Scaling up your sales doesn't always mean scaling up your sales team.
Instead of hiring and training new personnel, which can be tedious and time-consuming, you can enter into strategic channel sales partnerships.
This approach delegates marketing and selling responsibilities to a third-party entity, enabling you to reach new markets and customers.
Studies suggest that 66% of B2B leaders who adopted this method anticipate a revenue increase of more than 11% in 2023, thanks to their channel partners. So, it’s reasonable to consider channel sales as a viable solution for scaling up your revenue.
The challenge though, is putting your product in the hands of third-party sales reps who don’t have the same knowledge of your customers and your product.
So how can you actually pull off a solid channel sales strategy? Let's find out.
What is channel sales?
Channel sales is an indirect sales strategy where a company promotes and sells its products through third-party sellers.
These intermediaries, which include affiliates, distributors, resellers, or value-added providers, receive a commission based on the sales they generate.
Working with channel sales partners helps you reach new markets and customers, which ultimately boosts sales and revenue. This also allows you to focus on its core competencies and leave sales and distribution to the partner, increasing overall efficiency and productivity.
Channel sales vs. direct sales
The main difference between channel sales and direct sales is the distribution model used to reach customers.
- Direct sales involve selling products or services directly to the end customer, allowing for complete control over the sales process, brand messaging, and customer experience. For example, your sales reps contact target customers through email marketing and social media outreach, demonstrating product features and addressing customers' inquiries. (If you need help automating your email follow-ups, check out this list of the best email management tools).
- Channel sales allow you to tap into your distribution network and the expertise of your partners to expand your reach, reduce costs, and improve efficiency. For example, companies like Coca-Cola don't enable direct purchases through their website but instead employ local grocery stores and vending machines to sell their products.
You can have the best of both worlds and combine both approaches to optimize your sales strategy and reach more customers, too.
Use direct sales to target specific customers or segments where your business has a strong presence or USP (e.g., selling your high-end products or services to enterprise customers).
Then use channel sales to expand your company's reach and increase brand awareness (e.g., selling your more accessible products or services to SMBs).
What is a channel partner?
A channel partner is an intermediary who markets and sells your products for you in exchange for incentives or commissions.
They typically have an established network of customers, suppliers, or other business relationships that you can leverage to expand your reach and increase sales.
Types of channel partners
Channel partners come in many forms:
- Affiliate channel partners or affiliate partners are responsible for affiliate marketing or product promotion. You pay them a commission once the sale is completed due to their marketing efforts.
- Referral channel partners refer to companies of people who refer leads to your business intending to boost sales and customer relationships.
- Reseller channel partners buy your products from you to resell to their customers. As the customer directly places an order with the reseller, the latter handles customer support and inquiries and retains sales revenue.
- Value-added reseller (VARs) channel partners are the resellers who offer add-on services like consulting, customizations, or configurations in addition to your product.
- Agency channel partners or retailers take up your product as part of their own product/service offering.
- Technology alliance partners offer technology that complements your product, so they bring both solutions together, pitching it as an integrated solution.
- Cloud service providers offer various components of cloud computing, such as IaaS, SaaS or PaaS, to improve your system's speed, security, and flexibility.
- Managed service providers remotely manage the IT infrastructure and end-user systems of multiple organizations.
- Service delivery partners focus on enhancing your product's value to end-users through a range of services like presales consulting, installation, and managed services.
Benefits of channel sales
Channel sales may not be suitable for every company, but they offer significant advantages over direct sales, like:
- More cost-effective, thanks to lower customer acquisition and sales training costs
- Enhanced market reach through partners
- Low-cost entry into new markets
- Growing indirect sales revenue
- Higher efficiency as you can delegate marketing and selling responsibilities to multiple channel partners
- Built-in trust when affiliated with credible companies
All this ultimately enables you to scale your business fast—provided you choose the right channel partnerships.
Examples of channel sales programs
Here are some real-life examples of B2B companies using (and succeeding with) this selling strategy:
1. Mainstreet's Referral Program: Helping Startups Save Money
Mainstreet, an enterprise SaaS platform, has found a way to make a significant impact in just six months by offering a unique referral program.
Startups looking for financial help to fund their businesses are the target audience, and they can easily identify, claim, and advance tax credits automatically through Mainstreet's platform.
Each Mainstreet client gets a unique referral link, and for every signup and qualification using that link, the company provides a 15% off. This incentive has been a great success, and Mainstreet has exceeded $3 million in just half a year.
2. HubSpot's VAR Channel: Partnering for Marketing Success
As a HubSpot Certified Partner, Roketto sells HubSpot licenses to its clients.
In addition, clients who purchase a HubSpot license through Roketto get a special link that helps them save on the regular $3,000 onboarding fees. While the client pays HubSpot directly, Roketto provides them with training and support.
Roketto serves as the reseller who makes the sale on behalf of HubSpot, creating a win-win situation for both parties. While Roketto gains access to the market demand for HubSpot products, HubSpot still plays a significant role in ensuring the success of the overall marketing strategy.
3. Cisco Champion Program: Influencer Marketing at Its Best
The Cisco Champion program leverages the power of influencers and brand ambassadors to share their Cisco product-related experiences and insights. Cisco takes charge of content production, and the content is mainly put up on YouTube, Twitter, and podcasts, ensuring enhanced reach.
The program has been incredibly successful, with over 55,000 tweets and several mentions attributed to the campaign over the years. Bryan Cranston, famously known as Heisenberg from Breaking Bad, even participated in one of Cisco's conferences, making the campaign even more impactful.
The Cisco Champion program is a prime example of how a well-executed influencer marketing campaign can lead to significant business success.
What makes a good channel partner?
A good channel partner is someone who helps you generate significant revenue and offers value that strengthens your overall business strategy.
They have a deep knowledge of your product and its potential benefits to customers, which enables them to communicate your brand's USP and sell more effectively.
Partnering with one or more channel partners is undoubtedly a powerful tool for accelerating company growth. But with a wide range of partner types available, you need to understand the pros and cons of each to select those that align most closely with your business goals. Labels should not be your only focus, as many of these relationships will evolve over time to deliver the greatest value to your company.
Adopt a selective approach when choosing partners, prioritizing quality over quantity.
Focus on finding someone who complements your technology and can help scale your business. By concentrating your efforts, you can maximize your chances of success and achieve sustainable growth.
How to measure channel sales programs
Measuring the success of a channel sales program can be a complex undertaking, as it involves analyzing the metrics of two related yet distinct businesses.
The key to overcoming this obstacle is measuring specific metrics for each company, as well as assessing the partnership as a whole.
Here are the channel sales data metrics you should consider measuring:
1. Channel partner profitability metrics
To compare the profitability of your channel sales partners vs. your direct sales efforts, you can measure:
- Customer acquisition cost (CAC) for direct sales vs. partner sales
- Retention rates for direct sales vs. partner sales
- Cross-sell and upsell rates for direct sales vs. partner sales
2. Channel sales recruitment metrics
To know the effectiveness of your channel partner recruiting and onboarding efforts, you can measure:
- Total number of partners
- Total attrition rate (how many partners leave your company’s channel sales program over a period of time)
- Requirement quota attainment rate
- Percentage of partners recruited by channel (e.g., from networking groups, referrals, outreach)
- Average cost of recruiting and onboarding a new partner
- Average length of time to recruit and onboard a new partner
3. Channel sales training and support
To know whether your channel partners have a consistent understanding of your offering, you can measure:
- Percentage of partners using provided sales and marketing collateral
- Percentage of partners who attend optional events and/or ongoing training
- Average partner satisfaction score
- Percentage of partners who have attempted certification
- Percentage of partners who have completed certification
4. Channel sales success metrics
To compare the success of your channel sales efforts vs. your direct sales efforts, you can measure:
- Total number of partner deals registered
- Average value of a partner deal
- Percentage of accepted partner-submitted deals
- Percentage of closed partner-submitted deals
- Average sales cycle length
- Percentage of partners who registered a lead in the past month or quarter
How do you enable a channel partner’s salespeople?
Having a highly motivated sales team at your channel partner's disposal can lead to increased sales for your company. But how do you get the sales professionals driven in the first place?
Here are a few channel sales strategies to apply:
Create targeted channel sales enablement content
To effectively communicate your product's benefits and use cases to decision-makers, your channel partners need two types of channel sales enablement content:
- Partner-facing content: Educational content that informs channel partners on how to sell it effectively (e.g. competitor battlecards, messaging one-pagers, pricing sheets, etc.)
- Customer-facing content: Branded content that channel partners can share with customers (e.g. traditional sales and marketing collateral such as product guides, case studies, and data sheets)
Providing them with both types of content will make partner reps more familiar with your company and enable them to convey your product's value to potential clients.
However, sales collateral distribution can be chaotic, often involving multiple platforms like email attachments, Dropbox folders, and Google Doc links. This can lead to confusion and wasted time for reps.
Dock solves this problem by giving partner sales admins a few ways to enable their channel partners:
- Create workspaces for your partners to educate them on product messaging and releases
- Create pre-populated channel sales templates that your partners can use to share information with buyers
- Use Dock’s Content Management platform to manage all your partner- and customer-facing content
With all sales-related content in one place, reps can access everything they need from a single link. Plus, customization for specific target customers and channel partners increases the effectiveness of the content in driving sales.
Mentor and educate
Prepare the sales reps for potential deal roadblocks like budget constraints, security assessments, and competing priorities they may encounter when giving a demo or negotiating with prospects.
The primary objective is to arm them with strategies that will help them navigate and mitigate objections. This includes:
- Demonstrating your product’s potential ROI and other financial benefits
- Offering alternative pricing options
- Sharing case studies and proof of concepts
- Providing comparisons against competitor products
Collaborating with channel partners can foster a genuine commitment to closing deals, bolstering trust and improving teamwork. This, in turn, spurs increased motivation to work harder.
It's also essential to customize training to specific market segments. In the case of selling software to healthcare providers, reps can be trained on the specific needs and pain points of healthcare providers, and how the product can solve these problems.
To optimize the learning experience, consider recording mentoring sessions and bundling them into a comprehensive content package, comprising vital resources like an information deck, mentoring video and all other related assets on the new product. You can then house them in a Dock workspace to ensure easy access.
Provide the required tools and templates
Share use-case-driven and trackable templates that make it easier for reps to sell. And that’s where Dock comes in.
With Dock's templated digital sales rooms and mutual action plans, reps can have complete control over the content they share with clients, embedding a variety of media formats such as videos, PDFs, and spreadsheets.
Reps can also pull from the Content Management library, ensuring that they have the most up-to-date information available.
Plus, everything is trackable in Dock. Reps can easily monitor how often each asset is accessed and who accesses it, enabling them to identify trends in buyer behavior and prioritize high-performing content.
Empower your channel sales partners with Dock
Dock simplifies and streamlines channel sales partnerships, allowing you to not only set up the partnership deal but also educate the partner’s sales team about your brand and product.
Reps can use Dock’s wide range of resources and tools, from the handy templates to the engagement analytics, to communicate your product‘s value in a way it sticks, increasing their chances of success with potential customers. Take Dock for a spin — it’s free to try.