. Vertical Market Penetration: Using VAR expertise to target niche industries.
4. Managed Services: Enabling VARs to offer your technology as part of their managed service offerings.
5. Custom IP Development: Encouraging VARs to build their own intellectual property on your platform.
6. Global Systems Integrator Partnerships: Collaborating with large VARs for complex enterprise deployments.

7. Ecosystem Integration

VARs are integral to several POEM (Partner Ecosystem Orchestration Model) lifecycle pillars. During Recruit, vendors identify and attract suitable VARs. Onboard involves integrating VARs into the vendor's systems and processes. Enable focuses on providing VARs with the tools and knowledge to sell effectively, often through a dedicated partner portal. Market includes providing through-channel marketing materials. Sell is where VARs drive revenue through co-selling and deal registration. Incentivize ensures VARs are rewarded for their performance. Finally, Accelerate involves optimizing VAR relationships for sustained growth.

8. Conclusion

Value-Added Resellers are vital contributors to any robust partner ecosystem. They transform standard products into tailored solutions, meeting diverse customer needs. By understanding and supporting VARs, vendors can significantly expand their market reach and deliver enhanced customer value.

Effective partner relationship management is key to a successful VAR strategy. Investing in strong enablement, clear communication, and fair incentives allows VARs to thrive. This creates a mutually beneficial relationship that drives growth for both the vendor and the VAR.