When we launched our web site marketing system for dental practices, we got a start by partnering with resellers to get the first versions of the system sold and to start establishing a track record with them.  It was one of the best moves that we made when getting our niche product out there on the market.  I know that we would have gotten no where near the same returns and it would have cost us a lot more money up front. 

While it all sounds good, there are definite disadvantages of using resellers, especially when it consists of the majority of your new clients:

• You are totally beholden to their sales cycles.  If they aren’t bringing in new clients - you aren’t bringing in new clients.
• Less “clients” to work with.  It’s not a catastrophe if 1, 2, or half a dozen clients drop your service - in fact, that’s expected if you have a large number of clients.  But if you lose even 1 of your major resellers, it could really cripple your business.  There is less risk if you don’t rely on your resellers.
• There are going to be process inefficiencies.  You are dealing with another business and they do things differently than you.  You can spend a lot of time coordinating everything with them.  And it makes it even more difficult when you deal with multiple resellers.

Due to some of these risks, we have considered going to more of an affiliate model than using resellers.  It fits in more with our concept of building a streamlined business that is very process based. 

What is a Reseller?

In our world, a reseller is a company or person who sells your product for you.  You are not involved in the sales process at all.  There are some additional characteristics of resellers:

• They bill and collect from the clients and pay us each month.
• We “white label” the product so that they can sell it as their own.  We would actually prefer it be under our name for branding purposes but we give our resellers that option.

What is an Affiliate?

 The main difference between a reseller and affilliate is that we sell to the end client in the affiliate model, while the reseller sells to the end client directly.  There are a few other characteristics that affiliates:

• The client would be “our” client and not of the company or person who referred them. 
• We do the billing and collecting from the clients and payout to the affiliate.

Simply put, an affilliate refers leads to us that we sell.  It’s harder on us because we have to do the actual selling, but it’s better in the end because we have more control over the client.  The referrals could be through a link to our website, sending out a message to an existing client or marketing list, or just e-mailing prospect contact information when they have them.

Which one is Better?

Honestly, it’s tough to say at this point since we have only dealt with resellers. 

If you don’t have good sales processes, having resellers is a great way of addressing your weaknesses.  You don’t have to worry about learning how to be a salesperson - you just wait for new clients to come in.

But if you are good at your sales processes, or at least not extremely bad, then the advantage is with the affiliates.  The main reason I would prefer affiliates is that everything goes through the same sales and operations process.  No need to change anything, based on who you are working with.  It’s just more leads to fill up your pipeline.