How to Increase Channel Sales in 7 Steps: Strategies & Best Practices

Picture this: you’re in the market for a cutting-edge software solution. Instead of navigating the complexities of direct purchasing, you consult with a knowledgeable reseller who not only recommends the best software but also facilitates the purchase and manages your license renewals through a dedicated support service.

In this scenario, the software company benefits from a sale and ongoing revenue without ever engaging directly with you, the customer. This is the essence of channel sales management—utilizing a network of partners to optimize sales processes and enhance customer experiences.

By strategically aligning with various partners like resellers, agents, and service providers, companies can tap into new markets and customer segments more efficiently.

This blog will delve much deeper into channel sales and its management strategies so that you could master sustainable growth and gain competitive advantage. 

What are channel sales? 

Surinder Brar is a channel expert who created a worldwide channel sales program and managed partner strategy for Cisco. He explains, “vendors often think of channels as merely an extension of their sales force and expect them to behave accordingly. This is fundamentally wrong. The channel isn’t part of your organization, and you can’t expect the same behavior or performance.” 

In short, channel sales, also known as partner sales, is a form of indirect sales in which a company works with channel partners to reach its customers. Channel partners can include distributors, resellers, dealers, influencers, agents, and other intermediaries. 

Indirect sales happen through third-party intermediaries to reach their customers. These include wholesalers, retailers and distributors. Channel sales fall under indirect sales; companies sell through third parties. Most companies use a combination of direct and indirect sales for maximum reach.  

How is channel sales related to channel partners? 

Channel partners are organizations or individuals who can broader the access of the company to a wider customer pool. Through channel partner sales, companies can reach customers they would need help to get. 

Channel partners constitute third parties such as distributors, agents, consultants, affiliate partners, resellers, retailers and value-added providers. They are all people who sell the product but don't work directly for the company. Moreover, Forrester estimates that 75% of the world's trade flows through indirect means, i.e. through third-party partners? That’s a lot.  

Then what is the difference between channel sales and direct sales? 

When discussing channel sales versus direct sales, it's essential to understand the fundamental differences in approach. Direct sales refer to a model where a company sells its products or services directly to the end customer.

Benefits and advantages of channel sales 

The advantages of channel sales are primarily centered around one key outcome: revenue growth. In the software industry alone, channel sales revenue is projected to soar to $70 billion this year, a significant increase from $30 billion in 2019, as reported by IDC. Here are the essential reasons why channel sales success is becoming increasingly prevalent: 

1. Expand into new markets quickly 

By leveraging channel sales partners, businesses can introduce their brand to customers outside their existing networks, enabling faster scaling of sales than what might be achievable through a direct sales approach. 

2. Leverage existing trust 

When customers have established relationships with your partners, their credibility can enhance your own company's reputation. This built-in trust can significantly impact customer decisions. 

3. Increase brand awareness 

Partners can amplify your marketing efforts through their own influence, whether by hosting local events, conducting webinars, or training end customers on your solutions. This collaboration enhances your sales channel strategy. 

4. Reduce operational costs 

Utilizing an indirect sales model can lower expenses associated with maintaining a direct sales team. This approach allows for a more efficient allocation of resources and improved profit margins. 

5. Enhance customer experience 

Partnerships often add value by offering complementary products and services. This means customers can enjoy a more integrated buying experience without requiring your company to develop every aspect independently. 

However, there is a big “if” that decides whether channel sales will work you. 

How to determine whether the channel sales is right for you? 

While it has plenty of benefits, the channel sales model is only an approach some businesses would want to implement. It becomes essential to consider many factors such as your margins, products, state of the company, sales process, operating procedure and others. How can you determine whether channel sales is right for you? Here are 4 major factors: 

1. Scale of the company and maturity 

Small companies that don't have the revenue to have dedicated sales teams can leverage channel sales to get their products off the ground. Once they have scaled enough, a dedicated sales team can take over or work with sales partners. 

Established companies can use channel sales to penetrate a new market. However, it might come with some challenges. 

2. Product maturity 

Products that have yet to make their mark on the market can do well by taking advantage of the direct customer relationship. Channel partners in that way can be an excellent place to experiment with features and changes that will make it a good fit in the long run. 

3. Sales process maturity 

Unless you have a fine-tuned sales process to your product and market, it isn't easy to train your channel partners. A mature sales process has several elements, such as customer stakeholders, buying triggers, average sales cycle length and other parameters figured out. Such companies are also in a good place to train their channel partners. 

4. Location 

Businesses scattered across multiple cities can do well by adopting channel sales, and it helps them cast a wider net and avoid appointing multiple sales teams. 

5. Revenue demands 

Revenue is one of the most significant factors to consider before picking channel sales. Since it takes a while to set up a channel sales system with reliable partners, it must be attempted depending on your industry. For some, starting with direct sales and scaling is better before choosing channel sales partners. 

If all these criteria are fulfilled, you must know that there are some drawbacks to these channel sales. 

3 drawbacks of channel sales to help perfect its management strategy 

While a channel sales strategy can be highly effective, it also presents several challenges that businesses must navigate. Here are some common pitfalls and strategies to counteract them: 

1. Less control over customer experience 

In a channel sales model, your partners represent your brand to the end customer, which means you have limited control over their interactions. To mitigate this, focus on providing an excellent partner experience.

When channel sales managers ensure that partners are well-supported and equipped with marketing tools, it often translates into a superior customer experience for the target audience. 

2. Limited knowledge about customers 

Indirect sales through partners can lead to a lack of visibility regarding who is purchasing your products. To address this issue, implement product registration processes. This allows you to create a direct connection with end customers once they register their products.

By gathering customer data at this stage, you can survey them to uncover unmet needs and ensure that your channel sales programs are effectively meeting expectations. 

3. Potential conflicts between sales channels 

When employing both direct and indirect sales strategies, conflicts may arise if partners feel they are competing with your direct sales team.

To minimize this, establish clear guidelines defining which products will be sold through the sales channel versus those handled directly. This clarity helps prevent confusion and fosters stronger partner relationships. 

By understanding these challenges and implementing targeted strategies, businesses can enhance their channel sales performance and drive revenue growth through effective collaboration with new channel sales partners and existing customers alike. 

7 effective strategies to increase channel sales and drive revenue growth 

Channel sales strategies play a crucial role in driving business growth. They should be integrated with a thorough analysis of market dynamics, conducted by both marketing and sales teams, to identify best practices, key drivers, and actionable steps needed to enhance results. Here are seven effective strategies to increase your organization's channel sales performance: 

1. Ensure availability of marketing and sales collateral 

In channel sales, equipping your partners with the right tools is essential for their effectiveness. This includes providing sales kits for resellers and marketing materials tailored for the target audience. 

• Marketing collateral: Marketing teams generate leads for channel sales. Effective marketing assets not only raise awareness about the parent company's products but also help maintain control over the brand message. 
• Sales collateral: Training tools can accelerate the sales process by enabling channel sales managers and partners to communicate the value proposition effectively. This collateral may include competitive data sheets, interactive webinars, sales scripts, customer testimonials, spec sheets, or case studies. 

Having well-prepared marketing and sales collateral significantly strengthens channel sales partnerships. 

2. Define clear rewards and incentive programs 

Incentive programs are vital in channel sales as they motivate partners to optimize their performance. While many channel sales partners have existing programs, they can often lack structure. 

Clearly defined metrics are essential for these incentive programs. Establish explicit expectations regarding sales and revenue yields for each sales channel, supported by thorough research into the potential of each channel—considering factors like prospective customers and revenue potential. 

Additionally, ensure that your rewards system aligns with monthly or quarterly activities for channel partners. Proper logistics, reporting, and analytics must be established and communicated effectively to all partners involved in channel sales. 

Compass, a holistic channel sales management platform, helps to run an effective channel performance program that will oversee every step of the process with proven results. 

Compass can significantly enhance channel partner management by enabling businesses to create complex and scalable channel incentive plans quickly and without any coding skills, thanks to its intuitive no-code plan designer. This platform allows for the design and launch of personalized channel partner programs tailored to specific criteria for each partner, facilitating a more targeted approach.  

3. Prioritize communication at all levels 

Effective communication is fundamental in overcoming common challenges in channel sales. The presence of multiple stakeholders can lead to confusion if communication is not streamlined. 

Partners should have clear points of contact for specific issues, promoting open lines of communication. Encourage cross-channel communication; for instance, manufacturers could offer assistance by reaching out to distributors' prospects as a supportive measure rather than a competitive one. 

Providing technical support for products and services is also crucial. Open and consistent communication fosters successful channel partnerships. 

4. Leverage cross-promotion opportunities 

Cross-promotion with channel sales partners is essential for mutual success. The success of one partner often translates into success for others in the network. This can involve promoting each other's marketing campaigns on social media or connecting through professional networks like LinkedIn. 

Building strong relationships through networking can enhance collaboration in channel sales strategies, creating a solid foundation for partnerships. 

5. Focus on enhancing existing partner relationships 

Prioritizing quality over quantity is vital when aiming to increase channel sales. Strengthening relationships with current partners can lead to more effective selling before seeking new ones. 

Consider how you can improve the effectiveness of existing partners—much like how McDonald's upsells additional items at the point of sale. Incremental improvements in partner performance can yield significant revenue growth over time. 

Compass helps identify profitable distribution networks by analyzing revenue trends across various distributor plans, providing valuable insights into market dynamics. By utilizing short-term tactical schemes and trade promotions, businesses can gain a competitive edge, ensuring that their channel strategies are both effective and adaptable in a rapidly changing market environment. 

6. Establish a partner advisory board 

Creating a partner advisory board can facilitate ongoing dialogue with your partners about their experiences and insights into the market dynamics affecting their performance. This collaborative approach helps identify areas for improvement in your channel strategy while celebrating partner success. 

7. Utilize technology to streamline processes 

Implementing specialized tools can help manage partner data effectively as you scale your business across multiple channels. These tools not only track revenue generated by your channel sales programs but also streamline incentive payouts and enhance communication. 

Best practices on how to increase channel sales 

Tips to build perfect channel sales strategy 

A robust channel sales strategy is key to excellent channel sales management. Here are seven tips on how to do that: 

1. Attract the right partners using relevant and useful content 

Publishing precise content designed to target your desired partners can go a long way in attracting them. For example, if you are a company that manufactures carpentry equipment and raw materials, publishing eBooks with content published specifically for machinery operation and maintenance will attract the right channel partners. Channel partners who recognize you as the authority in the subject would want to work with you to meet the demand from customers. 

2. Work on the partner's needs 

To have a profitable and successful long-term relationship, the channel sales strategy should work as well for your partners as it does for you. They will only work with you if it benefits them somewhat. Therefore, figure out what their needs are and how you can help improve their business by selling additional services, capturing new markets or improving the value of their offering. 

3. Decide on the model your channel sales partnership will have 

The model of your partnerships can be set in three different ways. First, you can work together with your partner on the products or services you're selling. For example, if you own an auto service center, your partner can run the car wash next door. 

Second, you can sell with the help of your partner. Departmental stores are a prime example of this kind of partnership, and they often put together items from a wide range of sellers. If you find someone who sells predominantly in your niche, they can be a great fit for your business. 

When it comes to the method of the channel sales partnership, you can pick the one that works best for the two of you. Companies often operate in two or all models to maximize their sales. 

4. Maintain an open line of communication with your partners 

Communicating frequently with your partners shows them your dedication towards building the relationship and the business. If they don't often hear from you, they would be less likely to show interest in your program. 

They would also miss out on essential updates, the latest news and strategic announcements that would create inefficiencies in sales or bumps in the road. Staying in touch with your channel partners through regular email, Facebook groups, slack rooms, webinars and office meets keeps them in the loop and the partnership strong. 

5. Motivate and support your partners throughout 

What makes channel sales so challenging is that partners can lose motivation over sales, and there's little you can do about it. Unlike your full-time sales reps, which can be motivated through performance plans to meet sales quotas, underperforming partners can become hard to motivate. 

To ensure your partners can perform at their fullest, give them material such as comprehensive manuals, customer testimonials, examples, competition comparisons, scripts, email templates, objection-handling cheat sheets and more. All of this material will have them as prepared as your own sales reps to sell your product. 

6. Offer additional rewards 

Although the commission they earn is enough reward, some people need more to get motivated to perform better. Additional reward systems for your best-performing partners can create 'super partners' which bring in a lot of value. 

If you work with multiple partners, there's likely a tier system for partners performing at different levels. So, depending on their tier, you can offer them tickets to exclusive events, advanced marketing support, strategic consulting, a premium listing in the directory, a feature in the newsletter and more. 

7. Leverage channel partnership platforms 

When you're working with channel partners at scale, spreadsheets just won't cut it when it comes to keeping them engaged. You'll need a platform that can effectively have all your channel partners on one dash where you can see their performance and shortcomings and assort them into tears. With such a platform, it becomes possible to connect with your channel partners fully and even make it fun through gamification and extra rewards. 

A comprehensive platform such as Compass can take care of all your channel sales management needs and do it on a simple dashboard. Do Your partners need to do better? You can figure out the issue with analytics and find the best solution. The platform also allows you to celebrate and showcase achievements to others to keep the drums beating. 

How to measure channel sales performance? 

Now that you have a channel sales strategy in place, it's time to look into how to measure the results of your efforts. Here are a few key indicators that show channel sales performance: 

• Partner pipeline for the year: Assess the total expected revenue from partners over the year. 
• Partner pipeline for the quarter: Evaluate quarterly contributions to understand short-term performance. 
• Total revenue driven: Measure the overall revenue generated through channel sales. 
• Attainment against forecasted expectations: Compare actual sales results with projections. 
• Partner leadership scoreboards: Utilize dashboards and reports to visualize partner performance. 
• Return on investment (ROI) of total marketing funds: Analyze how effectively marketing investments translate into sales. 

Implementing a robust channel sales strategy involves leveraging partner relationship management (PRM) software integrated with your CRM. This approach consolidates your sales data, making it easier to track performance and set individual partner goals. By doing so, you can streamline your sales process and enhance collaboration with new channel sales partners. 

Wrapping up with key takeaways 
Increasing sales with indirect channel sales partners are not easy, but it can happen with the proper time, attention, and solid groundwork. Here's our key takeaways to increase channel sales: 

• Provide all stakeholders with the appropriate collateral, whether sales or marketing. 
• Ensure your rewards system is laid out and consider utilizing a third-party company to establish and manage your channel sales incentive program. 
• Ensure that you have an easy-to-understand chain of command and that lines of communication are always open. 
• Remember that cross-promotion of channel partners equates to everyone's success. 
• Focus on cultivating the relationships you have with your current partners before tackling new channels. If you follow these steps, you will drive more channel sales in no time! 

Compass is the perfect sales & channel incentives solution for your business. Want to know more? Book a demo now. 

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