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While increasing channel sales has been akin to herding cats. B2B sales are difficult enough as is, yet when navigating through indirect sales channels, there are many moving parts. Essentially, you’re relying on another person, team, or company to sell your product or service.
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.”
So how can you create a cohesive channel sales partner ecosystem? Before we go into that, let’s first understand what channel sales is.
What is Channel Sales?
Channel 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. (Source: HubSpot) It's called a channel because you don't directly interact with customers but rather go through other people or "channels" to do the business.
The channel sales process typically involves promoting products and services through the channel partners and paying them a commission when they make a sale. Your business-to-business sales team has always relied on a direct sales force, but that may not be the best solution for your next big pipeline push. Using a channel to market can deliver a huge return on investment. But, just as important, it can provide expert value content for your buyers.
What is a Channel Sales Strategy?
A channel sales strategy allows you to increase sales without increasing overhead, thus leveraging the help of third parties to sell your products and services. Channel sales strategies are usually deployed as part of your business growth effort. Developing a channel sales strategy is key because many organizations today realize they need to be more effective in utilizing their marketing dollars to maximize ROI.
The more partners you have, the more market share you can upsell and cross-sale, which makes your whole business' profit margin look great. Keeping that in mind, now let’s tackle five channel sales strategies to increase channel sales performance.
How to Increase Channel Sales: 7 Effective Strategies to Begin with
Channel sales strategies are usually deployed as part of your business growth effort. Consequently, they should go hand in hand with a rigorous market dynamics analysis performed by marketing and sales teams to define the best practices, drivers, and actions needed to achieve better results. Here are seven actionable ways to increase channel sales ratio in your organization:
1. Have the marketing & sales collateral handy
When working with channel sales, you must ensure your partners have the proper tools they need to be most effective. Whether that collateral is sales kits for resellers/distributors or marketing material geared towards the end user, collateral must be available and disseminated throughout channel sales partners.
- Marketing Collateral: Marketing teams bring in the leads for channel sales. For manufacturers and vendors, marketing collateral not only builds awareness for their product/service but also allows them to control their brand's message.
- Sales Collateral: Sales training tools can accelerate growth and ensure your partners in channel sales can accurately communicate the value proposition of a product/service. These types of collateral can include; competitive data sheets, interactive webinars, sales scripts, customer testimonials, spec sheets, or case studies.
The proper marketing and sales collateral will significantly aid in building a strong channel sales partnership.
2. Clearly outline rewards & incentive programs
With channel sales, incentive programs are common ground. Your partners will optimize their performance when incentivized with high-value rewards. While most channel sales partners already have rewards and incentive programs, it is surprising how often they can be unstructured and, therefore, ineffective.
Incentive programs for channel sales need to have clearly outlined metrics. This means an explicit expectation of sales and revenue yield for each channel, which should be backed up by proper research. There needs to be an accurate evaluation of the potential for each sales channel, i.e., the number of prospective customers, size of customers, revenue potential, etc., in order to establish incentive programs.
Furthermore, how will your rewards system fit in with month-to-month or quarterly activity for channel sales partners? It is paramount to the success of a rewards program to ensure logistics, reporting, and analytics are set up correctly and understood by all partners in channel sales.
Turning to a third-party company to administer and manage your channel sales performance services can be very helpful. 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.
3. Communication, Communication, and more Communication!
Have you heard of the issue of too many cooks in the kitchen? That is a common problem when it comes to channel sales. The root cause of this issue can be combated with proper communication. Cross-channel communication can be difficult because many factors are at play, including consistency, availability, frequency, or even confusion on the point of contact. In addition, there are multiple stakeholders in channel sales, and while they all generally want the same thing, different organizations represent different perspectives. Therefore the messaging isn't consistent at each stage of the channel.
Like rewards and incentive programs, communication breakdown should be crystal clear within your channels. Partners should know who they can contact for specific issues. Beyond that, those contacts should be available for all communication. To take it one step further, encourage cross-channel communication. If you're a manufacturer or vendor, why not offer to call your distributor's prospects? It is essential to outline this is just a means of help, not a way to take away business.
Helping your channel sales partners close deals and answer client questions can go a long way. Communication also includes technical support for products and services. If you want your channel sales partnerships to be successful, the lines of communication need to be open and consistent.
4. Cross Promotion
Cross-promotion and networking with channel sales partners are integral to the process. Channel sales is a collaborative effort. A rising tide lifts all boats, therefore, a partner’s success equates to your success. This can include cross-promotion of your partner’s marketing and campaigns via social media and connecting on LinkedIn.
Networking is an inevitable aspect of channel sales. If you’re connected on social media and lay the groundwork for an authentic relationship, partnerships will strengthen. Interconnected channel sales strategies will provide a solid foundation for your working relationship.
5. Upsell Valuable Relationships
Prioritize quality over quantity. When organizations want to increase their channel sales, they often look to improve their partners. However, it’s important to remember quality over quantity. Focus on bolstering your existing relationships before going out to attract new ones. How can you make current partners more effective at selling the product? Enterprise sales channels can learn from the McDonald’s model.
When a McDonald’s employee has a captive customer in front of them, they ask, “Would you like fries with that?” or “Would you like to supersize?” Those incremental sales equate to huge year-end profits. Apply the Mcdonald's method to your current channel partners. Ask yourself, how can you build a stronger partnership? What can you upsell?
Channel sales relationships are strategic investments that require time and effort, and captive audiences are much easier to sell than cold leads.
Increasing sales with indirect channel sales partners are not easy, but it can happen with the proper time, attention, and solid groundwork.
Here's a recap of our five strategies 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.
Frequently asked questions for channel sales
Here are the frequently asked questions for channel sales:
1. How does channel sales work?
Channel sales involve distributing products or services through third-party entities or intermediaries, known as channels. These channels include wholesalers, distributors, retailers, value-added resellers (VARs), and online marketplaces.
In channel sales, the manufacturer or vendor sells their products to these channels, then sells them to end customers. Channel sales provide broader market reach, access to specialized distribution networks, and the opportunity to leverage channel partners' expertise and customer base.
2. What are channel sales examples?
Examples of channel sales are:
- Selling products through a network of authorized retailers or resellers. Everything is taken care of by the entity — right from picking, packing, shipping, and fulfilling orders.
- Distributing products through wholesalers who supply to smaller retailers or regional distributors.
- Partnering with online marketplaces like Amazon or eBay to sell products to a wider audience.
- Utilizing value-added resellers (VARs) who add additional features or services to the product before selling it to end customers.
- Collaborating with franchisees or dealerships to distribute and sell products in specific territories.