Sales are an integral part of all businesses. However, making your product or service directly available to your customers has its limitations. Channel partners are mainly used to increase revenue.
The goal is to add another channel besides the one that is already showing good results.
Hence, you must partner or look for external entities to overcome these limitations. Implementing channel sales will ideally benefit you in this case.
63.5% of companies agree that channel sales partners highly contribute to their annual revenues. And so, to become a member of the mentioned figure, you need to strategize your channel sales plan.
Channel sales strategies leverage the support of third parties to sell your products and services.
A well-designed and rightly implemented sales channel will always bring rich fruits.
This blog explains everything you need to know about channel sales strategy.
So, let’s get started!
What is channel sales?
One can understand channel sales as indirect sales. Unlike direct sales, where there’s no middle person involved in the selling process, channel sales use external opportunities.
In channel sales, a parent company sells products through another company that works as a mediator between the consumer and the parent company.
Depending upon the role of this mediator, you can refer to them as distributors, reseller or channel partner, agents, etc.
However, partners are decided with thorough filtration. You need to search for yourself and look after the functioning.
It will help if you work closely with these mediators to ensure they operate efficiently.
Moreover, you must train and guide your external company to sell your products with respect to product education, target audience, etc.
Channel sales, when executed correctly, are bound to bring enormous revenues.
So, after learning about the concept, let’s look closely at the secondary topic of channel sales, i.e., mediators, also known as partners.
6 Types of channel sales you can implement
When talking about businesses, you know that no one size fits all. Hence, you need to be familiar with the types of channels that will suit your business.
Moreover, various types of mediators depend on the role and relationship they maintain. Let’s understand each and pick the right ones for you –
1. Referral partners
This concept is popular among SaaS and digital products. Here, an existing customer or someone from the parent company refers to another person to turn them into a customer.
Once the parent company turns the referred person into a customer, the referrer gets a referral bonus.
So, if I’m your existing customer and I bring a new customer to your software product. I get some percentage of your net earnings.
This concept is a perfect example of a win-win situation. Your company gets a new customer, and the referral partner gets their bonus.
This is one of the easiest ways of getting new customers, as 84% of consumers start their buyer journey from a referral.
This term is self-explanatory. A reseller is the one who picks the product from the seller and sells it in the market.
They play a crucial role in matching the level of demand among customers. They operate in return for said revenue and are profit-oriented.
Opting for resellers can be a great move in order to increase your sales.
A distributor works as a middle man between the parent company and the customer for a said percentage of sales.
A distributor differs from the wholesaler, who acts as a sales representative for the parent company.
At the same time, distributors sell the product or service to wholesalers and consumers. At the same time, explore other market opportunities.
Dealers are a particular mediator between the parent company and the customers. They are unique in nature as they only deal with one specific product, e.g., car dealers.
Unlike agents, dealers work as the principal and take charge of products while trading in the market.
They usually pick bulk products from the principal company and then market and sell them to customers.
Agents are individuals that work as mediators between the seller and buyer in exchange for a percentage of sales. They are usually considered knowledgeable and are approached by customers to have a piece of insightful advice.
You may also work with an agency that operates like an agent but is a separate company itself. Moreover, agents provide more services than products.
6. Affiliate partners
An affiliate partnership is an agreement that agrees to promote the product collaboratively.
Affiliates get a commission from the parent company on every new purchase based on marketing promos.
Having an affiliate has its own benefits, including expanding your brand’s reach, gaining more credibility, and leveraging an opportunity for growth.
As per reports, 80% of brands opt for affiliate programs.
In all, opting for an affiliate will help you market your product and increase sales.
All the mediators mentioned above are great additions to be made. However, while selecting any of these, you need to consider the motive of your channel sales.
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So, let’s proceed to learn about the types of sales channels strategy.
Find the right sales channel strategy for your business
To select the right channel partner, you should have a clear purpose.
Below are the three main strategies most companies use when choosing a partner.
1. Expanded sales reach
This strategy focuses on the business’s primary goal, which is increasing sales and customer base. It could be in any form, like expanding geographically or increasing your supply to capture most of the market share.
You can use an affiliate partner, a consultant, a dealer, or any other channel partner.
Irrespective of the channel you use, your motive should be to partner with mediators already working in your target market and ultimately expand your sales reach.
2. Increased distribution
As a business, you may aim to make your products and services available to your customers at their nearest reach. Better distribution will help you increase your sales volume and, ultimately, your revenues.
You should have uninterrupted delivery and customer support to achieve the above goal. Therefore, ensure that your sales reps and managers are on the same page during execution.
The ideal channel partner for this could be a reseller, a dealer, or a distributor. The key motive is to have speedy delivery and faster inventory management.
3. Combined solutions
This channel sales model strategy aims at the mutual benefit of the parent company and the channel partner.
Here, a company partners with another company with the idea of promoting and benefiting together.
Let’s take the example of a SaaS company entering into a partnership with an affiliate to market its product.
Here, the affiliate will promote the SaaS product, and at the same time, as an individual, they will be growing their clientele.
Check out how Salesmate offers an affiliate program to partner with various companies & industry experts.
These are the three main strategies that companies usually plan. You can select the most effective channel sales strategy that fits your company’s goals.
After selecting the strategy, you need to learn how to implement it.
How to implement a channel sales strategy?
Implementing a channel sales strategy is entirely subjective to what would be your master plan to have channel sales in place.
However, irrespective of the strategy, you must ensure that the channel sales program is consistent with each addition to the channel partner.
Just like hiring employees in your company, where you practice uniformity with the code of conduct, offers, training, etc.
You need to maintain uniformity with your partners’ training, onboarding, and so on.
Implementing these strategies requires research and planning. So, to implement these strategies efficiently, you should follow a process for every channel or partner you pursue.
Steps to build a successful channel sales strategy
Building a channel sales strategy process is time-consuming and requires proper structuring. So, to ease your work, here’s a step-by-step process you should follow –
Step 1: Hunting for perfect partners
Finding the correct channel partner sounds like a lot of work.
Of course, it is!
You choose a partner depending on the strategy you opt for. And this makes it subjective concerning your motive. It is suggested to develop an image of an “ideal channel partner.” Also, remember to look for one who meets all or most of its requirements.
Moreover, specific points are essential ground rules when selecting a channel partner. So, here are a few qualifiers to consider for your reference:
- What value do they add to your product? Are they bringing better packaging or faster distribution that increases your sales potential?
- Do they have an in-depth understanding of your target audience?
- Are they operating or have contacts in your market?
- If they work in a different market, do they have the potential to grow there with your product?
- Analyze if they are ready to cope with your sales speed
- Are they aligning with your sales process? Do they have the same sales ideology with respect to upselling, pricing, negotiation, and so on?
There may be an instance where you’ll be in doubt. In such a case, it’s suggested to start brainstorming the partners you want to work with or consult within your network.
After prospecting, you need to know what your relationship will look like with your partner. So, here’s the next step.
Step 2: Connecting with shortlisted partners
Once you shortlist eligible partners, you will let them know what’s in the box for them. Remember, channel sales benefits should benefit both parties.
And so, you should be prepared to present your thoughts clearly on the table and answer their queries while discussing the agreement.
Competitive incentives like referral bonuses, revenue shares, or discounts are some of the great tactics to compel your partners.
Your sales team should know about what the onboarding package looks like. Let’s learn about the next step.
Step 3: Entice your partners to perform through education
The next step after selecting partners would be enticing them to perform. Enticing partners can be done in many ways; one could be offering competitive incentives discussed above.
However, you must understand that nothing would entice your partner than a proper education about your offerings.
This means educating your partners on the benefits it brings to the users. You can do this in various ways, such as organizing a webinar, offering eBooks, giving tutorials, etc.
Moreover, you can segregate your partners based on their reach, product knowledge, and targets.
This will help you offer exciting bonuses and incentives to them. At the same time, help them break their records and go beyond their general boundaries.
Also, while implementing the above practice, you must ensure that you’re helping your partners with the right tools and information for your customers.
Like helping them with your ideal buyer persona, scripts, pricing information, demographics, etc., this information will help your partners stay close with the customers.
Step 4: Implement CRM for effective operations
Remember, practicing channel sales requires effective communication, data-driven reports, a customized dashboard, and many other tools for smooth operations.
Having a CRM in place will help you sort all your stuff correctly, proving to be a one-stop solution for all your operations.
While dealing with a partner, the most basic and paramount thing to remember is to have assertive and uninterrupted communication.
With the implementation of CRM, you can access multichannel communications, get insightful reports, centralize your data, segment between your partners, and many more.
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How Salesmate can help you efficiently create channel sales strategies?
Salesmate is a great CRM that lets you simplify your process while working in channel sales.
With Salesmate, you can leverage the Contact Management feature to communicate with your partners efficiently. You can create a centralized database of all your contact, manage the conversations, and reach out to them with multichannel communication such as emails, texts, and built-in calling.
Also, you can integrate with over 700 applications and work productively within Salesmate. This means you can connect with your partners on different platforms.
Moreover, with Account Based Sales, you can manage your multiple partners. This feature centralizes all your accounts and activities management.
Either expanding your sales channel partners or aiming at better management, you can always opt for Salesmate.
So, get started with Salesmate and try it out for 15 days!
Creating a channel sales strategy can be complicated if not executed properly. With the right platform, such as Salesmate, you can easily manage all your channel sales programs and optimize them for better performance.
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