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.

What is Channel Sales?

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.

The Key Players in Channel Sales

Several types of partners play critical roles in a channel sales model, each with its own unique strengths and capabilities.

  • Resellers purchase products from the manufacturer and sell them directly to end customers, often providing additional value through bundled solutions, installation services, or technical support.
  • Distributors, on the other hand, serve as intermediaries between manufacturers and resellers, offering logistics, warehousing, and credit services to facilitate the flow of products through the channel.
  • Affiliates, such as bloggers, influencers, or content creators, promote a company's products or services to their audiences and earn a commission on resulting sales.
  • Value-added resellers (VARs) specialize in specific industries or technologies and offer comprehensive solutions that include hardware, software, and professional services.
  • System integrators focus on designing, implementing, and managing complex technology solutions for their clients, often incorporating multiple vendors' products.

The Benefits of a Channel Sales Strategy

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.

Expanding Your Market Reach

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.

Incorporating Partner Expertise in the Sales Process

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.

Reducing Sales and Marketing Costs

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.

Challenges in Channel Sales and How to Overcome Them

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.

Aligning Direct and Indirect Sales Teams

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.

Maintaining Brand Consistency

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.

Measuring and Improving Partner Performance

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:

  • New partner enrollment: Track the number of new partners joining the program and assess their quality to ensure they align with your objectives.
  • Partner onboarding and activation rates: Measure how effectively partners complete the onboarding process and become active contributors.
  • Active vs. inactive partners: Categorize partners into active, pending, or inactive groups to focus resources on those delivering the most value.
  • Program abandonment rate: Monitor how often partners leave your program, signaling potential areas for improvement.
  • Pipeline value and deal registrations: Calculate the value of active opportunities generated by partners and track their deal registration activity.
  • Average deal size and opportunities per partner: Analyze the average deal size and the number of opportunities each partner generates to assess their performance.
  • Satisfaction and retention rate: Use surveys and retention metrics to evaluate partner and their clients’ satisfaction.

Best Practices for Channel Sales Enablement

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.

Developing a Comprehensive Partner Onboarding Program

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.

Providing Co-Marketing Support

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.

Equipping Partners with Sales Collateral

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.

  • Product demos help partners showcase your offerings in action and demonstrate how they solve customers' pain points or challenges.
  • Case studies provide real-world examples of successful implementations and the business benefits achieved by customers.
  • Battle cards arm partners with key talking points and counterarguments to use when facing competitive situations.

A channel sales software with a centralized content repository and partner portal can improve access to these resources.

Leveraging RO&I Software for Channel Sales Success

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.

Gaining Visibility into Partner Performance

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.

How BoostUp Supports Channel Partner Sales in Real Time

  1. BoostUp's AI-powered analytics can identify which partners are consistently exceeding their sales quotas and contributing the most to overall revenue growth. With this insight, businesses can reward top-performing partners with additional incentives, resources, or lead-sharing opportunities to further capitalize on their success.
  2. By analyzing partner sales data across different regions, products, or customer segments, BoostUp can help businesses pinpoint areas where partners may be underperforming. For example, if partners in a specific geographic area are struggling to meet their targets, BoostUp can alert sales leaders to this trend, enabling them to provide targeted coaching or support to help those partners improve their results.
  3. BoostUp's forecasting capabilities can provide accurate, real-time projections of partner sales performance, taking into account factors such as historical data and seasonality. This visibility can help businesses proactively identify potential shortfalls in partner revenue contribution and take action to address them before they impact overall sales results.
  4. For businesses that offer usage-based or subscription-based products, BoostUp can track partner performance in terms of customer adoption, retention, and expansion. By monitoring metrics such as product usage, renewal rates, and upsell/cross-sell activity, businesses can identify partners who are effectively driving customer success and revenue growth over time.
  5. BoostUp's deal inspection features can provide granular visibility into individual partner deals, including factors such as deal size, stage, and likelihood of closing. By identifying deals that may be at risk of stalling or falling through, businesses can work proactively with partners to address any obstacles and keep the sales process moving forward.

Key Takeaways

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.

References:

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