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Doug Nebeker ("Doug")
Those dealing with B2B probably have similar experience to mine - 95% of resellers just work as purchasing departments and don't bring any value to the table. There's another kind of reseller, which can trully sell your product, in most cases because it's good fit with their own products.
I was recently approached by such reseller, and he's well known within my niche. There're few interesting points in this deal.
They've just released utility which works similar job as mine. This is not their core product, just utility for stuff they need. We can think of this analogy - I have general video editing tool, and they're youtube. Their core business is something else, their video editor is very limited but can automatically create playlists, edit video without downloading/uploading, etc. And they still charge for this tool, so it's not free with their main offering.
So it's not about video editors but I hope you see the big picture. In the future their tool could become as general as mine. Also my tool will probably have better handling of their system in next releases, so these two programs could be much closer competitors than they're now. But I'm not sure if they're interested in becoming my competitor at all, they usually do deals with consulting, their tools are much more expensive (including "competitor" one) while I sell relatively cheap shrink wrapped software.
One way to look at it - they're buying time until their product is more mature. Another way is - they don't want to spend more time on that. Even if first option is correct, I think it's better to have them resell my software. If nothing else that will remove pressure from them to improve their tool and could give me more time without competition. If I decline reselling agreement I'm afraid they'll have more incentive to improve their own tool and it will be bigger threat.
Another issue is that they don't want to give customer data, which raises question on how support will be handled, upgrades, etc. We can discuss this too, but I'm more interested if anyone could share a thought about competitor thing.
I think it is good if they can bring more customers to your product.
In addition you can make your product to show your news and announcements (for example when it checks for version updates).
This way you will be able to "send your message" to customers whey are hiding from you.
Tuesday, September 10, 2013
Selling to businesses is expensive, especially if you are unknown, without other product lines to give you an established customer base. Unless you have a good business plan to significantly increase your revenue per user, so you can afford your own sales force, you can't afford to turn down resellers who already have access to your market.
"they don't want to give customer data, which raises question on how support will be handled"
Especially if their access to your market is through consulting. The best solution is to charge the reseller for support from you, and let the reseller worry about customer satisfaction. If the reseller isn't happy with that arrangement, then the only alternative you should offer to them is direct support to end users for a much smaller discount to the reseller and you embed all the necessary contact information in the software, so if the end user has any problems they will contact you. Regardless of how much or how little value the reseller adds to your software, they aren't going to hand over accurate information about their customers (unless they are idiots, and you don't want resellers who are idiots).
The reseller will reveal how much service they are willing to add to your software by whether or not they want it "white-labelled." If they end up pooching your software by providing lousy service to end users, then your strategy is to release a "name-brand" version that you sell directly and make sure end users can find it with Google. Brand names are important in B2B as well, so you will have to re-brand your software and add some features to differentiate it from the software the reseller is pushing.
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