1. What does the “V” in VAR mean?
By Mike Pagliuca
Manufacturers and end users define the value of a VAR in different ways. How do
manufacturers view VARs? What do end users expect from VAR’s? By understanding
how to define, manage, and bridge the gap between manufacturer and end user, the VAR
has the opportunity to create a unique and recognizable position valuable to both entities.
The Perception – through the eyes of the manufacturer
Manufacturers will shape their go-to-market strategies and allocate their resources
according to how they view the VARs effectiveness. Within the manufacturing
organization, the VP of Sales, the CFO, the VP of Support and the VP of Marketing will
all have varying definitions of VAR success and VAR effectiveness. Some of the most
successful VAR executives whom I have met sell their abilities and successes through the
manufacturer’s organization. It is wise for the VAR to treat manufacturers like a major
account by understanding the manufacturer’s objectives, goals of specific individuals,
and overall politics of the organization. Often VAR leadership does not spend the time to
strengthen their brand within the manufacturer.
Manufacturers are driven to VAR channels by financial benefits. The manufacturer seeks
to increase their net new revenue while reducing their cost of sales. Manufacturers also
expect non-financial benefits from working with VARs. In return for their commitment
to sell through the channel, manufacturers expect an increase in their brand recognition as
well as to realize an increase in end user attentiveness. Maximizing end user
attentiveness is important to drive toward higher levels of customer satisfaction as well as
being proactively positioned to secure “add on” business. Manufacturers expect the VAR
partner to function as an extension of their sales organization. If the VAR has increased
net new revenue, brand recognition, and user attentiveness while acting as an extension
of the sales organization, the manufacturer will describe their VAR channel as efficient.
Failure to reach “success” in any of these areas will lead the manufacturer to complain
about the value of their indirect go-to-market strategy as well as the contribution of their
channel partners. In extreme cases where the manufacturer is not convinced the channel
is reaching success in each of these areas, the manufacture may adopt an informal
“pseudo channel” model. This model is a direct sales model with a channel wrapper
around it. The manufacturer sells direct but fulfills through the channel. The customer
relationships and the customer interactions are run as if the transaction was going direct.
To the end user, and often to the VAR, the transaction feels like a direct transaction.
Sometimes a VAR can work to evolve beyond the "puesdo" channel" model through their
relationships with the manufacturer and the end user but sometimes they cannot. For the
manufacturer sales person, the VAR channel introduces risk, complication and, without
net new business from the channel model, a reduction in sales person’s revenue. The
VAR needs to understand and address these issues with the manufacturer to break the
“pseudo channel” model.

2. Perception – through the eyes of the end user
All things being equal, the end user would rather conduct business with the manufacturer.
This position is created because the end user feels, often times unjustly, that should a
problem occur the manufacturer can quickly resolve the problem. This mean time to
resolve issues translates into both the operational risk to the business and personal risk
metrics for the end user personnel who are making the decision. The end user feels that
they have more leverage with the manufacturer and are in a better position to get their
desired results.
The end user will evaluate how they source a product and make their decision to source
product relative to their expected risk. Pricing is clearly important but an argument can
be made that end users hold value and a reduction of risk as priorities over a small price
savings. Do not underestimate the end users interpretation of risk.
How does an end user evaluate and determine the value of a VAR? Here is a partial list of
end user criteria evaluated before they decide to do business with a VAR:
1. Do you know something that is new, innovative, and potentially beneficial to their
business?
a. Let’s face it; unless you already have the role of a trusted technology
confidant most end users feel they know what technology they need better
than you do. If you have a new solution or an innovative way to use a
technology, this information needs to be communicated in a way that
makes the customer feel that you have something new to offer.
2. Can you support the product as efficiently and as quickly as the manufacturer?
a. Manufacturers are not in the integration business. Arguably,
manufacturers are not in the post sales business (unless there are more
sales and/or revenue to come). Manufacturers make money selling and
implementing their products and their solutions. Quality VAR’s are in the
customer care and client satisfaction business. Do not be bashful about
assuming the technical lead or the technical project manager of integrating
multiple technologies. This is the single most important area where a
VAR can differentiate from a manufacturer.
b. Communicate to the end user that you can facilitate and coordinate the
necessary resources. Assume the product is a commodity and that any
differentiation will be created by your ability to implement and support
what is sold.
3. Do you know their business?
a. Do you have successes that can be applied to their business?
b. Prior successes will reduce their potential risk in working with you. Very
few end users want to be your first attempt to implement a solution.
4. Are you prepared?
a. Do you have meeting objectives and does the customer understand the
objectives? (hopefully they agree)
b. Are your materials up to date?

3. c. Do you have the right people at the meeting? It can be equally damaging
to have too many people as it is not the right people at a meeting. The end
user perception is important.
d. If the CIO walks into the meeting are you prepared? What would you
say?
e. Consider every appointment an interview. Whether it is a first time call or
a state-of-the relationship call, always be prepared.
5. Do you understand the “ripple effect” of proposed changes? If so, how will you
help to mitigate the impact of such changes?
a. Many manufacturers and VARs tell the end user, “If you implement this
solution, it will save you money”. The solution can save them money but
have you analyzed the impact of the solution on adjacent technologies?
You should be able to communicate to the customer that you understand
the impact on adjacent technologies. Have you asked about change
control parameters? Are you interested in the bigger, wider impact of the
proposed solution on the infrastructure? Show interest, sympathy and
understanding for the fact that the current environment works (albeit
maybe not optimized) and changes have to be calculated, planned, and
measured.
6. Can you communicate a best practice for managing the high level relationship as
well as the tactical execution of specific tasks?
a. Do you have proven areas of success in this area?
b. Is there industry or business specific knowledge that you have acquired?
Communicate how your expertise is a differentiator. This is an advantage
to doing business with your company.
7. Do you know your competition?
a. Know not just the competition but be able to communicate the benefits of
your product. Technology benefits need to be translated into operational,
financial, and personal reasons that working with a particular solution are
beneficial to the customer. Cool technology is not a reason to do business.
Competitive discussions should include both technology and business
advantages.
8. Do you communicate a defined sales process that shows the customer that you
will be able to satisfy their technology, financial, implementation, and post sales
requirements?
a. Do you do what you say you are going to do when you are going to do it?
One customer describes this as his “say to do” ratio. His management
measures him using this ratio and therefore he measures his vendors with a
similar ratio. You do not want to be the reason why end user personnel
fail to meet their commitments to their managers. Discuss the risks.
Develop contingency plans if appropriate.
b. Work with customers to define a sales process or to have them agree with
your sales process. With respect to the sales process, plan to adapt. There
will be changes and you have to have the flexibility to adjust.
9. Do you make the end users staff more efficient and more effective?

4. a. When selling to different levels with an organization, how you work to
support and augment the customer staff is essential. Do you build
complimentary relationships that strengthen your position? Do you have
the support of both management and staff? Both roles should realize your
value.
b. Does the end user staff view you as competitive or complimentary?
c. As part of your engagement, do you offer training and a formal method to
transfer knowledge to the staff of the end user?
10. Have you asked how the end user prefers to do business?
a. Their desired way to do business needs to be compared with how you
prefer to do business. If you can adjust to match expectations, that is
good. If you cannot match business expectations, communicate that fact
and refer them to another supplier. Before disengaging from the
transaction, evaluate the bigger picture to determine if expanding the
scope the solution or positioning for future business will impact your
business analysis.
11. Have you earned the right for referral business or to receive a business
testimonial?
a. The ultimate measure of customer satisfaction is a customer referral. Will
the customer recommend your services to a coworker, a peer, or state their
satisfaction of your work in a public forum?
12. The most important view a customer has of you is summed up best by the famous
football coach, Lou Holtz. When building relationships and assembling a team to
execute a game plan, Lou would think the following, “Can I trust you” and “do
you care about me”. This attitude shaped his philosophy and he transferred this
way of thinking to his coaches and players.
Your customers think just like Lou Holtz. You cannot and should not try to fake
this approach to customer service. If you don’t care, your customers will know it.
By the way, this is a mutual approach to a customer relationship. If you don’t
trust your customer and you feel that they do not care about you, adjust your
approach or disengage from the transaction.
13. Interpersonal and business etiquette
a. Do you really listen?
b. Do you follow up?
c. Are you polite?
d. What is your body language saying?
e. What mood are you communicating?

5. Value creation needs to be driven
Successful VAR’s need to ensure their value is understood by both the manufacturer as
well as the end user. The “V” in VAR represents Value. Value means different things to
different people. Do not let the definition of the perception of your engagement and the
subsequent contributions evolve on its own. This is what makes you special – define it
and communicate it. You have to drive they way you want people to perceive you.
Speak to your suppliers and your customers about their goals and, if appropriate, match
your abilities to help them succeed with their own agendas. If your value is not
appreciated and recognized, adjust the expectation for the business relationship or move
on. As a VAR, selling your value into vendor and customer environments creates loyal,
profitable business relationships.

6. Value creation needs to be driven
Successful VAR’s need to ensure their value is understood by both the manufacturer as
well as the end user. The “V” in VAR represents Value. Value means different things to
different people. Do not let the definition of the perception of your engagement and the
subsequent contributions evolve on its own. This is what makes you special – define it
and communicate it. You have to drive they way you want people to perceive you.
Speak to your suppliers and your customers about their goals and, if appropriate, match
your abilities to help them succeed with their own agendas. If your value is not
appreciated and recognized, adjust the expectation for the business relationship or move
on. As a VAR, selling your value into vendor and customer environments creates loyal,
profitable business relationships.