Max: 00:08 Hey. I’m Max Clark. Let’s talk about resellers and why a reseller might be good for you. Resellers can take a couple different forms. Right?
Max: 00:15 They can call themselves resellers. They can call themselves distributors. They can call themselves service providers. It doesn’t really matter. What matters is they are buying something from somebody else and in turn, putting margin on it and selling it to you.
Max: 00:26 When I just say that, right, they’re buying something from somebody else putting margin on it and selling it to you, that sounds like a bad thing. Why would you wanna work with a reseller? Because they’re adding margin and you’re gonna spend more money. But that’s the trick. A lot of times you’re actually not.
Max: 00:38 And this is why resellers and service providers can be good for you. The first thing is when a manufacturer or when a, an ISV, a software company decides to make a product, they can sell that product direct. So this is, you know, direct sales channel, and you can buy it from them and deal with them directly. Now in order to get service support and discounts from that company you have to get to scale and size with that business give you a basic example if you’re a 100% company and you go buy from Salesforce you’re getting a very different price from Salesforce versus a 100000 user company buying from Salesforce Force. And there is nothing that you can do to get that 100,000 seat price at your 100 seat count.
Max: 01:17 It’s not happening because Salesforce is a direct only model. You’re dealing with Salesforce. They define their tiers. They define their support structure. They define everything.
Max: 01:24 There’s a lot of ISVs in the market, and I’ll use, let’s just say hardware manufacturers. Let’s say, you know, I won’t use I won’t name names, but let’s say you needed a firewall and a switch and access point and an SD WAN service. A lot of these things have direct motion now where they will sell to you direct. You can go you go to their website. You can go on to a, a reseller, you know, to to whatever it is you can buy and have the thing shipped to you.
Max: 01:47 Right? And or you can go through a reseller. And by the way, here’s a here’s another secret about the whole reseller market. If it is a name brand, manufacturer ISP, you need to deal with a large reseller. Okay?
Max: 01:58 Now large resellers come with our own complications. Part of the reason why my business exists is because I we help our clients deal with these large bureaucracies of of of, you know, behemoth organizations. Right? So, you know, there’s always this thing where it’s like, oh, if you deal with a smaller service provider or reseller, you get more personalized attention. You get all these different things.
Max: 02:15 What I’m gonna what I’m gonna tell you about that though is what you’re missing. And what you’re missing is if if it’s a think about it this way. If the manufacturer is doing a few $1,000,000,000 a year in revenue, and they’ve got a reseller in their market and their channel that’s selling $10,000,000 a year worth of of their widget, where does that reseller sit in their priority and their and their tearing and their attention and their discounts at the extreme bottom so you want to interact and you want to deal with resellers and service providers that are much higher on the stack because why they get bigger discounts and flexibility and margins and marketing funds and everything else from the manufacturer they have more attention because they’re more important to the manufacturer So if you’re dealing with a reseller I hate to break it to you don’t use a little mom and pop in your neighborhood go find a really big one and figure out how to work with a big one efficiently, you know? So what we do call us. Right?
Max: 03:01 We’ll help you. But the point here is if or once a reseller crosses let’s call it a $100,000,000 in sales now all of a sudden they have interesting things that come up they get access to different discounting and part of what they’re trading and why the manufacturer is giving them these deals is that manufacturers pushing a lot of volume there’s a lot of weight but they’re also going to be supporting you as the end user. So that service provider, that reseller now is taking on the support load and is taking on, your interaction and is staffing out their own engineers, is doing the installation, is doing the first call, is doing all these, you know, is is buffering a lot of this, what becomes very problematic for the manufacturer to deal with at scale because it’s it’s just it it becomes really complicated. It’s hard to operationalize. In exchange for taking all that on in exchange also for the size that manufacturer gives that reseller a bigger discount so right so now you’ve got something that can happen that turns into just pure gold for you as a customer when you were buying this widget again hardware software whatever it is is now you have the option and the opportunity of dealing with a reseller and either they’re going to take and they’re going to include their services and you’re gonna get value from services from them for the same price as if you went direct so same costs go buy direct and get nothing or go through a reseller now the reseller is taking their margin and adding services and value to you in attention and care that you wouldn’t get out of the manufacturer so that’s one place or the second thing that you could see is a reseller is going to pass on that discount to you and you’re gonna get value and lower cost from that reseller than the the manufacturer or maybe it’s both maybe you get service value as well as margin value going through a reseller and by the way, this applies to cloud services as well big secret you can you can do this in the cloud world It’s not as efficient because we we you know, the resellers don’t have the same scale and and, and leverage that they do.
Max: 04:49 This is a leverage game. So we want the resellers to become bigger and bigger and bigger because then they create more more, leverage. And then with more leverage, that that ends up being passed down to the cook. This is the Amazon business model, by the way, in terms of, like, selling product to you. Right?
Max: 05:02 Like, the entire thing is with Amazon is just like, they wanted to get really, really, really big. So that way they could put more pressure on the, you know, people building the the stuff that they were putting into their distribution facilities and selling to you. So that way they could drive prices down. So that way they could give you a better price. So that way that you would only shop with them ever, which would give them more volume, which would give them more leverage, and that’s the flywheel.
Max: 05:21 Right? So, anyways, back to what I was talking about before I went on a a a a anyways. So the trick now becomes finding and identifying the reseller, the service provider that matches the value that you actually want. Right? Is this a we’re just looking for discounting and price efficiencies.
Max: 05:37 Let’s go get you one that gives you better price efficiencies and discounting, and and it exists. Guarantee you, whatever you’re buying well, Salesforce doesn’t exist with Salesforce. They have to have a a a reseller channel. They have to have, an indirect channel in order to take advantage of these things and not just a direct sales channel. Most large entities do.
Max: 05:55 Let’s just leave it there. So maybe you’re just looking for margin, and you’re just looking for better price. You want better unit economics, and you wanna you know, you know, instead of spending, you know, a $1,000 a unit, you you can go and you can get it for 850 unit. I mean, that’s an example. And and by the way, another big secret with these things is a lot of times the resellers can tap into market development funds or marketing development funds, which fits into a different category within that manufacturers.
Max: 06:18 And the manufacturer, there is money in that manufacturer’s marketing department to give you a better deal when you’re buying that thing that they can’t give it to you on a on a line item basis on the unit on the widget that you’re buying, but they can give it to you because it’s coming out of a marketing budget to acquire you as a customer. So that’s another big secret, and I’ve got lots and lots of examples of these things. And it’s it’s it’s magic. I mean, tapping into MDF when you’re doing these sort of projects with these things, it’s just absolutely magic. Getting excited just thinking about it.
Max: 06:44 I had a tagline for a while. I was talking about, like, abusing balance sheets of $1,000,000,000 businesses. And this is really what that comes into play because there’s money out there that if you know how to get into it, you can do cool things with. And by the way, the manufacturer wants you to use that money because they’re desperate to acquire you as a customer, and that’s why that money exists. This isn’t, like, a bad thing.
Max: 07:00 This is good. This is good for them. It’s good for you. Everybody wins. It’s yay.
Max: 07:04 The other side of it is in services. And a lot of these manufacturers and ISVs cannot support you. You know, Google does not have a support organization for Workspace and GCP. Like, they have they they don’t. They’ll tell you that they do, but there’s a reason why they push every single one of their workspace and cloud customers into a CSP, which is a cloud services provider, into a CSP as they want that CSP providing support to the end user because they can’t do it.
Max: 07:29 They know they can’t do it. They don’t wanna do it. They suck at it. It’s terrible. You are gonna be dealing with a CSP.
Max: 07:34 Now in order for that CSP to come in and provide that service to you that Google wants them to provide, they have to give the CSP you know, the CSP has to be incentivized to do it. How do they do that? They get margin on the resale. That margin creates space for them to make money on the resale and to also offer you services and create value on that resale. So now again, you get back to this, again, magic alignment where you have the opportunity.
Max: 07:57 You can go buy it, you know, I don’t know. Spend $20, $20, $20 unit, buying it from Google, or you can spend $20 a unit buying from a reseller and getting support for free included, or guess what? You can get a discount when you buy it from that reseller. It’s not gonna be $20 anymore. It’s gonna be less than $20, and you still get the value of the services on top of that.
Max: 08:15 And Google’s happy, the reseller’s happy, and you’re happy. Everybody this is good for everybody. So if you’re in the situation where you’re looking at this and somebody’s telling you, like, go out use a reseller. And and it’s not, there’s nothing shady going on here. They’re not trying to pull a fast one over you.
Max: 08:30 They’re actually trying to do you, you know, do you a service, and they’re trying to help you. And there’s this resistance in a lot of organizations that they see of being like, oh, we wanna buy direct because they think they’re gonna get a better deal out of it, or they think they’re gonna better value or they think they’re gonna get better support. And usually all 3 of those are no’s. You’re gonna get you’re gonna pay more, you’re gonna get less service, you’re gonna get less value. You don’t wanna do it.
Max: 08:50 If the resellers exist without manufacturer, go buy it from a reseller. If you don’t know the reseller to use, call me. We’ll help you. We’ll help you figure out how to do this. And, again, this isn’t like the mom and pops in their neighborhood.
Max: 09:01 You gotta use the big boys. They are gonna be aggravating to deal with. It’s it’s, but that’s okay because all you just need is you just need a little, like, you know, you you need a you need a map. You just need a map and a guide to, like, negotiate through the you know, navigate you through the bureaucracy. And once you have that magic map with a compass attached to it, what you can do is phenomenal.
Max: 09:22 And we’ve seen I’ve seen just I’ve seen incredible things happen when you have manufacturer, reseller, service provider, and customer alignment, and and just really phenomenal outcomes for the customer, which is, you know and in today’s economy, that is usually driven around how do we reduce our spend? You know, we need to cut our burn. How do we reduce our costs? How do we become more operationally efficient? And in a lot of cases, these are situations where you can do both at the same time.
Max: 09:48 You can become more operationally efficient. You can take a lot of load off of your staff and let them redirect into projects that actually generate revenue for you. And you can save money along the way. And you can tie all this together in a neat little bow. And you can take and get an advantage that maybe your competitors are refusing to do because they’re too stubborn to realize that maybe resellers are good.
Max: 10:06 I’m Max Clark. Hope it helps.
