Evaluating Resellers 101

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So you’ve gathered a pool of good reseller candidates; they’ve expressed interest in exploring a partnership, and now it’s time for you to start screening who you want to do business with. Many SaaS startups tend to want to sign up with everybody as a reseller, but the truth is you should be very selective of who you allow to represent your product in the marketplace. So, you should evaluate resellers as you would a new hire and apply a uniform process across all potential reseller partners.

KPI’s & Customer Data

The first thing you should know about a potential reseller is their track record. How many solutions are in their portfolio? What’s the average number of sales per offering every month? What’s their average deal size? It’s important for you to know these data points so you can judge the level of activity you can expect from this reseller.

Secondly, you need to know about who their customers are. If they have an existing portfolio of companies they sell to, you need to dig into that information. How many companies have they sold to? What size are they? What was the average deal size? What does their churn look like? How many customers renew their sales contracts? For resellers that employ a direct selling method, where do they get their leads? What do their conversion rates look like? Are customers renewing their contracts? What is their employee churn rate? These are the types of things you should be asking as you evaluate potential reseller partners. Remember to pick KPI’s that make sense for your business.

Roles & Responsibilities

Every reseller has their own operating model. The ways in which roles and responsibilities are broken out differ amongst almost all of them. It is very important that you establish a common understanding of what roles and responsibilities you as a vendor, and them as a reseller, will have throughout the lifecycle of a customer. Before you can do this, you must figure out what you want in a reseller partnership. What are you comfortable letting others manage, and what do you want to keep control over? And then make sure you communicate those roles and responsibilities clearly while evaluating potential reseller partners.

For example, some resellers like to take a holistic account management approach. This means they make the sale, work with you throughout implementation, but then actively manage the account through issues, solutions, and contract renewal. There are some great resellers like this. They are great because they augment your workforce with an outsourced group. However, in this scenario you grant almost full control of the customer to the reseller – something that can be difficult for a company to swallow.

Set Expectations

Finally, you need to set expectations with potential resellers. These include quotas, deals closed, customer size, average deal size, or any number of metrics you expect to come out of the relationship. Setting up and managing resellers requires a large investment of time and resources, and this is your way of communicating an expected return on your investment. During this conversation many resellers will self-select out as they learn you are a metric-driven organization that expects results from partners. Also, this lets the potential reseller know that you expect consistent results, rather than the often-seen trend where resellers produce well early on and then trail off over time. Some resellers will drop out, but those you want to work with will see this process as expected and exciting, especially as you discuss how your firms will jointly own collective success.


For more great content try:

4 ways to sell your product like you’re pitching to a vc

5 ways for a vp of sales to impress the CEO

When is the right time for a live product demo?

 

 

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