What are Channel Sales?
Channel sales are often referred to as indirect sales, as they rely on utilizing a third-party to connect with customers to sell products. The “channels” are different avenues that customers utilize to purchase a company’s product.
Depending on a company’s business model, they may not have the capacity to carry out direct sales, so they rely on customers finding and purchasing their products from different places. Many companies will use a combination of both channel sales and direct selling to reach wider audiences and increase overall revenue.
Channel Sales vs. Direct Sales
Channel sales are indirect sales; they utilize a third party to help sell a company’s product. Direct sales are done directly between a company and their customers. The main difference is whether an intermediary is involved.
Different Types of Channel Sales Partners
There is no one-size-fits-all when it comes to channel sales. Who a parent company partners with will vary based on what exactly their product is, what their KPIs are, and their overall business strategy. However, there are some common types of partnerships that companies seek out because they’ve proven, historically, to be effective.
Agents
Agents are intermediaries who help facilitate sales and receive commissions for deals they help close.
Affiliates
Affiliate partnerships are commonly seen on websites and social media accounts, where the parent company pays the affiliate a commission (or percentage) for each individual sale they make.
Value Added Reseller
Value-added resellers are third-party companies that group different products together and sell them in a combined transaction, which adds to the overall value the customer is getting. It’s easier for them to make sales because the products they’re selling complement each other, so the customer gets a better value for their money.
Ultimately, when working with channel partners, you want to ensure their values and goals align with your own. Ensure all processes are understood, and that there’s mutual respect, realistic expectations, and open communication between everyone involved.
Why Are Channel Sales Important?
Utilizing channel sales helps increase overall revenue. Ultimately, sales reps only have so much time in a day and can’t connect with every single lead on their list. Therefore, many companies use both direct selling and channel sales.
Reach New Markets
New channel partners will help your company reach different audiences using new methods. It’s easy for internal sales reps to get caught up in routine outreach, so utilizing channel sales can help shake things up. This also allows for more distribution; a wider customer base inevitably leads to increased sales and brand awareness.
Outsource Work
You don’t want sales reps getting burnt out, and hiring more permanent full-time staff can be expensive. By utilizing channel sales, you can hire contractors to work as agents, which helps budget overhead costs and ensures your sales team isn’t overworked.
Break Down Sales to Analyze Data
Put processes in place to track sales across every channel. This will help with strategic planning and forecasting and make it easier to see exactly where sales are coming from, what sales methods work best, and where to focus efforts.
Bolster New Partnerships
Working with other companies will allow you to form new relationships, lean on each other for professional advice and knowledge sharing, and effectively help each other create new business opportunities and increase revenue. This can lead to product integration and more collaboration on a larger scale. When effective partnerships are formed and maintained, you can tap into each other’s markets and work together to generate more revenue.