So you’re a small but growing company, thinking about establishing some reseller contracts to push your products. Maybe you’ve decided to expand into a new market where you don’t have a presence. Maybe you’ve hit on a windfall – a company has come to you wanting to resell your products and they already have customers lined up! Or maybe you already have some reseller agreements in place that haven’t been as successful as you’d hoped. There’s no denying that reseller agreements are becoming more prolific and are a great way to expand your sales reach and market penetration without having to invest in a large direct sales force. However, unless planned carefully,
road to reseller agreement bliss can be paved with pitfalls. Suppliers often complain of resellers who don’t perform or who expect marketing dollars and sales leads handed to them without any return commitment. Resellers complain of suppliers who expect outstanding sales performance but offer little by way of incentives, support, and rewards. Both sides complain of opportunists looking for a quick sale, without any thought of long-term, mutual benefit. The key to success is to structure reseller programs with right vision, goals and rewards. Here are some guidelines to follow when structuring your reseller agreements:
1.Keep Your End Customer in Mind: Understanding needs of your end customers will make job of forming profitable partnerships easier. Start with some solid customer research and then identify what kinds of resellers will allow you to reach market segments most efficiently while providing superior value to your clients.
2.Establish a Program With Clear Guidelines: Companies with successful partnering agreements put some infrastructure behind them. Your program should clearly define types of partnerships you engage in as well as requirements and rewards for doing business with your company. You should also consider what goals you expect to achieve from engaging partnerships:
*What percent of your revenue to you hope to gain through reseller channels? *What markets do you want to reach with your partners? *What need can reseller fill for customer that you can’t? *What value can you provide to your reselling partners? Put some serious thought in to this, put someone in charge of program, and consult your potential selling partners on development issues. Companies with large, established partnering programs put nearly as much effort into marketing themselves to partners and supporting those partners as they do their customers.
3.Require An Upfront Commitment: Opportunists are everywhere and both suppliers and resellers often make mistake of focusing on quick sales. Instead, spend your energy on partners who are interested in a long-term commitment. Additionally, don’t try to talk companies into reselling for you. Reluctant partners won’t do anything for your customers or your business. Start small with one partner who has an established business and a strong business model. Require training, certification, and forecasts to be sure they’re invested in selling your products and helping you grow. Include partners in business planning and offer to help them with their business issues. In return, reward them for their performance. Once your model is in place, you can expand your partnering agreements to new segments keeping in mind that quality of resellers is always better than quantity.
4.Offer Rewards in Return for Sales/Profits: Partner program managers often complain about resellers who want them to provide money and sales leads with little or no upfront commitment. Prevent this by making partners prove themselves before offering up marketing dollars and customers. Quick and easy incentives for reseller’s sales force is another mistake some suppliers make. The best rewards will always be marketing dollars, product and training discounts, and support for partner company. This serves to form a mutually beneficial relationship and keeps reseller motivated to include your products in their long-term strategy. Partner programs with varying levels of performance and rewards work well as incentives. Most importantly, be consistent with your requirements and rewards, and don’t make better deals with certain resellers. Your other partners will likely find out and there goes relationships you’ve been trying to nurture.
