Selling directly to your customers is a straightforward, traditional way to drive revenue. But it’s limited. However many salespeople you have and however good and efficient they (and your processes) are, there are only so many hours in the day. And yes, you can hire again, but this is a slow and investment-heavy way to scale your business. Another option is channel sales.
With this model you distribute your products via channel partners, who can market and sell on your behalf, giving you access to an external workforce, new markets, the ability to experiment with new customer bases and the opportunity to affiliate your company with trusted brands. Let’s dig further into this potentially game-changing sales model.
What is Channel Sales?
Channel sales is simply the process of selling products or services through third-party partners. These partners could be resellers, distributors, agents, VARs (value-added resellers), wholesalers, consultants, dealers, system integrators and any other third-party business that could offer your products or services via their setup.
Rather than your reps selling directly to customers, channel sales leverages outside operators and their audiences. You as the vendor provide the product/service to your channel partners, as well as any training and support they’ll need to be able to sell your goods effectively. In return, your partners earn a commission or margin from the sales they make.
Channel sales is particularly common in tech, manufacturing and B2B services, and this model is often supported by partner programmes, incentives and deal registration systems.
Channel Sales Vs Direct Sales
Choosing the right sales approach is a key factor in your growth strategy, so let’s briefly take a look at the main differences between channel sales and direct sales:
Direct Sales
- You sell directly to the end customer without the involvement of any intermediaries.
- Your internal sales team manages the entire sales process (from prospecting and pitching right through to closing).
- This model offers more control over pricing, messaging, and customer relationships.
- It typically involves higher upfront costs (such as salaries, tools and training).
- With direct sales it’s easier to gather customer feedback and improve products or services.
Channel Sales
- You sell through partners, such as distributors, resellers and agents.
- Your channel partners are responsible for selling your product in their market or territory.
- Channel sales enables faster scaling into new regions or industries.
- This model requires lower internal sales overheads, but you have to share revenue with your partners.
- You have less direct control over customer experience and brand presentation.
Why Use Channel Sales? Advantages to Consider
When it comes to the benefits of using a channel sales model, they all revolve around revenue growth. Here are a couple of statistics that you might find interesting:
- 95% of Microsoft’s commercial revenue is delivered via its partner ecosystem.
- 75% of world trade flows through indirect channels, partnerships and alliances.
Here are some more general, but still incredibly valid, reasons why you might take a channel sales approach:
- You can scale your business faster without growing your headcount, which also means scaling cheaper.
- You can expand your geographic reach and market access without having to invest in costly expansion strategies.
- You can leverage the existing customer relationships of your channel partners to reach new audiences.
- This is a cost-effective model for long sales cycles or niche verticals.
How to Choose the Right Channel Sales Partner
If you are planning on scaling up with the help of channel sales partners, who you partner up with really matters. So, what should you look for in a sales partner?
Aligned with Your Market
This means your partner’s customers should benefit from your offering. Perhaps they’re in need of additional support, solutions or other features that your partner isn’t able to offer but you can. You also need to consider whether their customers are a good fit in terms of where they’re based and the size of this audience.
Complementary to Your Solution
Your partner’s offering should complement yours, helping customers use your product/service more effectively, or filling gaps in what you provide. Your partnership should create added value for the customer, driving growth for both parties.
Technical Expertise
Think about how much technical knowledge your partner will need to sell your solution and how quickly they’ll be able to get up to speed with it. You may need to provide training, so consider how expensive and time-consuming this may be against the long-term payoff of working with this partner.
Compatible Sales Process
Your ideal channel partner will have a similar sales process to yours, and there’ll be a fitting point within their process where they can introduce or upsell your offering.
Experience and Track Record in Your Industry
The right channel partner will have experience selling solutions in your particular industry and should be able to show you proven results of previous successful partnerships.
Consider these areas and you’ll be able to put together an outline of your ideal partner persona. It’s wise to then rank these areas by importance for your business in order to create a useful framework you can use to evaluate potential partners.
Contact Excelerate360 for Channel Sales Support
If you think channel sales could help your business scale quicker and cheaper, we can provide the support you need to build those crucial partner relationships via our expert Channel Sales Managers.
Get in touch with us today to discuss your goals and we’ll help you take the next step towards indirect revenue growth.
