Channel sales, also known as indirect sales, involves partnering with third-party organizations to sell your products or services. Businesses are increasingly turning to this way of selling to expand their reach, tap into new markets, leverage the expertise and resources of their partners, and scale their sales efforts without the need for significant investments in internal sales teams. Channel sales-based revenue in the software industry is predicted to increase from $30 billion in 2019 to $70 billion by the end of 20241.
In this article, we are going to explore how to increase your revenue by adding channel sales into your arsenal.
It is important to note that while "channel sales" and "sales channel" are similar terms - in reality, they mean different things. The term sales channel is a broader concept referring to any method or route a company uses to sell its products or services, including both direct and indirect approaches. This can include direct sales (e.g., selling through a company’s own sales team, website, or physical store) and indirect sales through intermediaries.
On the other hand, channel sales is a sales model in which a company sells its products or services through a network of partners, rather than directly to end customers. These partners can include resellers, distributors, value-added resellers (VARs), system integrators, and other third-party organizations. In this model, the company provides its partners with the necessary tools, training, and support to effectively sell its offerings, while the partners are responsible for managing the sales process and customer relationships.
Unlike direct sales, where a company's internal sales team interacts directly with customers, channel sales relies on intermediaries to promote, sell, and support the company's products or services. This approach offers several advantages, such as access to new markets, greater sales coverage, and the ability to leverage the partner's existing customer relationships and industry knowledge.
However, channel sales also brings unique challenges, such as maintaining brand consistency, aligning sales efforts, and ensuring partner performance. To be successful with this strategy, companies must carefully select and manage their partners, provide them with the resources and incentives they need to succeed, and continuously monitor and optimize their channel sales performance.
Several types of partners play critical roles in a channel sales model, each with its own unique strengths and capabilities.
Implementing a channel sales strategy offers numerous advantages for businesses looking to grow their revenue and market share. By partnering with resellers, distributors, and other third-party organizations, companies can expand their reach into new markets and customer segments without the need for significant investments in internal sales resources.
Channel partners can also help businesses reduce their sales and marketing costs, as they often have established relationships and expertise in their respective markets.
Additionally, a well-executed multi-channel sales approach is great to have in markets where clients have fractured decision-making - in this case, channel sales multiplies touch points and can complement the core sales and marketing efforts.
One of the primary benefits of this strategy is the ability to expand your market reach. Channel partners, such as resellers and distributors, often have established networks and customer relationships in specific geographical regions or industry verticals.
By leveraging these partnerships, businesses can tap into new markets and customer segments that may have been previously inaccessible or too costly to pursue directly. This expanded market reach can help companies increase their brand visibility, generate new revenue streams, and gain a competitive edge in their respective industries.
Channel partners bring valuable industry and product knowledge to the sales process, which can be a significant advantage for businesses looking to enhance their sales effectiveness. Partners often have a deep understanding of their customers' unique needs, pain points, and buying preferences, which allows them to tailor their sales approach and offer more targeted solutions.
Additionally, partners may have specialized expertise in specific technologies, applications, or industry verticals, which can help businesses position their products or services more effectively and differentiate themselves from competitors.
By partnering with channel partners, companies can leverage their existing sales and marketing resources, such as customer relationships, sales teams, and marketing channels. This can help businesses avoid the high costs associated with building and maintaining an internal sales force, such as salaries, benefits, and training expenses.
Additionally, channel partners often share the cost of marketing and promotional activities, such as trade shows, events, and advertising campaigns, which can further reduce a company's overall marketing expenses.
While channel sales offers numerous benefits, it also presents unique challenges that businesses must address to ensure success. One common issue is the potential for conflict between direct and indirect sales teams, which can arise from competing priorities, overlapping territories, or misaligned incentives.
Maintaining brand consistency across multiple partners can also be difficult, as each partner may have their own way of presenting your products or services.
Finally, ensuring partner performance and accountability is critical, as poor-performing partners can negatively impact your brand reputation and revenue growth. To overcome these challenges, businesses must develop strategies for aligning sales efforts, maintaining brand control, and measuring partner success.
To manage collaboration between internal sales teams and channel partners, businesses should establish clear roles, responsibilities, and communication channels.
One effective channel sales strategy is to create a partner account management team that serves as a liaison between direct and indirect sales teams. This team can help ensure that both groups are working towards common goals, sharing leads and customer insights, and avoiding conflicts or duplication of efforts.
For example, Salesforce involves channel partners in 90%+ of their deals over $1M. This means that there is a huge amount of ongoing sales process to manage, which is not possible without a dedicated partner account management team working closely with internal sales staff and channel partners to develop joint business plans, coordinate sales activities, and resolve any issues that arise.
Another best practice is to develop a clear compensation plan that rewards both direct and indirect sales teams for their contributions to overall revenue growth. This can help align incentives and encourage collaboration rather than competition between the two groups.
Having a consistent brand presentation across all platforms can boost sales by as much as 23%2. Therefore, ensuring that channel partners accurately represent your brand and value proposition is essential for maintaining customer trust and loyalty.
One way to achieve this is by developing a comprehensive brand guidelines document that outlines your brand messaging, visual identity, and product positioning. This document should be shared with all partners and reinforced through regular training sessions and communication.
Another effective strategy is to provide partners with pre-approved marketing materials, such as product collateral, email templates, and social media posts, that they can use to promote your products or services.
Fun fact: The city of Antwerp (Belgium) provides its channel partners with access to a centralized marketing portal that contains a wide range of customizable content and resources3. This helps ensure that partners are using consistent messaging and branding across all customer touchpoints.
Additionally, businesses should regularly monitor partner marketing activities and provide feedback or guidance as needed to maintain brand integrity.
Setting clear performance metrics and providing ongoing support to partners is critical for driving channel sales success. Businesses should establish key performance indicators (KPIs) that align with their overall sales goals. These KPIs should be regularly tracked and shared with partners to help them understand their performance and identify areas for improvement.
Here is a list of the channel partner KPIs to track for an immediate understanding of the situation:
In addition to the strategies mentioned above, businesses can further empower their channel partners by providing comprehensive training, co-marketing support, and sales collateral. These channel sales enablement tactics help partners effectively represent your brand, generate leads, and close deals.
A well-structured partner onboarding program is essential for setting channel partners up for success. This program should include in-depth product training that covers features, benefits, and use cases, as well as insights into your target market and buyer personas. Partners should also receive training on your sales methodology and process, including how to identify prospects, handle objections, and close deals.
To make the onboarding process more engaging and interactive, consider using a variety of training formats, such as live webinars, on-demand videos, and hands-on workshops. Additionally, assign a dedicated channel sales manager to each partner to provide guidance, answer questions, and offer ongoing support throughout the onboarding process and beyond.
Investing in a comprehensive onboarding program not only helps partners ramp up quickly but also ensures they are equipped to represent your brand and sell your products or services effectively, ultimately leading to increased channel sales and revenue growth.
Co-marketing is a powerful way for businesses to support their channel partners' marketing efforts and expand their reach. One effective tactic is to create co-branded content, such as whitepapers, case studies, or webinars, that showcase the value of your products or services and highlight successful customer implementations. This content can be shared with partners to use in their own marketing campaigns, helping to generate leads and build credibility.
Another way to support partners is through lead-sharing programs, where businesses provide partners with qualified leads or opportunities in exchange for a percentage of the resulting revenue. This approach helps partners focus on closing deals rather than prospecting, while also ensuring that leads are being followed up on on time.
Finally, participating in joint events, such as trade shows, conferences, or customer workshops, can be an effective way to generate awareness and demand for your products or services, while also strengthening relationships with partners and customers alike.
Providing channel partners with high-quality sales collateral is critical for enabling them to effectively sell your products or services. This collateral should include product demos, case studies, and competitive battle cards that highlight your unique value proposition and differentiation from competitors.
A channel sales software with a centralized content repository and partner portal can improve access to these resources.
Revenue Operations and Intelligence (RO&I) software solutions provide real-time visibility into partner performance, enabling businesses to drive more revenue through their channel partnerships.
RO&I software can integrate data from various sources, such as CRM systems, partner portals, and marketing automation platforms, to provide a comprehensive view of partner sales activities and pipeline health.
With RO&I software, businesses can track key metrics such as partner revenue contribution, lead conversion rates, and average deal size, enabling them to identify top-performing partners and areas for improvement. For example, a sales channel review may reveal that certain partners are consistently outperforming others in terms of revenue generation or customer satisfaction.
By leveraging these insights, businesses can allocate resources and support to the partners that are driving the most value, while also identifying opportunities for training or process improvements with underperforming partners.
Real-time visibility into partner performance also enables businesses to proactively address potential issues before they impact revenue, such as stalled deals or at-risk renewals.
Terret's AI-powered revenue agents automatically monitor channel partner performance and execute actions that optimize partner relationships:
Channel partnerships offer numerous benefits, including expanded market reach, access to new customer segments, and the ability to leverage partners' expertise and resources. However, to fully realize these benefits, businesses must be proactive in addressing challenges such as sales team alignment, brand consistency, and partner performance management.
Implementing best practices for channel sales enablement, such as comprehensive partner onboarding, co-marketing support, and sales collateral, can help businesses empower their partners to succeed.
If you are planning to build or further expand your channel sales efforts, consider implementing an RO&I solution that provides a real-time overview of your partners' performance and puts you in control.
1Source: Salesforce.com — What is Channel Sales? A Complete Guide, March 19, 2024.
2Source: Smallbizgenius.net — 50+ Eye-Opening Branding Statistics – 2024 Edition, February 6, 2024
3Source: Prindustry.com — Whitepaper, Brand Portal for Sales Partners