Glossary of Terms
A sales conduit through which product flows through a second and possibly a third party before it reaches the customer. A sales channel could be comprised of a reseller, distributor, and vendor or just the reseller and vendor.
In the first scenario, the customer buys the product from the reseller, the reseller then buys the product from distribution, and the distributor either has the product in stock, in their cloud, or acquires it from the vendor. Product is sent to the reseller who then delivers it to the customer.
In the second scenario, the reseller buys directly from the vendor. Both of these examples represent an indirect sales model.
A close association between companies created for a common objective, be it joint technology development, increase in market share, or to gain access to each other’s customer base. It may not always be about sales and revenue.
Companies coming together to take part in a specific activity. Companies will partner their products and services in order to offer a complete solution to their customers. Partner companies will sell together, each providing its own product expertise. Lead opportunities are created for the partnership.
A company responsible for distributing a vendor’s product to reseller organizations. A distributor will add its cost to the price of the product. Companies do not necessarily need to use distributors. They can sell directly to their resellers to avoid the distributor price mark up.
A non-retail company that resells a vendor’s products. A Value Added Reseller (VAR) or solution provider offers services and solutions with the products they sell. They are adding value to the product.
OEM (Original Equipment Manufacturer)
A company that builds software and/or hardware products using components from other companies. An OEM sells these products under its own name. Many OEMs differentiate themselves by building solutions rather than just products for their customers.
ISV (Independent Software Vendor)
A company that develops and sells software products.
ROI (Return on Investment)
When an organization makes any type of investment they want to ensure they will receive a return. A vendor’s return on its investment in the channel is increased sales, revenue growth, and increased product market share. A channel partner’s ROI in the channel is higher margins leading to increased revenues.
SI (System Integrator)
A company that builds and markets a complex solution using products and/or components from other companies. An SI sells these solutions, and the service required to install the solution, under their own name.
TCO (Total Cost of Ownership)
This is the total cost of owning hardware and software. TCO is not only the price paid for a product but also the cost of maintenance, upgrades, and product downtime.