Partner Management channel strategy

Channel sales 101: A guide to building a successful sales channel

7 min read

Jun 5, 2024 5:29:19 PM

Imagine empowering a network of partners to boost your product's market reach. That's the allure of channel sales—a strategy that can elevate businesses to new heights. Understanding this pivotal concept is crucial for tapping into new markets as the sales landscape evolves.

Channel sales, where third-party intermediaries sell a company’s product or service to the same target market, is essential for expansion. It's a collaborative ecosystem where both the brand and its partners thrive. However, navigating its complexity requires a detailed guide.

Join me as we explore the essentials of channel sales. We'll cover strategies for identifying ideal partners, fostering strong partnerships, and ensuring seamless integration with your internal team. Learn to manage and optimize these relationships to propel your business forward in "Channel Sales 101: A beginner's guide to building a successful sales channel."

What is channel sales?

Channel sales, also known as indirect sales or nearbound sales, involve a company using external entities—such as partners, resellers, distributors, or affiliate partners—to market and sell its products. Unlike direct sales, where all responsibilities lie with the original company, channel sales create a shared effort where both parties handle sales tasks.

This arrangement typically operates on a commission framework, compensating channel partners for the sales they generate. This model is crucial for firms aiming to expand their customer base by leveraging their partners' established market presence and relationships.

Effective channel sales management focuses on robust oversight and clear communication to ensure all parties align with the brand's mission, sales tactics, and customer service standards. When executed well, channel sales can significantly boost sales numbers, brand visibility, and market reach.

Importance of channel sales for businesses

Channel sales partners are vital for businesses, especially in the SaaS and tech industries. By leveraging the reach of external entities, companies can access new customer bases and market segments that might otherwise be out of reach.

A key advantage of channel sales is cost efficiency. By reducing the need for a large in-house sales team, resources can be reallocated to enhance product or service offerings. This model lowers overall expenditures by sharing the sales burden with partners better positioned within their networks.

Moreover, this channel sales model allows companies to focus on their core strengths and competencies. By harnessing synergy with partners, businesses can drive exponential growth and improve their market standing without diluting focus or resources on the sales process's complexities.

Developing a channel sales strategy

Creating a sales channel strategy involves careful partner selection, clear goal-setting, and robust partner support. Clear communication of the business vision and fostering an environment of mutual growth are essential. Ensuring partners' objectives align with the company's goals encourages synergy and enhances overall performance.

Hands-on training and consistent support are crucial for effective channel sales tactics. This helps partners feel competent and confident in selling and representing the company’s products. Defining how the onboarding / enablement works, is a key element of the channel partner strategy. Aligning goals with strategies ensures that every action taken by partners contributes to overarching business targets, fostering a cohesive and productive sales network.

Defining your Ideal Customer Profile

Identifying your ideal customer is fundamental to successful channel sales, enabling tailored marketing strategies and product development. In the B2C realm, detailed buyer personas—highlighting demographics, spending habits, and lifestyle—are vital. They focus on product features and marketing campaigns that resonate with the target audience.

In the B2B sector, understanding the customer's company size, industry, key decision-makers, and professional roles leads to custom solutions catering to specific corporate needs. Establishing such detailed customer profiles ensures that efforts are concentrated on prospects with the highest conversion potential, enhancing sales channel productivity and efficacy.

Setting clear goals and objectives

Clear and measurable objectives are the guiding lights for partnership engagements and value-based programs in channel sales. Consistent communication and unwavering engagement support this foundation. Establishing KPIs and incentivizing partners for hitting targets injects motivation, inspiring them to excel and stay aligned with the company's vision.

Positioning partners as problem-solving champions for customers builds trust and loyalty. Remember, that partnerships work both way - you want to be able to present your partners as the best companies able to make the most of your product. Win-win.

Finding potential partners

Finding potential partners requires a thorough understanding of the intended relationship dynamics. By defining desired traits, organizations can attract partners who share similar values and goals. Cultivating a partner-centric atmosphere—e.g. extending support in training, finance, and operations—sparks effective collaboration. Also, remember there are a lot of different types of channel partners, such as referral partners, brand ambassadors, strategic partners or affiliate partners - each one will have a different way of achieving success.

Quality over quantity is key in partner selection (maybe apart from affiliate partners); a few well-matched, synergistic partnerships often yield greater revenue than numerous mismatched connections. Partners should complement the business, bringing unique offerings and reaching customer bases that can truly benefit from the products or services.

Building relationships with channel partners

Strong relationships with partners are the backbone of successful channel sales. Transparent, bidirectional communication fosters trust and collaborative success. Keeping partners informed about new products, strategies, and promotions reinforces their engagement. Actively seeking and valuing their feedback opens the door to continuous improvement and shared understanding.

Active listening and responsive measures are critical for building trust and mutual support. Maintaining open and consistent communication ensures that the bond with channel partners remains durable and fruitful.

Providing sales training and support

Comprehensive sales enablement materials are essential for partners to navigate the sales journey effectively. Delivering thoughtful training sessions, product demonstrations, and marketing tools empowers them to perform as customer problem solvers. Providing partners with visibility into the sales pipeline and relevant data equips them to optimize sales strategies and capitalize on emerging opportunities.

Working with the internal sales team

Harmonizing channel sales with the internal sales team is vital to avoid conflict and ensure clarity in roles and responsibilities. Aligning internal and external sales efforts requires clear communication of the distribution model's benefits and understanding each team's distinct functions. The internal team often focuses on direct sales processes, while channel sales extends reach through partners. Very rarely there is a specific channel sales manager role in the organization.

Effective collaboration can be nurtured through regular meetings, shared goals, and a unified sales approach. Both parties should have access to sales tools (for ex. a PRM) and customer data, providing a comprehensive view of the sales landscape and fostering a collaborative environment. This ensures the internal team supports channel partners as extensions of the company's brand and sales force.

Designing an incentive structure

A well-designed incentive structure is crucial for motivating channel partners. Successful programs blend tangible rewards with recognition, including behavior-based incentives and revenue-based rewards for sales performance.

Consider a tiered incentive program with the following characteristics:

Performance Tiers: Clear, attainable tiers with associated benefits encourage healthy competition and higher sales performance.
Segmentation: Customize incentives for different partner segments to cater to diverse motivational drivers.
Transparent Tracking: An accessible system for tracking progress toward incentives fosters transparency and trust.
Celebrating Success: Recognize achievements through awards or public acknowledgment to strengthen engagement and loyalty.

Consistency and clear communication are essential for incentive programs to thrive, alongside tracking systems that make achievements and goals visible and understandable. Beware that the incentive structure has to be aligned with the channel sales manager or the head of the sales team. Knowing how much commissions you can pay your partners is key to understand before you make it public.

Defining the lead flow

Efficient lead flow is the backbone of potential customer engagement and conversion in channel sales. A streamlined process ensures partners understand the steps needed to cultivate a lead into a paying customer. The journey includes:

Lead Capture: Collecting potential customers' information.
Lead Distribution: Assigning leads to appropriate partners based on factors like geography and expertise.
Lead Qualification: Assessing leads based on criteria to determine sales readiness.
Lead Nurturing: Engaging and educating leads through the sales funnel.
Sale Conversion: The final push toward purchase, often involving tailored offers or direct interaction.

Effective lead flow management strengthens partnerships and maximizes sales opportunities by ensuring partners have a consistent pool of qualified prospects.

Collaborating with the sales team

Collaboration between the internal sales team and channel partners is crucial for maximizing channel sales potential. Cohesion can be fostered by:

Establishing common ground in customer targeting and sales approaches.
Creating mixed initiatives like Lunch-and-Learn sessions to share knowledge and expertise.
Sharing responsibility for marketing and selling products while respecting partners' unique customer interactions.
Developing clear buyer personas together to unify marketing strategies.
Setting up front-end agreements on commissions to avoid disputes.

This collaborative environment encourages shared knowledge, resources, and objectives, delivering a comprehensive customer experience that drives sales.

Handling sales objections and challenges

Managing sales objections and challenges is a key aspect of channel sales. A unified approach provides stability and trust in the brand. Key strategies include:

Product and Brand Consistency: Implement policies to ensure uniform messaging and quality across all partner channels.
Conflict Resolution: Develop systems to prevent channel conflict and manage competition among partners.
Improve Partner Experience: Prioritize training and support to equip partners for success.
Enhanced Communication: Foster transparent communication and data-sharing for a thorough understanding of customer interactions and feedback.

By actively addressing these challenges, businesses can establish a robust channel sales program that thrives despite the complexity of working with multiple sales channels and partners.

Managing and optimizing your channel sales efforts

Once you've built the strategy, it is time to optimize it and make it a success. Remember - Rome wasn't built in a day!

Measuring success

Skillful resource allocation is vital for a successful channel sales program. Invest in processes and tools that enable partners to sell efficiently while focusing on product innovation. This approach leverages partners' strengths in sales and distribution, expanding your reach while maintaining core expertise.

Success metrics for channel sales include partner profitability, customer acquisition cost, customer retention rates, partner attrition rate, onboarding costs, partner satisfaction scores, certification rates, deal registration frequency, average deal value, and the percentage of closed sales originating from partners.

Making continuous improvements to your channel sales strategy

Continuous improvement of your channel sales strategy relies on clear metrics that highlight optimization areas and inform strategic decisions. Regular communication with partners via multiple channels keeps them engaged and informed. Feedback loops and collaborative discussions strengthen relationships and ensure partners align with company goals.

Critical assessment and adaptation of partner selection criteria, focusing on profitable partners, and regular monitoring of recruitment efficiency, partner satisfaction, and deal success guide your strategy's effectiveness. Incremental adjustments ensure your channel sales strategy remains powerful and adaptive to market dynamics, driving business success. Remember the power of small improvements - they compound over time and let you become the champion in your company.

Let me end with a short list of additional tasks worth adding to your channel strategy.

Keep regular contact with your partners
Provide excellent resources for the partners
Offer your partners product training
Give access to Customer success stories
Define business goals and objectives for both sides
Be transparent about te accepted partner-submitted deals - when closing deals, make sure you notify the partner
Update your partners about the product roadmap - they need to be knowledgable to close deals with your target customer
Offer prepackaged campaigns or MDF's. Common types include paid articles, co-financed conferences and / or co-hosted webinars