Channel sales development allows businesses to expand without investing in in-house sales teams. It leverages the channel partners’ reach and customer base to increase brand awareness and boost revenue.
Channel Sales Definition
Channel sales, also known as indirect sales, is a strategy wherein companies sell via third parties such as:
- Affiliate partners: This refers to individuals, businesses, or website owners who promote products or services. They usually get a percentage of every sale made from their promotions via commissions. A popular example of this is the Amazon affiliate program.
- Dealers: They sell directly to end users, but unlike retailers, dealers specialize in a specific product.
- Distributors: They act as a middleman between the company and the consumers.
- Resellers: These partners buy products from the company and resell them directly to the end user. They profit by selling the products at a markup.
- Value-added resellers: VARs often bundle their products with your offerings to provide customers with more features. This is common among computers that have pre-installed software from other companies.
Channel sales is essentially a type of B2B sales outsourcing. Companies can benefit from this model by:
- Increasing sales reach: Most partners have a large customer base. By selling through them, you can tap their customers without needing to do the legwork.
- Boosting brand reputation: You can increase your brand’s reputation by leveraging the partners’ authority and credibility.
- Reducing cost: Channel managers can handle multiple partners, so a full-stack in-house sales team is not necessary. This could save you six figures in salaries annually without disrupting your sales process.
Roles and Responsibilities of a Sales Channel Development Manager
Sales channel development managers are responsible for overseeing channel sales strategies. They work closely with partners and ensure a harmonious working relationship.
These are the main duties of a sales channel development manager:
- Coordinate with internal stakeholders: Channel development managers work closely with departments such as marketing, customer service, sales, and legal to ensure that the company meets its objectives.
- Oversee channel strategy implementation: Managers ensure that channel partners adhere to agreed-upon guidelines.
- Track KPIs: The success of channel sales programs is measurable through KPIs such as partner attrition rate, average value of partner deals, average sales cycle length, and many more. Managers monitor these metrics and provide recommendations for improvements.
- Assist channel partners: Channel development managers create toolkits to help partners achieve sales objectives.
To effectively implement these duties, a sales channel development manager should have the following skills:
- Communication: These managers directly interact with partners and coordinate with other departments within the organization. They should be able to communicate well and build rapport with all stakeholders involved in the process.
- Analysis: Channel sales managers deal with data from multiple partners. They need to accurately interpret this information to make decisions that benefit the company.
- Organization: Managers must have techniques that enable them to complete tasks efficiently.
Here’s a quick look at the average salary of a channel development manager in the US:
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Depending on their performance, channel development managers can earn more through bonuses, commissions, and incentives.
Is Channel Sales Model Right for Your Business?
These are the main considerations before adopting a channel sales business model:
Establishing a channel sales program can be a lengthy process because you need to:
- Carefully recruit channel partners
The success of a channel sales program heavily depends on the quality of its partners, as they’re the ones responsible for selling. This is why it’s crucial to be meticulous when choosing who to work with.
An ideal channel partner should be relevant in your industry and not have conflicting products or services. To find the best partners, you’ll need to do extensive research and attract their attention by creating content that resonates with their audience.
- Teach channel partners how to sell your products
Channel partners are likely to have a good grasp of sales concepts, but they are unfamiliar with your business processes and products.
A well-executed onboarding process for sales partners mitigates potential problems down the line. It also equips partners with the right knowledge and tools, allowing them to have better chances of success.
If you are in dire need of cash flow, focusing on direct sales strategies is recommended. A channel sales program brings many benefits to your business, but it can take a great deal of time before it becomes fully functional.
One of the downsides of channel sales is slow feedback. You don’t directly hear from your customers, so it takes time to determine which aspects of your products need improvement.
The sales channels development strategy best works on proven and tested products. If you are still refining your offerings, a direct sales model might work better.
Small-size companies can benefit from a channel sales model, as it allows them to tap a partner’s customer base while keeping lead generation, marketing, and operation costs low.
As your company grows, you can start building your in-house sales team or continue with the channel sales model if it works well for your business.
Businesses with multiple offices usually have several sales teams. Implementing a channel sales strategy allows a centralized approach, making it easy to track and manage.
Establishing a sales channel program is no easy feat, but it can positively impact your business when done right. It helps you connect with more consumers and build trustworthy partnerships with relevant companies in your industry.