The enterprise communications sector is continuously evolving, and one of the bigger changes for the past decade has been the transition from owned equipment to cloud-delivered services. While new technologies and features dominate most of that conversation, the go-to-market changes (or disruptions) are equally significant.
The comms industry was built on a traditional reseller model. The value-added reseller (VAR) purchases components at a wholesale price, configures and delivers them, then resells the solution to the customer at a retail price. The difference between the wholesale and retail prices goes toward operating costs and profits. Reseller models are common with physical products including cars, groceries, and furniture.
The agent model is also well-established. Agents represent the provider and sell, rather than resell, products and services. The customer pays the provider directly and the agent then receives a commission from the provider. The commissions paid are often recurring over the customer lifecycle, and go toward operating costs and profits. Agent models are common with services including travel, insurance, and real estate.
The communications industry has used both models. Traditionally, equipment was sold through VARs, and carrier services were sold through agents. The VARs had local experts that could provide installation, support, parts, training, and whatever else the customer required. The reseller model survived the transition from hardware to software, but cloud-delivered services share more characteristics with the carrier or service model. Partners usually sell UCaaS and CCaaS services through an agent model. That made sense as the cloud devalued many traditional VAR benefits such as inventory and installation — at least initially.
However, the agent model isn’t ideal in all situations. That’s because the larger and more complex implementations (of any size) are where the value-add in VAR shines. The VAR often understands the customer’s business and objectives, and tailors solutions to fit their specific requirements. This includes optimizing workflows and integrations as well as providing end-to-end support across multiple systems.
VARs typically don’t charge for value-add; instead, they include their services in their overall price. The agent model makes this more difficult. As a result, the reseller model is gaining popularity with cloud-delivered services. Here are some examples of how partners can resell UCaaS services.
New implementations favor cloud-delivered communications services, and that’s expected to continue for the foreseeable future. Partners should choose the right model as it’s as important as picking the right technology.