Are resellers customers of vendors?

Are resellers customers of vendors?
By Kit Craig, Channel Consulting Director

Finding questions you can answer with a “definite maybe” is one of my great joys in life. However, whether vendors should treat resellers as customers is definitely not one of these questions. There’s no “maybe” about it; resellers are not vendor customers, definitely.

At the top level my view is simple: customers buy products or services for their own use; resellers on-sell products or services to someone else, usually with some added value.

“So what?” asks every channel sales rep for company A reading this, “I get paid commission whether B is a reseller or a customer!”

That’s indisputably true. That’s also the basis of most problems resellers have with their vendors and vice versa.

Especially for product-oriented vendors, viewing resellers as customers rapidly devolves into behaving transactionally. Business planning, business reviews, and even everyday conversations become tick-boxes of numbers. Lots of reselling partners have told me over the years that they’re sick of vendor reps calling them to ask what they’ve sold this week, and what they’re going to sell next week. This is particularly galling for resellers whose primary business is selling their own software or services, as in the case of ISVs and integrators.

Both resellers and vendors make profits from the spend of the real customers: the end buyers. So to ensure profitability and growth, it’s crucial to satisfy these customers and ensure they come back. However, if a vendor sees a reseller as the customer, then reseller satisfaction can become more important than customer satisfaction, to the long-term detriment of both businesses.

Reselling partners are a sales channel available to vendors[1], and in my opinion should always be treated as such. It’s the partnership between the two companies that’s key: how is this partnership driving mutual success and mutual business value? More importantly, are the real customers – the end buyers – seeing value from this partnership?

While the transactional view and sales are important for governance, that’s only one aspect of the overall partnership view.

In the modern world of empowered non-IT buyers, it’s critical for both vendors and their channel partners to develop customer centric ‘outside-in’ perspectives, and to drive integrated strategic approaches to customer experience management. This requires partnerships between like-minded organisations.

If a vendor views their reselling partner as a customer then inevitably the reseller will view the vendor as simply a supplier. That’s not a partnership.

[1] This is not to say that reselling partners are the same as direct sales reps and should be treated the same way.  I’ll write a separate post on this topic.