According to HubSpot, value-added resellers specialize in purchasing and reselling technology products with additional software or features that are above and beyond the standalone features of the product.

For example, a VAR can develop an application for a particular hardware platform and then sell that combination as a turnkey service or tool. So if you want your VAR sales reps to push harder, reward them for their effort. According to research conducted by Ariyh, such incentive programs can increase your total sales by 6% to 9%.

Benefits

• Increase market reach: Manufacturers and distributors can use VAR incentive programs to broaden their reach and market penetration.
• Handle complex IT projects: VARs can be incredibly valuable in handling complex IT projects that are too demanding or time-consuming for in-house employees.

Challenges

• Trust issues: Many vendors find it challenging to trust VARs, as they are another company.
• The intermediary role of VAR: Businesses are not happy with the profits enjoyed by VARs because of their role as intermediaries. VARs might also not share customer ownership and contact.

Example

Cisco’s Channel Partner Program is a good example of this. This award-winning program provides solutions, training, tools, and support to value-added resellers (VARs) to help them accelerate profitability and grow their businesses along with Cisco. In addition, the resellers can reinvest in their business using their rewards from selling targeted technologies.

VARs frequently collaborate with third parties to deliver a complete solution to suit the needs of their clients. These are often independent businesses that provide specialized software and expertise. These Independent Software Vendors (ISVs) typically have long-standing working partnerships with VARs.

For example, HP’s ISV partner program runs two tracks for ISVs—the virtual reality track and a retail track.

➼ Under the virtual reality track, HP wants its ISV partners to leverage HP’s massive product line of VR-ready devices and sell immersive solutions to the end customers.

➼ Under retail track, HP aims to boost sales for its purpose-built retail platforms, which includes tablets, mobile, convertible, and fixed position solutions.

HP incentivizes its partners with marketing, sales, and technical support. As a result, it becomes a win-win situation for both HP and ISV partners.

Occasionally small and medium-sized businesses (SMBs), nonprofits, and government agencies also hire managed service providers (MSPs), which are third-party companies, to remotely control their information technology (IT) infrastructure and end-user systems. These services may include network and infrastructure management, security, and monitoring.

A perfect example of incentivizing these MSPs is Google Cloud’s partner program. Market research found that for every $1 of Google Cloud technology sold in 2020, partners are likely to generate $5.32 through their offerings, services, and IP globally.