When executed effectively, channel sales can allow your company to grow and expand rapidly. But the approach doesn’t just mean shipping your products off to a third party and hoping for the best.
In order to be successful, you must strategically build your distribution channel network and follow the right steps to develop a strong, ongoing relationship with each channel partner.
This post will cover what channel sales is, the benefits and challenges associated with the sales model, and 5 tips for getting the most out of your channel sales process.
What is a Channel Sales Program?
Channel sales is a model of selling in which a business relies on third parties to sell their product or service. That can include resellers, affiliate partners, dealers, distributors, value-added providers, independent retailers, etc.
A channel sales model differs from direct sales, in which a company sells its products and services directly to prospects and customers without an outside party involved.
What Are the Benefits of Channel Sales?
When executed effectively, channel sales can provide multiple opportunities and benefits, including:
- Greater Profitability - Channel sales is like outsourcing the costs of having your own far-reaching sales organization, while still retaining an excellent portion of the sales profits.
- Increased Productivity - Using channel sales leaves you the time and resources to develop your products instead of spending it on making sales.
- Increased Market Share – Selling your products through third-party dealers increases your total sales in your industry.
- Increased Brand Credibility - Your product will automatically seem more credible because of your channel partner’s endorsement if they are well known within a market or vertical.
Challenges of Channel Sales
While there are benefits to selling through dealers and distributors, there can also be drawbacks. If your channel sales strategy is not well executed, you may be faced with the following challenges:
- Maintaining a Healthy Profit Margin - Selling through partners can mean you don’t have control over the sales process and whether or not your dealers’ sales professionals are selling your product profitably.
- Keeping Consistent Brand Messaging: Without an organized strategy, it can be difficult to control your messaging or make shifts in the approach being used to sell your products.
- Slowed Feedback Cycle: Having a middleman between manufacturer and end user can prevent valuable customer feedback gained during the buying process from being shared and implemented effectively.
- Maintaining Relationships with Dealers: Your dealers have their own agenda, and it can be difficult to establish a relationship that’s consistently win-win for both parties involved.
- Competition from other Manufacturers: Your dealers sell a range of products, some that are likely in direct competition with your products. It can be challenging to get dealer reps to position your product over the competition.
- Little Control Over Sales Performance: Without strategic relationship management, you have little ability to coach dealer sales reps to improve their sales effectiveness.
Tips for Getting the Most out of Your Channel Sales Process
When your company relies on channel partners to sell your products, it can feel as though you don’t have much control over your sales strategy and performance. Follow these tips to keep the channel relationships efficient and profitable.
Tip #1: Increase Mindshare of Your Product
Every brand a dealer represents occupies a slice of their limited time and energy they have available for selling. To increase indirect sales, your company’s goal should be to grab as big of a slice of their pie as possible. In channel management terms, this is referred to as mindshare.
To increase mindshare, you must engage your dealer’s reps so they’re motivated to promote your product to customers. You can do that by following the remaining 4 tips.
Tip #2: Establish Partnership Expectations
When working with a channel partner, you must establish your expectations early on. Create a dedicated onboarding process to provide partners with the information and resources necessary to sell your products to customers as effectively as possible.
Work to align the goals of your dealers and dealer reps with your company’s objectives, and establish expectations relating to margin, branding, messaging, etc.
Tip #3: Define What Success Looks Like
Identify your key performance indicators and collaborate with your sales partners to track the performance of their sales professionals.
Having both parties aware of what success looks like will help to maintain an effective long-term relationship.
Tip #4: Provide Sales Enablement Resources
A customized sales training program overcomes the challenge of influencing and improving a sales team that doesn’t report directly to you.
The most effective channel sales training programs are designed with input from both the manufacturer and the dealer. You know your product and its strategic benefits, and involving your dealer improves buy-in from their sales reps and increases the likelihood that the training sticks.
Learn more about customized channel sales training here.
Tip #5: Provide Ongoing Coaching and Reinforcement
Along with a flexible sales process, you should consider sales management training for your channel managers as well as dealer sales managers. This will ensure that sales reps are using their new skills and continuing to improve their sales performance.
Channel Sales requires keeping your outsourced sales teams up to date with your products, ensuring that they are adequately informed and trained, and regularly updating them on changes and issues in order for them to function at their best.
If you’re challenged with channel partners who aren’t selling enough of your product at high margin, targeting the salespeople within your network is the solution you need.
All companies will have a unique channel strategy and business development plan, so you should partner with a training provider that’s experienced in dealership distribution and can work with you to create a customized sales strategy that works.
Learn more about customized channel sales training here.
Hear one client’s experience with IMPACT sales training and the success that’s come from the channel sales enablement program
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Published on March 18, 2019