Note: This is the latest in our Partnerships 101 series. You can read the other entries here.
Look around and you’ll recognize everyday examples of reseller partnerships, from the grocery chain that resells your local coffee shop’s specialty dark roast to Total Wine reselling your favorite Napa cab and delivering it right to your door. In the SaaS world, a reseller partnership is not much different from these examples (minus the wine and coffee, of course).
Resellers often have access to an existing customer base or specific audience that other SaaS companies want to reach. SaaS companies use resellers to explore new verticals, enter regional or global markets, and/or acquire new customers or user bases — all of which are growth levers for driving revenue.
For example, look at monday.com, the Work Operating System (OS) company. It gained 161 new customers and tripled its annual recurring revenue (ARR) in South Korea — all thanks to its reseller partnership with SPH, a Geographic Information Systems (GIS) solutions and consulting company based in South Korea.
How it all happened:
- SPH translated monday.com from English to South Korean and crafted a go-to-market strategy, which included using South Korea’s search engine and social media platforms to launch monday.com.
- SPH’s local insights and cultural expertise put it in a much better position to sell monday.com in a way that would resonate with South Korean customers and drive sales.
That’s just one of many success stories in the reseller partner ecosystem — we have plenty of others in store for you. So, if you’re noodling on the idea of a reseller program for your business, or if you’re a nerd and just curious, you’re in the right place.
In this post, we breakdown the SaaS reseller ecosystem — including terminology, types, and examples — to help you round out your knowledge.
- What is a Reseller Partnership
- The Relationship Between Resellers, Indirect Sales, and Channel
- Resellers and Value-Added Resellers (Plus Examples)
- Benefits and Drawbacks of a Reseller Partnership
What is a Reseller Partnership
In its purest form, a reseller is a company that helps a vendor sell its products and services to its end customer. (This definition changes a bit when it comes to value-added resellers, but we’ll get there later).
Most resellers make money by pocketing a portion of the software sale (aka revenue share). The exact share depends on a variety of factors, though our 2021 State of the Partner Ecosystem Report shared the most common splits:
Other reseller partner incentives might include:
- A partner page listing on the vendor’s website
- Product discounts
- Consulting guidance for developing services
- 1:1 support and product training
- Higher priority level for lead flow distribution
Sometimes resellers will retain exclusive rights to sell a vendor’s products and services to a specific market. For example, global learning company Houghton Mifflin Harcourt (HMH) has exclusive rights to distribute Amira Learning’s intelligent reading assistant to U.S. schools, grades K-3.
The Relationship Between Resellers, Indirect Sales, and Channel
Resellers, indirect sales partners, and channel partners are all related, but like most of your family members, they’re all quirky in their own way.
Reseller partnerships are a form of indirect or “channel” sales, in which your partner (a third-party entity) sits between you and the customer, brokering sales and/or services on your behalf.
Resellers are just one type of channel partnership, others include system integrators (SIs), agency partners, indirect sales partners, affiliate partners, business process outsourcers (BPOs), and managed service providers (MSPs).
For the purpose of this post (and to keep your head from spinning any further), we’ll focus solely on resellers. The important takeaway to remember is that all reseller partnerships are channel partnerships, but not all channel partnerships are reseller partnerships.
Resellers and Value-Added Resellers (Plus Examples)
Now that you have a solid foundation, let’s dig into the primary types of reseller partnerships: traditional resellers and value-added resellers.
Think of a traditional reseller partnership in which a third-party entity sells another vendor’s product to an end customer with little to no modifications. Here are some real-life examples.
Pipedrive and TS Cloud
Pipedrive, a CRM and pipeline management company, expanded into Taiwan in 2020. Pipedrive launched a localized version of its product in Mandarin Chinese, and then entered a reseller agreement with TS Cloud, a technology company based in Taipei.
TS Cloud is responsible for pitching and selling Pipedrive to sales teams in Taiwan’s small and mid-sized business (SMB) market. TS Cloud understands Taiwanese business culture, language, and customs — it has sales intel that Pipedrive doesn’t.
Pipedrive benefits from the partnership because it can grow sales in Taiwan and quickly learn whether or not it should continue expansion in Asia.
Carahsoft and DocuSign
Carahsoft, a government IT solutions provider, resells DocuSign’s e-signature solutions to the public sector.
Think of Carahsoft as a massive virtual department store fully stocked with shelves of software and hardware products for government agencies. It knows the intricacies of the government procurement and buying process inside out.
By using Carahsoft as a reseller, DocuSign now has users across 800+ local, state, federal, and tribal agencies.
Fiscal Foundation and Intuit (QuickBooks)
Account and bookkeeping company Fiscal Foundations is a QuickBooks (Intuit) Solution Provider — a distinction for those resellers with record sales numbers and high-quality services for Intuit and QuickBooks’ finance and accounting software products.
Fiscal Foundations resells Intuit licenses and offers setup, customization, and support services. Prospects can also browse and compare QuickBooks products on Fiscal Foundations’ virtual storefront.
QuickBooks benefits from this partnership because Fiscal Foundations is an extended sales arm, driving product sales and generating revenue. Fiscal Foundations benefits from sales incentives and also gets QuickBooks’ support with lead generation, co-selling, and co-marketing.
In a Value-Added Reseller (VAR) partnership, a company resells a vendor’s product, but it also offers add-on products and/or consulting, configuration, implementation, or training services — thus, the “value-added” piece.
Think of your local mechanic. They sell you the parts you need for repair and will also do the work to fix your car. They are reselling the parts from the manufacturer as well as “adding value” by taking care of installation.
Now that our metaphorical car has been fixed, let’s put it in “drive” and check out some VAR partnership examples.
JMT Consulting and Vena Solutions
JMT Consulting, an enterprise resource planning (ERP) and financial management solutions company, is a value-added reseller for Vena Solutions (Vena), a financial planning & analysis (FP&A) platform.
With 27+ years of nonprofit experience and expertise, JMT Consulting understands nonprofits’ financial reporting and budgeting processes and workflows, positioning them to resell Vena for nonprofit clients.
Rather than investing money and time trying to build decades worth of industry knowledge, Vena simply taps into JMT Consulting’s know-how and its existing 2,000 + nonprofit clients. In turn, JMT Consulting can sell prospects and clients value-added services like JumpStart for Vena Solutions, an implementation program designed to help nonprofits get up and running quickly on Vena.
Google and Shivaami Cloud Services
Shivaami Cloud Services, a Google Cloud Premier Partner, is a global value-added reseller for Google’s cloud products — like Google Workspace, Google Cloud Platform, Chrome, and more. Based in India, Shivaami became a Google partner in 2008 and is one of the top twenty Google resellers internationally.
During a Cloud Software Association webinar in January 2021, Shivaami Cloud Services CEO Punit Thakkar shared his company’s experience as a Google reseller in India. Shivaami Cloud Services became a Google partner in 2008 and is one of the top 20 Google resellers internationally. The company understands the trends, personas, and buying process across various regions of the Indian market. That intel — coupled with enablement and support from Google — continues to help it drive revenue for Google’s cloud products. The company earns recurring revenue on product sales, and sells additional support, migration, and training services.
And by focusing less on selling, Google can do what it does best: building cloud solutions (oh and you know, organizing the world’s information).
ALMToolbox and GitLab
ALMToolbox, a productivity Application Lifecycle Management (ALM) solutions company, is a premier reseller for GitLab, a DevOps platform.
Based in Israel, ALMToolbox helps local customers of all sizes — including state/local/education, SMB, mid-market, large, and the federal government — purchase and manage GitLab licenses (the reseller piece). It also offers migration, training, add-on development, and integration services to GitLab customers.
GitLab can rest assured from halfway around the world that it’s not only driving product sales in Israel, but it’s also helping customers successfully adopt its platform because of its partnership with ALMToolbox.
Benefits and Drawbacks of a Reseller Partnership
As you can tell from some of the examples above, a reseller partnership is set up for success when there is a shared understanding about the partnership goals, expectations, and outcomes.
Like any healthy relationship, it takes two.
“Our partner’s success is our success. When partners fail, we fail. When partners get paid, we get paid. When they don’t get paid, we don’t get paid. We’re so intimately tied into everything they do and all their KPIs.” says Aleksi Mattlar, Partner Development Manager at Vena Solutions.
When a reseller partnership is done correctly, here’s how both the vendor and the reseller benefit.
- Expanding faster than solely relying on direct sales.
- Reducing the costs of hiring, training, and retaining a direct marketing and sales team (i.e. lower customer acquisition costs). This comes in handy especially if the vendor is seeking global expansion.
- Tapping into a reseller’s established customer base lowers the barrier to entry in new verticals or global markets.
- Diversifying revenue streams (If you’re a SaaS company, you don’t want all your revenue concentrated with few customers. That’s risky business! You’ll want a diverse customer base in the event a large account cancels their contract.)
- If exclusivity rights are negotiated, it offers more control and a competitive advantage (Think: If a reseller is a sole distributor in a given market, that means no other resellers can encroach on its turf).
- Focusing on sales, distribution, and training without worrying about the messy “building a product” part.
- Establishing credibility by associating with a product that has a strong brand reputation.
- Revenue share, plus revenue generation from selling ancillary products and services.
- Achieving KPIs and metrics can unlock additional perks from the vendor like bespoke training, strategic co-selling opportunities, product discounts, and more (This is where partner certifications and tiers help resellers shine bright among other partners.)
But alas, reseller partnerships aren’t for everyone. Here are some drawbacks to be wary of.
- Time consuming to educate, train, onboard, and communicate with reseller partners and challenging to scale (At a certain point, you’ll need to invest in Ecosystem Ops — the tools, workflows, and processes needed to scale partner programs).
- Putting your reputation in someone else’s hands is risky, especially if they tarnish it with poor customer service or misrepresent your brand standards.
- You are one degree further separated from the customer, so it’s challenging to stay in sync with customer feedback and challenges.
- Lack of education, support, and training from the vendor can hinder the reseller’s ability to market and sell the vendor’s product.
- Harder to address product limitations or pricing flexibility (The reseller is often at the mercy of the vendor).
- Lack of product/market fit with the reseller’s customers and market can impede the reseller’s ability to hit revenue targets and KPIs.
Looking for more tips, lessons, and tactics for getting started with partnerships at your company? Scroll through The Partner Playbook to learn from those living and breathing partnerships every day. 👇