8 Tips for Establishing Successful Reseller
Agreements
So you’re a 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 a company has come to you wanting to resell your products and they
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 a great way to expand your sales reach and market penetration without
having to invest in a large sales force. However, unless planned
carefully, the 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 the right vision, goals and rewards. Here are some
guidelines to follow when structuring your reseller agreements:
1.Keep Your End Customer in Mind:
Understanding the needs of your end customers
will make the 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
the types of partnerships you engage in as well as the 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 the reseller fill for the 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 the 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 the 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, keep in mind that quality of resellers is always better than
quantity.
4. Offer Rewards in Return for Sales/Profits:
Require partners to prove themselves before
offering up money and leads. The best rewards are marketing dollars,
product and training discounts, and support for the partner company.
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 the relationships you’ve
been trying to nurture.
5. Build Strong Relationships:
Your resellers may have agreements with
other companies as well. How do you ensure that they focus sufficient
efforts on your products? Make sure that you are the best supplier
out there. Assign channel account managers to oversee those relationships
and continually look for ways that you and your partners can help each
other grow business. Resellers often complain that suppliers don’t understand
their business model and make decisions that adversely affect them.
To avoid this problem, make sure that your channel managers understand
the partners’ business model and take that into consideration when modifying
strategy.
6. Communicate, Communicate, Communicate:
This is perhaps the most important rule
in reseller agreements. Don’t forget about your partners and always
err on the side of over-communication. Successful companies use regular
newsletters, emails, telephone calls, site visits and even annual conventions
to stay in touch with resellers and keep them motivated. Remember,
these are your business partners and they should be kept abreast of new
developments, marketing efforts, and sales goals. Invested partners
want to understand your business and how growing business for you translates
into profits for them.
7. Measure Performance:
Along with clear goals and expectations,
you need to measure partner performance to establish results and rewards.
All companies use reseller revenue as a metric. You might also consider
establishing a scorecard system to rank your resellers and let them know
where they stand in relation to other partners. Additionally, you should
gather feedback about your performance as a supplier through reseller advisory
councils or satisfaction surveys. You want to know what your resellers
are doing for you, but you also want to be sure that you are the best supplier
they have in terms of relationships, service, product quality and value.
8. Review and Revise Regularly:
Let’s face it, the business climate changes
continually and a program you designed for partners two years ago may not
cut it now. Successful partnering companies suggest reviewing the
effectiveness of the partnership program every 1 to 2 years and making
changes as needed. You can also use this as an opportunity to let
your unprofitable partners go and bring in new resellers that can better
meet your goals and serve the needs of your customers.
The bottom line is that resellers should
be treated as both business partners and preferred customers. By building
strong reseller relationships, you will only enhance the value and service
you provide to your end customers, thus improving your long-term growth
and success.
Cynthia Bade is the principal of Carlson
Bade Associates, a consulting practice that helps companies foster strongerc
ustomer and partner relationships to increase growth and profits.
For more information please email Cynthia at mailto: cynthia@ carlsonbade.com
or call 952-240-2161.
Copyright 2006 Cynthia Bade
|
