Reseller Growth 101: 5 Straightforward Strategies And The Risks Involved

By Elizabeth Harr, Partner, Hinge

“Nothing ventured, nothing gained,” the old saying goes, and that can certainly be said of VAR marketing. Marketing is the tool used by companies to jumpstart growth and the most effective strategies come with a certain amount of risk.

As a valued-added reseller, you’re trying to grow your business selling someone else’s solution to which you’ve added some special sauce -- which you hope will set your firm apart from the competition. That can make marketing especially challenging. Depending on your situation and market position, you may have to be willing to accept more risk in order to create a unique brand identity and achieve more reward.

In this post, I’m going to discuss five tried-and-true marketing strategies, all of which have varying amounts of risk attached to them. But if you’re aware of that risk, you’re in a better position to minimize it. Let’s start with the least risky and work our way up:

1. Selling more to your current clients

This may seem like a no-brainer to many VAR marketers. If you already have a solid, profitable client base, simply sell them more services – a VAR version of “super-sizing.” Pretty low risk, right? Well, yes and no. Our research has shown that cross-selling is not as straightforward a task as it might seem. That’s because most clients are not aware of the full services a provider offers. In fact, they might get confused about what your firm does if you’re suddenly offering services they didn’t know you could provide. As a result, you run the risk of losing clients who turn to other providers thinking you’re changing your business model. To minimize that risk, it’s important that you adequately educate your existing client base about all of the services you can provide so that you can cross-sell with confidence to increase business and revenue.

2. Venture into new markets

This is one of the most common growth strategies for professional services firms, including VARs. For companies that have maxed out one market – say, providing cloud data storage services to the financial industry – the idea is to simply move on to another market; in this case, perhaps offering the same cloud service to accounting firms. Sounds great – you’re providing a value-added service that you’re already highly experienced with to an entirely new, wide-open market.

Hold on for a second, though, because there are significant dangers. It can be an expensive strategy in terms of money and resources because you need to educate a new market and woo a new target audience. If you don’t invest enough time and money into the effort, you run the risk of gaining very little return on your investment. You may even end up diluting your brand and your value as you spread yourself out over several markets instead of specializing in one.

3. Open up new distribution channels

If your main distribution channel is direct sales, alternative distribution channels might be trade associations or business groups that can help you spread your message through speaking engagements and joint events. Or you might partner with complementary but non-competitive service firms in a mutual promotional arrangement that enables you to widen each other’s reach.

The risk is twofold. First is in the time and money it takes to develop new channels into real revenue-producers may be too long and too much. Second, if your partners lack credibility, they may create a negative image for your firm that can do serious damage to your brand.

4. Introduce new services

Developing completely new services takes a lot of time and effort. This can drain resources from other business development efforts and even from billable work. Depending on the industry or industries you service, there could be regulatory compliance issues.

There are other risks lurking in this growth strategy. The most dangerous of all is brand dilution. The more markets you target, the more your brand can get watered down. You can become a jack-of-all-trades and a master of none. Your core expertise gets compromised and your value less visible. What made your firm unique is now gone.

If you’re going to consider launching a new service, here’s a checklist of questions to ask yourself before you do:

Will the new service:

• Alienate established referral sources?
• Fit your brand?
• Complement your current services portfolio?
• Cause confusion in the minds of current and prospective clients?

If the answer is ‘no’ to all of these, you have a green light – or at least a yellow one – to proceed with caution.

5. Offer new services to new markets

This is the riskiest of all growth strategies. It takes the challenges of developing and launching new services and throws in the uncertainty and costs of entering a new market.

The opportunity for big pay-offs is within reach of those bold enough to accept the challenge. A little research, for example, may reveal that your core expertise is ideally suited for a market you initially thought was not worth looking at, based on your current service portfolio. By creating a new service around that expertise, you may find yourself holding a unique, high-value solution to a problem in an industry that was previously out-of-bounds.

My intent here is to help shine a light on the risks that are inherent with any VAR marketing strategy designed to promote business growth and profitability.

As I mentioned at the beginning, these are all proven growth strategies. They work. It’s up to you to determine which one of these best suits your specific market and business goals. And now that you’re aware of the risks associated with each, you can work to minimize them and maximize your success.

Elizabeth Harr is an accomplished entrepreneur and experienced executive who heads the technology services team at Hinge. Elizabeth brings over 15 years of experience in strategic planning, brand management and communications to her role as Partner.