The Ultimate Guide to Growing Channel Sales

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Your salespeople only have so much time. This is why scaling revenue is such a big challenge for many companies. Hiring the most focused people, investing in tools to boost efficiency, and removing all distractions, while important, does not increase the number of selling hours in the day.

Adding more sales reps is an option, but recruiting, hiring, and employing salespeople is expensive. Margins suffer as a result.

Developing a channel sales strategy and program is a viable, potentially game changing opportunity. Rather than hiring more reps, you distribute your products through a channel partner that will market and sell the product for you.

In this article, we’ll cover:

What is channel sales?

Channel sales vs. direct sales

Why consider channel sales?

What are channel partners?

Sales channel strategy

Sales channel examples

Types of channel partners

Sales channel partnership platforms

How to measure your channel sales program

What is channel sales?

Companies that employ a channel sales model sell through third-party partners. One example is affiliate partners. This type of partner gets a commission on each purchase in exchange for a lead. Other types of partners are resellers, value-added providers, or another entity that doesn’t work for you directly.

Channel sales vs direct sales

In channel sales, a company sells and distributes its products and services via a third party. In direct sales, a company sells its products and services directly to the end user or buyer. Companies that use a channel sales model don’t need an in-house sales team, though they might use a mixture of direct and channel sales to increase revenue.

Your sales team is responsible for increasing revenue in a direct sales model. They might use a mixture of inbound sales and outbound methods, prospecting and qualifying leads to turn opportunities into closed-won deals.

Why consider the sales channel?

Although the benefits of channel sales are many, the approach might not be right for your company. There are important pros and cons to consider before adopting this model.

Channel sales pros

Adding a channel sales model to your go-to-market strategy can have significant benefits. In addition to lowering your customer acquisition cost, other advantages are built-in trust, increased efficiency, and increased customer success.

Built-in trust

If your channel partner is already well-known within a market or vertical, you don’t have to do the work of establishing a brand presence. Your product will automatically seem more credible because of their endorsement.

Increased efficiency

One channel manager paired with several channel partners can bring in the same amount of revenue as five or six salespeople. Bringing on new partners is typically easier than hiring a new salesperson.

Customer success

If your customers need training, onboarding, implementation support, and service, working with partners who offer these services frees up time so you can close new business.
Having said this, channel sales does have some cons:

Channel sales cons

While adopting channel sales has tangible benefits, drawbacks exist that may make the approach less than ideal for some businesses.

Less control over sales

Unlike the direct sales model, you do not control the sales process. Your reps can not rescue a mismanaged deal, nor can they influence the timeline of the deal.

Harder to manage

Because you are working with and through third parties, updating your sales strategy, changing your messaging, and adding a new product is harder. Multiple external groups must all adapt.

Slower feedback cycle

It takes longer for customer feedback to reach you. The feedback might not be 100% accurate: perceptions may be biased, poor questions were asked, or data collection or analysis was unreliable.

Let’s take a closer look at what channel partners are and what makes a good one.

What are channel partners?

A channel partner is a third party that sells and distributes your product. Channel partners include resellers, affiliate partners, distributors, value-added providers, independent retailers – basically, anyone who doesn’t work directly for your organization.

Aside from making your product accessible to a greater number of buyers, channel partners reach a similar target buyer and have existing collateral or content that appeals to that buyer.

But engaging the wrong channel partners will fail to deliver results, so be choosy. The “right” partners will produce a profitable, mutually beneficial relationship.

What makes a good channel partner?

The process of finding partners is almost identical to finding prospects. You need to define what an “ideal partner” looks like. Consider this list of aspects to look for.

Complementary to your product

The partner’s product or service should fill a gap in your offering or help your customers use your offering more effectively.

Aligned with your market

Consider whether your partner’s customers benefit from your product. For example, are they asking for support, features, or solutions that your partner is unable to provide? Do their customers fit your ideal customer profile and buyer persona?

High technical expertise

Identify how much technical knowledge your partner would need to sell and service your products. You might have to provide a little or a lot of education and support.

Similar sales process

Your partner’s sales process should be compatible with yours. Ideally, there’s a natural point in their sales or services process for introducing or upselling your product.

Manageable commitment level

Understand how much commitment your partner must make to succeed. Maybe it is one day per quarter. Perhaps all they need is a basic understanding, which they can learn from one 30-minute video.

Now, let’s explore how this all comes together into a coherent strategy.

Sales channel strategy

Not every company will benefit from a channel strategy. This makes it important to take time to determine whether or not it suits your organization. Answering these questions can help:

Should my business use a channel sales strategy?

Embracing a channel sales strategy can be a tough call for a lot of businesses. Ones that are reluctant to trust third parties with their reputation and brand authority will have an especially difficult time. As we have shared, the benefits are worthwhile if there is fit.

Does my business have the resources to handle increased demand?

Expansion is the core of a channel sales strategy. Often you are diversifying your sales channels, getting products in front of more buyers so you can increase volume. While channel development takes time, you need to be ready to handle more demand.

Is my sales process effective, repeatable, and accessible enough to suit channel partners?

If you want your channel sales strategy to work, then you need to have an established sales process that works. In the event you are still working to validate your sales process, then hold off engaging channel partners. Chances are you will leave them high and dry.

Am I willing to trust potential partners with my brand reputation?

Trust is a large part of channel sales strategy. Others outside your organization are selling your product. If your channel partner does something wrong like misrepresents the capabilities of your product, then your reputation will suffer. If this thought is stressful, then you might not want to leverage channel sales.

After listing the pros and cons of channel sales and determining whether a sales channel strategy is right for you, here’s how to create a sales channel program step-by-step.

How to create a sales channel program

1. Create relevant, useful content to attract partners.

Use your ideal partner profile to create relevant, useful content. For example, if you want to work with technology solution providers, you might write an ebook on how your solution improves customer satisfaction, or host a virtual event for providers to learn how your solution helps them make more money.

Once you’ve attracted a few prospective partners relevant in your industry, focus on meeting their needs.

2. Focus on the partner’s needs.

Once you’ve started talking to a potential partner, make their needs the focus of the conversation. They won’t be interested in working with you unless they are benefiting. Figure out how you’d be able to help – by enabling them to sell additional services, reach new clients, or enhance the value of their product or service.

Once you’ve established a few partnerships, choose a structure for the partnership.

3. Choose a structure for the channel sales partnership.

While the subject of a longer discussion, there are three main ways to structure channel sales.

  • Co-sell together. For instance, if you offer environmental, health, and safety software, you might partner with a consulting company that provides audit and compliance services. This type of partnership helps companies add more value to their customers.
  • Sell through your partner. Retail is the classic example. They curate items from a range of third-party brands. Variety is typically the key. If you can find a retailer who’s already selling several similar products to yours, they may be a good fit for this type of partnership.
  • Sell it for you. These types of partners incorporate your product into theirs – and the end user may never know about your company. Many companies use two or even three of these simultaneously, along with a direct sales model. It all depends on your needs.

4. Motivate your channel sales partners to sell.

Channel sales is challenging because you’re trying to motivate people you have no direct influence over. If a partner isn’t selling, then there’s not much you can do, apart from “fire” them from the program. That’s usually not the most desirable option.

To get partners to sell, you’ll need to develop excellent resources that they can use to confidently sell your product. You should invest twice as much in content for your channel partners than you do for your direct sales reps. After all, your partners are much less familiar with the product.

Make sure they’re armed with clear, comprehensive, prospect-ready product specs, testimonials, customer examples, competitive comparisons, email templates, call scripts, meeting agendas, and objection-handling cheat sheets. Having this material will make partners feel more confident, which will boost their desire to sell.

5. Communicate often with your partners.

If your partners rarely hear from you, they won’t be as invested in the program. They won’t get the latest news, product updates, and strategic announcements. You may not discover issues until they have festered for a while.

Maintain regular contact with your partners. Send a periodic email, create a Slack channel, hold partner “office hours,” run webinars, host meetings at your office – do whatever you need to stay in touch.

6. Offer extra rewards.

Beyond earning commission, some companies add reward systems to their programs. This lets you drive specific behaviors. For example, you might have a tiered system: One tier for basic partners, a higher tier for partners who sell over a specific amount per month or year, and a third tier for partners who sell over an even higher amount per month or year.

The rewards you offer will vary. For example, they could offer advanced marketing support, tickets to exclusive events, strategic consulting, meetings with your executives, access to beta features, premium listing in your directory, opportunities to interact directly with your audience, features in your email newsletter, and so on.

7. Use a sales channel partnership platform.

For scaling multi-channel businesses, keeping data related to your partnerships organized can be a challenge. Using a tool designed to keep your channel data streamlined can be a helpful option, such as PartnerPortal. This will not only allow you to keep track of revenue generated by your sales partners, but sustainably grow your channel sales program.

How to know whether channel sales is right for you

It takes a lot of time and money to get a partner channel system up and running. If you’re planning to add a channel sales model, it is important to consider the state of your company, product, sales process, and more.

Company size and maturity

Companies can use partners to grow their business without having to incrementally invest in hiring and training a sales team. Some experts in early-stage B2B tech companies suggest getting to $20 million in revenue before launching a partner sales program.

Product maturity

If your product is still in the early stages, you might want to take advantage of a direct relationship with your customers so you can quickly and efficiently assess what’s working, what’s not, and what to build next.

Sales process maturity

You need to understand how to sell your product before you can teach others how to sell it. If you haven’t defined the various stages of your sales process, are unsure of the buying triggers, what the sales motion is, and how long the average deal takes to close, you may want to postpone a channel sales initiative.

Keep in mind the longer and more complex your sales cycle, the harder it will be for your partners to resell. A simple, straightforward, relatively short process is ideal.

Location

If your offices are spread out, it might make sense to use a channel sales model. That makes creating multiple sales teams unnecessary. Of course, you can also use an inside sales model where appropriate.

Revenue needs

It takes a lot of time and energy to get a partner channel system up and running. If you need money sooner, focus on direct sales.

Sales channel examples

1. Affiliates

In an affiliate partnership, a retailer will pay commission to website owners, businesses, and individuals who promote their products. Affiliate partners are typically paid a percentage of each sale. The Amazon affiliate program is a popular affiliate partnership platform.

2. Agents

In this channel, agents serve as an intermediary who does not have any ownership over the products or services they are selling. Agents facilitate deals between buyers and sellers, assisting with the negotiation process. A real estate agent or broker is a common example.

3. Dealers

Dealers sell products directly to end consumers, but operate differently than retailers who sell several variations of a wide variety of products. The most common type of dealer is an automobile dealer, who sells and leases cars directly to the end-user.

4. Distributors

Distribution channels provide products directly to the consumer. Some distribution channels are agents, websites, or businesses that serve as intermediaries between the companies that produce the products and the final buyer.

5. Independent retailers

An independent retailer is a business owner who runs a retail company that is not tied to any major brand or franchise. For example, if an entrepreneur founded and operates a clothing boutique without the support of a parent company, they would be considered an independent retailer.

6. Resellers

A reseller purchases a product from the company that produces it, and resells it to the end-user for profit. Essentially, a reseller serves as an intermediary between the company that makes a product, and the final customer.

7. Wholesalers

A wholesaler is a type of distributor who specializes in getting physical products on store shelves to be purchased by consumers. Wholesalers typically have sales reps who work to sell their products to retailers. Common examples of wholesalers include suppliers who sell food and other goods to restaurants and stores.

8. Value-added reseller (VAR)

Value-added resellers are companies that specialize in purchasing and reselling technology products with additional software or features that are above and beyond the standalone features of the product.

An example of a value-added reseller would be a computer company that sells hardware with another company’s software already installed.

Sales channel partnership platforms

Here are a few sales channel tools that can support your business as your channels and partnerships become more complex.

1. Allbound PRM

Allbound designs its partner portal technology to strike a balance between customization and automation. Channel managers can tag partners based on region, industry, company size, and other descriptors so the platform only displays content relevant to individual users. Multi-tiered learning tracks and accompanying quizzes automatically award new portal permissions as partners advance their learnings.

2. Channeltivity

Channeltivity’s partner relationship management software provides an all-in-one channel management solution. This cloud-based tool has an extensive set of features including a channel partner portal, partner training materials, distributor management, a commission management platform, and more.

3. Crossbeam

Crossbeam provides software to manage channel partnerships. A major upgrade from spreadsheets, notable features of Crossbeam’s tool include real-time forecasting, instant account mapping, and cross-partner lead generation.

4. PartnerTap Channel Insights

PartnerTap’s Channel Insights tool empowers companies to automate channel mapping and scale their sales efforts. This platform provides in-depth analysis on your current accounts, showing where there is opportunity to grow current partnerships and helps users determine the viability and profitability of future partnerships.

Grow Your Business with Channel Sales

Building a channel sales program is a major investment and it can make a huge difference to your company’s revenue growth. Not only will you reach new customers more efficiently over time, but you’ll develop mutually beneficial relationships with other companies serving your industry.

Our channel sales consultants and process and technology experts can help you design, build, and execute a channel sales program.

Schedule a free consultation with one of our channel and partner marketing experts

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