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Chanel sales guide: Develop an effective channel sales strategy

Channel sales guide: Develop an effective channel sales strategy

Sales planning can be daunting, especially when you’re trying to juggle multiple channels and partners.

However, by following a few simple steps, you can create a plan that works for your business and helps you reach your goals.

So, here’s a complete blog that will walk you through the process of implementing channel sales in your business.

This blog answers questions like – what a channel is, how channel sales is different from direct sales, how to build a channel partner training program, how to create a sales plan that works with your channel partner, and so on.

So, whether you’re just getting started with selling through channels or looking to refine your process, this guide has everything you need! 

So, let’s get started! 

What is channel sales? 

Channel sales meaning can primarily be understood as indirect sales. The term “channel” here refers to the mediators or partners that participate in selling the product or solutions to your end user. 

Channel sales is popularly used, resulting in 80% of global commerce.

Depending upon the role of this mediator, you can refer to them as distributors, resellers, agents, etc.

It also follows a pattern where the manufacturer (also known as the parent company) uses a middleman, either an individual or an agency, to make their products available to the customers. 

Adding to the above channel sales definition, it can be said that it involves third parties as a mediator between you and your customers. 

Let’s learn how channel sales is different from direct sales in a very subtle way. 

Channel sales vs. direct sales – How are they different?

Some key points differentiate between channel sales and direct sales.  

Let’s look at the table mentioned below:

Channel sales Direct sales 
Channel sales involve third parties in the sales process Direct sales don’t include any external party in the sales process 
Channel sales don’t involve direct customer interaction  Direct sales involve direct customer interaction. 
In channel sales, the profit is shared by the channel partners In direct sales, the principal business enjoys all the profit by itself 
Channel sales are beneficial for large enterprises Direct sales are profitable for small enterprises 
With channel sales, you can eliminate the in-house sales team With direct sales, you need to have an in-house sales team 

This table clearly states the key differences between direct and channel sales. In fact, the channel sales team and direct sales team also possess different responsibilities.

To have a detailed insight into this topic and to find out which method you should adopt for your business, give a quick read to the channel sales vs. direct sales article. 

Ahead is a close view of what exactly channel sales partners are, so continue reading! 

What are channel partners?

Channel partners are the ones that make omni channel sales strategy work. They play different roles and have other characteristics with one single motive for increasing sales volume. 

Simply we understand them as, “A channel partner is a company or an individual that partners with a manufacturer or producer to market, add value, and sell the manufacturer’s products, services, or technologies.” 

8 Types of sales channels you can consider

Here are 8 major types of sales channels for your reference so you can create an effective channel sales model.

Types of channel partner

1. Referral partners 

Referral partners are usually a part of SaaS or digital products.  

Here as a parent company, you ask your existing customer to refer a potential lead. Once the lead turns into your paying customer, you reward your initial customer.  

It’s a win-win situation for both parties, resulting in a successful channel partner sales strategy.

2. Resellers

A reseller or channel partner is the one who picks the product from the seller and sells it in the market. 

Many software companies sell their products through resellers. They many-a-times add value to the development and are also known as “Value-added resellers.” 

Such reseller provides high value to your business, as they cater to a huge target market.

3. Distributors 

A distributor works as a middleman between the parent company and the customer for a said percentage of sales.

Distributors differ from wholesalers by providing products directly to customers.

4. Dealers 

Dealers serve as a mediator between manufacturer and customer. They are unique in nature as they only deal with one specific product, e.g., car dealers.

This makes them different from other mediators who deal in various products. 

5. Agents 

Agents are the intermediaries who don’t have any product ownership or represent the owner.

They purely facilitate deals between seller and buyer, assisting the negotiation process between buyer and seller.

6. Affiliate partner 

Affiliates get a commission from the parent company on every new purchase based on marketing promos.

They usually get a commission for every customer sent to the merchant’s website. For example, a beauty brand uses social media influencers as affiliate partners to promote its products. 

7. Retailers

Retailers are the ones who collect goods from wholesalers in bulk. Further, sell them to customers in individual quantities or bunches as required. 

They usually operate locally and are not tied with any franchise. 

8. Consultants

Consultants are the experts that manage the creation and efficiency of various channel sales.  

They are paid for these services by the parent company. For e.g., Boston Consulting Group. 

All these mediators have their own specifications. Hence, it would help if you strategized which one would bring maximum profits to your business.   

If you’re clueless about where to start, you need not worry, as we have this point covered in the upcoming sections.

So, before learning the strategy, let’s learn about the benefits of the same. 

Top 6 benefits of channel sales

Channel sales, aka indirect sales, offer ample benefits. Below are the key benefits of that can help you grow your customer base.

Benefits of channel sales

1. Effective scalability 

Channel partners having expertise in niche products or a specific geographical location increase your scalability.

This saves a lot of money for expanding business. Hence, collaborate with new channel sales partners with expertise in your industry.

2. Market penetration

Partnering with local vendors to sell your products is relatively less expensive than entering the market by yourself.

Hence, it is one of the best ways to enter a new market without spending a higher budget. You can create effective channel sales programs by connecting with multi channel sales partners.

3. Cost-effective

Channel sales eliminate high costs like hiring an in-house sales team, office space, health insurance, and other operational costs.    

Since channel partners have a good grip on the local customers and other market factors, you need not spend much money on other sales and marketing activities. 

Hence, adopting the channel sales method is highly cost-effective.

4. Increased revenues

When implemented effectively, sales channels have a significant contribution to revenue maximization.

One way to ensure a smooth flow of operations is to hire a channel partner manager. Higher revenues are a primary reason for having channel sales process in place.

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Grow your revenue with accurate forecasting

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5. Customer satisfaction

Indirect sales serve as a whole experience for your customers. These channel partners add to your product, giving customers an entirely new experience. 

Hence, channel sales increase customer satisfaction.

6. Loyal customer base

Channel partners already have a specific customer base depending on their market reliability. 

Hence, while entering new markets or covering a new customer base, you already get good customers based on your partner’s creditability.

These are some benefits of adopting channel sales in your business. Now, let’s learn about developing a winning multi channel sales strategy.

Developing a winning channel sales strategy 

As we discussed above, in this section, we’ll discuss grounds that should be considered while choosing the right channel partner for your business.

1. Channel sales strategy process

While developing the process, there are four significant steps you need to follow.  

Step 1: Hunting for perfect partners 

You need to develop an image of the “ideal channel partner.” This will help you select the right partner to meet your goals. 

Step 2: Connecting with shortlisted partners 

Once you shortlist eligible partners, you must communicate what’s in the box for them. The process benefits both the parent company and the channel partner. 

Step 3: Entice your partners to perform through education 

The next step after selecting partners would be enticing them to perform. This can be effectively performed by imparting proper education.  

Step 4: Implement CRM for effective operations

Having a channel sales process is a lot of work. Implementing CRM will prove to be a one-stop solution to carry out all these activities.

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These four are the significant steps to take while planning channel sales strategies.  

Implementing a channel sales strategy 

Implementing a strategy is entirely subjective to your goal for the business. However, irrespective of your system, you must ensure that the sales plan is uniform. 

Just like hiring employees in your company, where you practice uniformity with the code of conduct, offers, training, etc, you need to ensure the same in your strategy.

To gain detailed knowledge about each step mentioned above, you can refer to our channel sales strategy blog.

Ways to build a channel partner sales training program 

Your channel partner is your product face in the market. Hence, it is essential that you impart adequate knowledge about the product and other relevant topics.

Here are 7 best ways of creating an effective training program: 

1. Determine your goals 

To receive long-term benefits from the process, you must ensure that your partners know the goals to achieve.

You need to set specific objectives for the training you conduct. 

2. Identify your partners that need training 

It is vital that you understand your partner’s needs before starting their training. 

Once you identify the needs of your channel sales manager and partners, it becomes easy for you to conduct the training and see the benefits yourself.

3. Find out which segment needs specific knowledge

Just like no one-size fits all, no one training program is required by all your partners.  

You can segment and plan a training course based on your partner’s company size and the market they work in. 

4. Align your KPIs 

Your key performance indicator (KPI) determines the business performance goal. 

Regular training helps your partner align with your KPIs and prevents them from being distant from your latest ones. 

5. Pick the best training method 

Training your partners can broadly be classified in two ways – The traditional and online methods. 

You need to choose which method you want to opt for and which partner. 

6. Stage & update training 

Staging your training makes it easy for your channel partners to consume it. 

Staging and updating your training programs keep your partners educated and updated in the most subtle way. 

These are the seven critical steps in creating the channel partner sales training program.

You can educate yourself about the training program benefits and understand these 7 steps in detail in the channel sales training blog.

Channel sales mistakes you need to avoid

Apart from knowing things to do while practicing channel sales, you need also to be aware of the things to avoid while practicing the same.

So, here are some mistakes that you should avoid when creating a channel sales partner program.

Channel sales mistakes

1. Not partnering with the right channel partner 

As discussed before, channel partners are the face of your product. Hence, you need to be very careful when choosing one.

It would help if you worked with a proactive partner, as their actions will decide your sales volume. Partners who align with your KPIs and are well aware of the business goals are always long-term players in the game 

It would help if you kept your expectations on the table, as there’s a massive difference between an investor and a channel partner. Hence, you must ensure that you partner with the correct channel partners.  

2. Not implementing the right tool 

Irrespective of high-involvement or low-involvement partnerships, it is crucial that you have the right tool for carrying out the channel partner activities. 

With the dynamic business nature, it is a must to have cloud-based software to manage all your communication and workflow processes. 

A CRM would be an ideal software to have in place. However, having the right CRM is equally important as having the right channel partner.  

The good news is– You need not research CRM for your channel process, as we got it covered in the further section of this blog. 

3. A wrong blend of activities 

As a parent company, you must ensure that all the activities are carried out properly and at the correct time.  

The communication, the training sessions, the distribution, and many such partner activities take place in appropriate portions. 

Having more training sessions and less distribution will not bring higher sales volume. Similarly, more distribution and no training will not get the desired results. 

Hence, you need to have the right mix of sales channel activities.

4. Not having a dedicated team 

It is incredibly crucial to have a dedicated team in place. 

As a startup, you might only have needful staffing in place. However, your channel sales will increase demand with the growing business. 

This means it’s time to employ a channel sales manager. The manager is responsible for communicating correctly, keeping accounts of target achievement, and working as a mediator between the parent company and the channel partner. 

Also, channel sales management is a lot beyond just sales. It even includes delivery and customer support value chain, marketing support, and other cross-functional support.  

Considering all these pointers, you must have a dedicated team in place to ensure a successful channel sales partnership.

These are four major mistakes to avoid. Let’s move ahead to one of the essential parts of channel sales, I.e., measuring the program. 

Ways to measure the performance of the channel sales programs

It is apparent that you can’t manage something that you cannot measure.

Moreover, the key to measuring success is analyzing the metrics of two related but distinct companies. Similarly, it is essential to evaluate the partnerships to ensure their relationship strength and areas of improvement. 

The very primary method of measurement is using KPIs and metrics. You might have an excellent fiscal year with one channel partner as a company. At the same time, a have a budgetary deficit with another partner.

Hence you should have collective metrics to measure. Some of them are as mentioned below: 

1. Quarterly sales pipeline

By practicing quarterly pipelines, you get a specific pipeline count that can be carried forward in the next quarter. This helps you estimate the sales for the coming quarter and take the necessary steps.

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2. Geographical revenue

One of the primary reasons to adapt channel sales is expanding geographically. 

Hence, it is crucial to measure geographical revenue. As it may happen, what works perfectly fine in one key location may not work well in another key area.  

3. The efficiency of funds allotted

Since every channel partner may be allotted a different budget, depending upon the scalability, geography, target, and so on.  

You need to measure the returns on this fund to measure the efficiency of the same. 

4. Program abandonment rate

It is the rate at which your program. However, this doesn’t give you an accurate result but works as a warning sign to take the necessary steps. 

As a partner’s exit impacts your present and future revenues. This rate helps you take the necessary steps in advance and mitigate the loss. 

5. Opportunities per partner

This metric helps you measure the opportunities that all partners bring with them.  

You can analyze whether your partners are large-scale or small-sized companies, under 500 companies or 50 companies, and so on.  

This will help you know the strength of your partners and help you set appropriate goals. 

6. Channel attrition rate

When there is significant churn among channel partners, ROI meets the standard it should. 

It is essential that you understand whether the churn rates are acceptable or something that’s specific to your approach to the channel.

To develop any business relationship, you need to think from a 360-degree view. This lets you understand their problem and increases your understanding. 

It is vital to strengthen the channel partner relationship to receive good business. 

How to execute channel sales enablement?

Channel sales enablement is similar to the term “sales enablement.” 

It is also known as partner enablement or channel enablement, is the process where you encourage your channel partners to sell your products and service. 

This means you provide your channel sales team with the right content and tools to help them be more innovative and better.  

Let’s learn about building a winning channel sales enablement strategy:

Usually, there’s discrimination between prioritizing large-sized partner companies and local partners.

However, local vendors have their own USPs that can help you effortlessly enter new markets. 

Hence, both local vendors and large-sized channel partners are important. 

How Salesmate helps in the operating channel sales process 

As discussed above, while practicing the process, it is vital to have a suitable tool in place.

This section talks about CRM that helps you automate and ease your process.

Salesmate is a cloud-based CRM that offers multiple features, which makes it a perfect tool for your process.

Salesmate CRM

It offers Account based Sales that help you manage your multiple partners from one platform. With this feature, you can create a centralized database of all your channel partners within a CRM.

You can communicate effortlessly with your channel sales partners with multiple communication channels such as Built-in Calling, Power Dialer, Text Messaging, and Emails.

Moreover, Salesmate’s Shared Team Inbox feature enables you to improve team collaboration as you can tag other teammates and partners for any important update.

Either expanding your b2b sales channel partners or aiming at better channel sales management, you can always opt for Salesmate.

So, click here and experience the benefits yourself by signing up for a 15-day free trial.

Frequently Asked Questions   

What is channel sales example?

Coco-Cola and L’Oreal cosmetics are both excellent channel sales examples. 

Is channel sales B2B or B2C? 

Most people use channel sales for business-to-customer (B2C). However, certain businesses implement channel sales for business-to-business (B2B) operations. 

What are the three main types of channel partners? 

Independent dealers 
Distributors 
Independent sales representatives 

Conclusion

We hope that this comprehensive guide has assisted you in taking the right approach for your company.

By implementing a channel sales model, you can seize new opportunities for your business and grow substantially.

So, implement the above-mentioned strategies and create a solid plan for your business.

Dhanashree Pal

Dhanashree has been into writing since her teens. She believes writing is the best way to express and explain everything happening in this world. Reading and imagining are something she can do for hours. Enthusiastic about exploring new places and food. Young and hopeful of becoming better with every passing day.

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