What is a Channel Sales Model, and Could it be Right For Your Business?

BizBritain By BizBritain
almost 3 years ago read
What is a Channel Sales Model, and Could it be Right For Your Business?

 Your organisation will have surely heard of channel sales. And you may even be aware that according to Forrester, three quarters of world trade comes via indirect sales – in other words, selling through partners, rather than vendors selling their products directly to customers. 

But what really is a channel sales approach, and would it be the right or wrong route for your firm? 

Introducing channel sales

When you are looking to grow your company by boosting sales and revenue, it might be difficult at first to escape the conclusion that you’ll simply have to take on more salespeople. After all, your current salespeople – no matter how good they are – will only have so much time in the day to help clinch more conversions and add to your bottom line. 

And of course, it’s a pricey, resource-intensive and time-consuming process to hire additional sales representatives, and to equip them with the training and tools they’ll require to excel in their roles. 

This is a dilemma that so many organisations have long faced. It’s what may lead you to seriously consider a channel sales model, whereby you don’t add any more salespeople to your payroll, but instead distribute your products via a channel partner that has the responsibility of marketing and selling them for you. 

These partners, or intermediaries, have been known by a lot of different terms over the years – ‘dealers’, ‘resellers’, ‘brokers’, ‘agents’, ‘affiliates’, and so on. And you’ve almost certainly acquired products or services through an intermediary yourself before – for example, if you’ve ever bought a car from a dealership, or purchased an insurance policy through a broker or agent, instead of directly approaching the insurer. 

The potential benefits and drawbacks of indirect sales

There are plenty of reasons why organisations from across the industries have often turned to an indirect, or ‘channel sales’ model. 

They may have done so as a cost-effective means of accessing new markets – making their product available to consumers in mainland Europe, for example, if they were previously only selling in the UK. It’s also simply a way for brands to relatively quickly and easily grow their networks, so that they can introduce their offerings to new customers more rapidly than they could by themselves. 

However, there’s also much to be said for choosing the right partner, and ensuring you work with them in the right way. From a cultural standpoint, for instance, does the partner you’re considering align well with your own business? Are their values – in terms of the broader impact they aspire to make on the world – the same as yours? Do they also offer complementary products that could be sold alongside yours, to help make your partnership with them more worthwhile? 

Indeed, this brings us neatly onto some of the reasons why you may not be so convinced of the validity of channel sales for your company. You might be concerned by the lack of control this model gives you over the customer experience, given that your brand won’t be the one directly interacting with the end customer at the sales stage. And if you sell directly to customers in addition to indirect sales, your partners may perceive that they’re being forced to compete against your own salespeople. 

Even these potential pitfalls might not be insurmountable ones for your company, depending on your situation and aspirations. Choosing a well-matched partner and communicating to them precisely why they would wish to partner with you in the first place, could help overcome some of these issues. 

And with regard to the lack of control over the customer experience, it’s worth remembering that providing a superb partner experience – perhaps with the help of a digital experience platform such as ON24 – could greatly help the partner, in turn, to give the customer the best possible experience. 

A channel sales model, then, isn’t necessarily automatically right for your own business, but when you make the right moves, it could well turn out to be. So why not consult this article from Sales Hacker for a more detailed comparison between direct sales and channel sales, to aid you in deciding whether indirect sales could be a suitable route for your brand?