Setting up a reseller partnership can help businesses expand their reach and increase sales by leveraging an existing network of resellers. However, establishing these partnerships requires careful planning and execution. This guide will provide tips on how to successfully set up and manage reseller partnerships.
What is a reseller partnership?
A reseller partnership is an agreement between a manufacturer or distributor (the vendor) and a reseller where the reseller purchases products wholesale from the vendor and then sells them under their own brand. The reseller takes ownership of the products and is responsible for marketing, selling, and supporting the products. The vendor handles product fulfillment.
Reseller partnerships allow vendors to rapidly expand their distribution channels and enter new markets without major investment. For resellers, these partnerships provide access to an established product line without manufacturing or inventory costs. It’s a win-win arrangement when executed properly.
Key benefits of reseller partnerships
There are many potential advantages of reseller partnerships for both vendors and resellers:
- Expanded market reach – Vendors can leverage resellers’ existing customer bases and distribution networks to access new markets and geographies.
- Increased sales – Adding multiple resellers allows vendors to generate more sales than through their direct sales team alone.
- Shared workload – Resellers handle end-customer management, freeing up vendors to focus on product development and fulfillment.
- Expert sales teams – Resellers often have specialized industry, product, or regional expertise that can enhance sales.
- Reduced costs – Resellers take on many sales and marketing expenses, reducing overhead for vendors.
- Brand exposure – Association with multiple trusted resellers can increase brand visibility and credibility.
- Faster time-to-market – Onboarding existing resellers expedites entry into new markets compared to building an internal sales team.
For resellers, partnerships with established vendors provide:
- Turnkey product line – Quickly add proven, ready-to-sell products through wholesale purchases.
- Shared marketing – Leverage vendor-produced marketing assets including brochures, videos, and event booths.
- Training support – Receive product education and sales enablement training from the vendor.
- Minimal risk – Avoid upfront product development and inventory costs.
- Expanded offerings – Offer customers a more diverse and robust product line.
- Exclusivity options – Negotiate exclusive distribution rights in specific territories or verticals.
Steps for establishing a reseller partnership
Structuring a mutually beneficial reseller partnership takes careful planning and preparation. Here are key steps for vendors to take:
1. Define partnership objectives and criteria
Start by outlining the goals for the reseller program and parameters for evaluating potential partners:
- Geographic markets to target
- Product line(s) to distribute through resellers
- Number of resellers needed
- Sales volume requirements
- Target customer segments or verticals
- Training and support commitments
- Exclusivity options
Also define the criteria that prospective resellers must meet to qualify, such as:
- Years in business and financial stability
- Relevant customer base and industry experience
- Sales territory and volume potential
- Existing distribution reach and infrastructure
- In-house sales and technical expertise
- Brand reputation
- Marketing capabilities
These parameters guide recruitment efforts and help set clear expectations with partners.
2. Identify and qualify prospective resellers
With criteria defined, research and evaluate potential reseller partners. Sources for prospects include:
- Existing customers with retail or redistribution operations
- Industry directories, associations, and trade shows
- Web searches for distributors and channel sales companies
- Business directories such as Hoover’s
- Current reseller referrals
Narrow the list by reviewing reseller websites, capabilities, and customer base against defined criteria. Qualify prospects further through questionnaires, requests for references, and phone interviews. Verify there is strong alignment on objectives, capabilities, and culture.
3. Develop a reseller application and onboarding process
Create a formal reseller application to uniformly evaluate interested candidates. The application should request information on:
- Company background and capabilities
- Years in business and leadership team
- Technical expertise
- Customer base and industries served
- Geographic sales coverage
- Annual sales revenue and volume
- Existing vendor partnerships
- Expected sales volume for vendor’s products
Also develop an onboarding process that covers operational details like order processing, product pricing, and marketing collateral access. Include terms in a reseller agreement (see step 5).
4. Define program requirements and benefits
Work with sales and marketing to outline the commercial requirements, benefits, and support that approved resellers will receive. Typical components include:
- Discounts and pricing – Wholesale pricing tiers and discounts based on order volumes
- Sales and revenue requirements – Minimum sales volume expected for exclusivity arrangements
- Marketing support – Co-branded materials, marketing campaign assistance, participation in trade shows
- Training – Product, sales, and technical training for reseller staff
- Sales tools – Access to branded digital and print sales collateral, presentations, and other tools
- Demand generation support – Leads and campaign support from the vendor’s marketing programs
Adjust requirements and benefits for different partner tiers and commitment levels if applicable.
5. Develop reseller agreements
Formal reseller agreements document the legal relationship, responsibilities, and commitments of both parties. Agreements typically cover:
- Description of territory, accounts, or segments assigned to the reseller
- Minimum order quantities and payment terms
- Use of trademarks and branding guidelines
- Lead and opportunity registration processes
- Marketing and sales support provided by the vendor
- Reseller sales performance requirements
- Product warranties, returns, and stock rotation
- Exclusivity clauses and non-compete agreements
- Term, renewal, and termination
- Confidentiality and non-disclosure
Consult a lawyer when drafting or modifying agreement templates to mitigate risk.
6. Announce and launch the program
Once agreements are signed, officially launch the partnership by:
- Issuing a press release and announcing the program through marketing channels
- Providing sales catalogues, price lists, and launching promotions
- Conducting reseller training on products and sales processes
- Supplying co-branded digital and print collateral to resellers
- Introducing resellers to key internal teams – sales, marketing, support, etc.
A robust launch ensures resellers have the assets, knowledge, and backing to effectively sell the product line.
Best practices for managing reseller partnerships
Ongoing program management and communication are vital for keeping reseller relationships productive and profitable. Consider these best practices:
Provide extensive onboarding and training
Conduct comprehensive product and sales training to equip resellers with deep knowledge of the offering. Provide playbooks detailing sales strategies, common objections, competitive positioning, and target buyer profiles. Schedule regular refresher trainings as products evolve.
Define clear roles and processes
Document procedures for key functions like placing orders, participating in marketing events, registering deals, and accessing partner support. Also outline the ongoing role of vendor sales teams in supporting or coaching resellers.
Communicate program changes and updates
Frequently update partners on product roadmaps, pricing changes, program developments, and new resources via email, partner portals, or quarterly business reviews. Transparency helps resellers plan and sell effectively.
Collaborate on marketing and sales campaigns
Conduct joint marketing and sales activities with partners. Offer marketing dollars or discounts for those driving lead-gen and events. Collaborate on campaigns, sharing insights and best practices.
Gather regular feedback and metrics
Check in regularly via surveys and scorecards to gather reseller feedback and track performance against KPIs like sales volume, activities, and funnel metrics. Analyze insights to improve the program.
Recognize top resellers
Identify and reward high-performing partners with expanded discounts, additional marketing support, preferred access to products, or recognition at annual events. Incentivize desired sales behaviors.
Add new resellers carefully
Be selective when recruiting additional resellers to avoid channel conflict and oversaturation. Onboard new partners strategically in underserved territories or segments.
Challenges to consider
While reseller partnerships provide a speedy route to new markets, they also come with some common challenges to consider:
- Channel conflict – Tensions may arise if reseller and direct sales teams compete for the same deals. Define sales territories clearly.
- Loss of control – Reliance on third parties means less control over customer experience. Set detailed requirements for partners.
- Administrative overhead – Extensive management time is required to recruit, train, and support partners.
- Pricing pressures – Resellers will pressure vendors for greater discounts, reducing profit margins.
- Forecasting difficulties – Indirect sales make it harder to predict and account for revenues.
- Partner underperformance – Poor execution by resellers impacts sales, brand reputation, and customer satisfaction.
Mitigating these factors requires careful partner selection, agreement structuring, performance monitoring, and relationship management.
Evaluating reseller partnerships
Track both quantitative and qualitative KPIs to monitor success and identify potential issues with reseller partners:
Quantitative metrics
- Revenue contribution by partner
- Sales volume or bookings by partner
- Growth targets met
- Average deal size
- Ratio of sales qualified leads to closed deals
- Customer retention rates
- Days to close deals
Qualitative metrics
- Adherence to brand standards
- Lead and sales pipeline reviews
- Training completion rates
- Customer satisfaction scores
- Knowledge and proficiency with products
- Quality and frequency of communication
- Attendance and engagement in partner events
Continuously monitor these metrics and review at quarterly business reviews. Provide feedback frequently and address issues promptly.
Terminating underperforming reseller partnerships
In some cases, partnerships with poor-fit or underperforming resellers may need to end. Best practices for terminating agreements include:
- Providing clear written notice within timing outlined in the contract
- Crossing all open opportunities over to other resellers
- Offering to buy back unused inventory at a reasonable rate
- Removing partner from all marketing materials, websites, collateral
- Revoking access to confidential product plans, roadmaps, and tools
- Scheduling an exit interview to provide feedback and transition plans
Legal counsel should review any contract termination to ensure compliance with local laws and avoid disputes.
Conclusion
Reseller partnerships enable vendors to rapidly expand reach and sales by leveraging existing distributors and channels. However, achieving success requires careful partner selection, win-win agreements, extensive enablement and support, and close performance management.
With upfront planning, clear expectations, and ongoing collaboration, reseller partnerships provide an effective growth strategy for sustaining sales momentum and extending market leadership.