TSP • @myTSPnet
Business is competition. The industry doesn't matter — the market creates the conditions for competitor development. The trick to success and profits is finding a way to add value to the end product, an addition that surpasses any current offering from the competition. The problem is most executives must focus on operations, perfecting existing products, and fostering client relationships, leaving little time for anything else. Partnerships with VARs can help, but what are VARs?
WHAT ARE VARs, AND HOW DO THEY WORK?
A VAR is a value-added reseller or a firm that adds customized products or services to a third-party product for end-user resale. VARs are prominent figures in the information technology industry, offering consulting, troubleshooting, and installation services on top of core products.
Resellers are not manufacturers, but they completely understand the core product, software, or hardware they sell. Their knowledge allows them to customize packages that add value to the original, third-party product. While some resellers are exclusive to specific IT corporations, most carry and offer packages for several brands, making these resellers a preferred option for consumers. Recognizing the benefit of working with VARs, IT companies often provide product discounts to resellers to help bolster sales through the business channel.
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF WORKING WITH VARs?
Determining the real value that VARs bring to a company is tricky. After all, a manufacturer sells the reseller its product at a discount, so how does that help their bottom line? As with any business partnership, there are risks and rewards. A manufacturer takes on some challenges and potential losses working with a VAR, but the benefits typically outweigh any possible losses or problems.
The primary benefit of working with VARs is the customer-centric design of the business model. Resellers increase opportunities for repeat sales and customer satisfaction. Manufacturers and developers are product-focused enterprises, meaning a reseller is better able to handle consumer challenges, especially when the reseller's profit margin typically comes from value-added, customer service-focused services.
VARs are also flexible, understanding that a standardized reseller program does not typically exist. Resellers are often willing to take a loss or low profit with minimal markups on partnership sales because add-on services and products are their bread and butter.
The primary issue with VARs is quality control. Resellers have little to no control over the products they sell. Also, some businesses are not transparent about the reselling process. The problem creates issues on the back end when consumers don't understand why one location charges more than the manufacturer for a product or when prices vary from seller to seller. Some manufacturers counter these issues by offering discounts to VARs, ensuring the resellers can charge a fair market price to consumers.
Without understanding "What are VARs?" and the standards for resale products, it is challenging for manufacturers to set up agreements. Resellers only provide add-ons; they do not deal with the features or quality of various products, which can hurt resellers' and, potentially, manufacturers' reputations.
WHY DO CUSTOMERS PREFER WORKING WITH VARs?
Despite the potential challenges of working with VARs, manufacturers still benefit from improved consumer relations. Resellers are popular among customers because they represent a competent and approachable authority.
While most consumers embrace technology and feel comfortable with standard devices, many struggle with independent and specialized applications, software, and hardware. Resellers step in to fill a gap in the marketplace and complement manufacturer products and services. The customer-focused approach leads to the five core reasons consumers prefer working with VARs.
- ACTS AS AN INTERMEDIARY
What are VARs' core strengths in the eyes of consumers? The businesses know the products they sell and have the time, patience, and infrastructure to work with consumers. To an extent, VARs navigate the fine line between original equipment manufacturers and consumer advocates — they know the intricacies of specific equipment but are not directly influenced by its profits. Consumers can establish more of a relationship with resellers than with a mega-vendor or prominent manufacturer. OEMs may not have the vertical knowledge or service capabilities necessary for direct-to-consumer interactions.
- ENSURES QUALITY
Quality assurance issues typically stem from partnerships with inexperienced resellers. Experienced VARs only work with certified companies, those with a proven history and industry track record. By only working with legitimate and capable OEMs, VARs establish a reputation of quality with consumers. When customers trust that they can purchase quality products and services from a reseller, they return for future purchases, creating a symbiotic relationship between customers, VARs, and OEMs.
- SAVES TIME
Researching OEMs is time-consuming, so what are VARs if not time-savers? VARs vet the products and services they sell so consumers don't have to. Also, resellers sell integrated and turn-key products with customized services and features. When consumers work with VARs, they get a built-in customer service solution. They don't need to attend conferences or special classes to find or learn how to use software — they can simply contact their VAR.
- SAVES MONEY
One of the reasons for working with VARs is they save consumers money. Most manufacturers offer resellers discounts on products, which they can pass to the consumer. Also, resellers typically invest in infrastructure, systems, personnel, training, research, and testing, meaning consumers don't have to invest in those things, saving significant time and money.
- ESTABLISHES TRUST
Unlike OEMs, VARs have the time and the business model to invest in consumer relationships. Their business is about establishing long-term, ongoing relationships and services — that's how they make their money. That said, consumers only continue working with VARs because the companies prove their value. They demonstrate knowledge, commitment, and clarity of service, meaning they establish trust.
WHAT ARE VARs, AND HOW DO WE USE THEM?
What are VARs? They are value-added resellers with a consumer focus. As resellers, they know OEM products, can drive business, and create a presence in the marketplace. We use VARs to help us deliver flawless services. Check out TSP to learn more about what we can do to amplify your team and simplify your service.