Branding the Reseller Rep
Increasing the Reseller Recommendation Rate
In 1988, Alan Hall was the president of one of Ray Norda’s (former CEO of Novel) companies and had tried traditional methods of promoting his product (ads, pr, trade shows, etc.) but met with limited success–he did not yet know the value of branding the reseller rep. He was running promotions to inform and brand prospects who would then try to purchase his product from their local reseller.
Unfortunately, many of the resellers were not aware of his product benefits, and, not wanting to lose the sale, they would switch the prospects to a product they were already familiar with. In desperation, Alan hired a group of college students to train the resellers and get them to personally use his product.
He figured that resellers would sell what they knew, and knew what they used—he was right… so he tried to get the resellers to use his produce. To his surprise, resellers started using it, recommending it and his product and company took off (and was soon acquired).
Alan had discovered the value of branding the reseller reps.
Later, he formed a company called TempReps (know called MarketStar) to help other companies increase the “recommendation rate” of resellers. This company grew to thousands of employees within just a few years while helping to launch over 400 high-tech products for over 150 companies (including Microsoft, Lotus, Autodesk, Corel, Intel, Sony, IBM, Canon, WordPerfect, Novel, Citrix, and more).
I was one of the original 15 employees and was later the first VP of Sales and Marketing for this new company.
At TempReps, through market research, we learned that 67% of prospects would ask a reseller for their recommendation, and 97% would follow it.
That meant that 61% of the products sold were determined by the reseller. Of course, this percentage would change up or down throughout the years and according to the product type and whether the reseller was a retailer or a VAR (it was over 80% for VARs), but the fact remained that branding the reseller sales rep was critical.
At this time in the industry (with the introduction of CompUSA and “shopping carts”), many large corporations were hiring consumer marketing professionals from companies like P&G. Unfortunately, these folks came from a “self-serve” retail fulfillment-only environment where they pre-branded the customer (and the sales rep had little influence) and did not recognize the reseller’s full influence (certainly not 61%!).
As a result, they would spend hundreds of thousands (and millions) of dollars using “tried and true” consumer demand-creation branding techniques. Unfortunately, they forgot to brand the reseller and their prospects were all too often switched to another product by the reseller on site.
Later, I was recruited away from TempReps, into DCA, the 5th largest software company at the time to help turnaround a failing product line. One of the first things my team did was to test the “reseller recommendation rate.”
We determined our baseline by blindly calling 150 resellers and asking which product they would recommend. We discovered that only 17% of resellers were recommending our product, while 76% were recommending our primary competitor.
We then initiated our campaigns to brand the resellers, contacted the same resellers after our 90-day campaign (caught about 100 of the original 150 reps) and ended up with 71% of the resellers recommending our product and only 13% recommending our competitors.
As a result, we diverted more money to brand resellers and were able to reduce our end-user promotions and overall budget by hundreds of thousands of dollars—while increasing sales.
Our competitors, not knowing why their sales were dropping increased their promotion spending—effectively driving more consumers into accounts that we “owned.” Recognizing the value of branding the reseller and increasing our recommendation rate helped us achieve 290% growth that year, in a market that only grew by 10%.
The value of the reseller recommendation rate has proven repeatedly to be the #1 variable to increase sales when working through a “shared” reseller sales force. We cut a $400,000 ad campaign that would pre-brand our prospects and instead spent about $60,000 to brand the reseller reps and had a dramatic increase in sales. It has proven out with the launch of Netscape, AOL, Red Storm and hundreds of other companies. Key takeaway – BRAND THE RESELLER REP.
BTW, the easiest way to brand the reseller rep is to get them to use your product. Resellers sell what they know. They know what they use. So get them using your product. A Not for Resale (NFR)–usually sold at cost of goods ($5 for a $100 Microsoft Mouse, $25 for Adobe Premier, etc.) is the easiest way to do this.
Click HERE to learn more about improving your reseller recommendation rate.