A strategy to focus on the “right” partners, open and honest communications, and incentive alignment to ensure mutual success. This blog unpacks why a sales channel is important, calls out the trade-offs, shares tips and tricks, and lists mistakes to avoid.
Sales channel can help you grow revenue
Adopting a channel sales model can offer significant benefits. Apart from potentially spending less on your sales team, you’ll gain built-in trust, increased efficiency, rapid testing and experimentation, and increased customer success. Let’s go over these one by one.
If your channel partner is already well-known within a market or vertical, you don’t have to do the work of establishing a brand presence. Your product will automatically seem more credible because of their endorsement.
One channel manager paired with several channel partners can source the same amount of revenue as five or six salespeople. It’s also typically easier to bring on new partners than hire a new salesperson – but only after you’ve created the program and worked out the kinks.
Rapid testing and experimentation
Channel partners let you experiment with new customer bases, products, packages, promotions, and/or marketing campaigns in a low-stakes environment.
If your customers need training, onboarding, implementation support, and service, partnering with vendors who offer these services lets you focus on closing new business without sacrificing your existing users.
If this sounds too good to be true, sometimes it can be. Channel sales does have some cons – let’s take a look.
The disadvantages of channel sales
Here are a few drawbacks that make it less than ideal for some businesses.
Less control over sales
You’re not directly managing the sales process. Your reps might not be able to jump in and take control if a partner is mismanaging a deal. They also might have zero say over the timeline of the deal – which can be frustrating and lead to unpredictable revenue.
If you partner with someone who has a poor reputation or treats customers poorly, you’ll look worse by association. That’s why choosing a channel partner with a good reputation and excellent customer service is important.
In exchange for sourcing and closing deals, your partners will get a piece of your margin. You’ll make less on individual sales, but acquiring each one will be less expensive.
Harder to manage
It can be difficult to update your sales strategy, change your messaging, or make any kind of major shift. You’re not simply rolling out a change to one internal team – you’re asking multiple external groups with other priorities and motivations to adapt.
Slower feedback cycle
Feedback will take longer to get to you fast. Also, the feedback might not be 100 percent accurate – partners may ask bad questions, use unreliable methods to gather information, or unintentionally give you a biased interpretation.
Things can get messy quickly when your direct sales staff competes with your partners for the same business. Suppose a rep decides to cut her partner out of the deal because she doesn’t want to give up the commission. If the partner finds out, he’s unlikely to ever pass her leads again.
Tips to establish a successful sales channel
Set an overall and by-channel sales goal
Establish a sales and pipeline growth discipline with all your sales channel partners. Make sure to align your partners with your sales goal in mind. Being explicit will save you future headaches.
Size the channel
Stay informed about the number of prospective customers each channel partner can engage, and how much sales potential each customer holds. Know the amount of revenue you can expect from one sales partner or other.
Establish a regular cadence
No sales channel will get you huge revenue from day one. But it is vital for you to share a common vision, set achievable goals, and put in place quantifiable methods to measure them.
Design a common sales tool kit
Make sure that all your partners have access to things such as messaging, sales collateral, ad copy, sample email message, case studies, white papers, and webinars.
Over-invest in the beginning
Starting out on the right foot is important to the overall health of the relationship. They may require you to spend more time upfront supporting deal pursuits, answering questions, and generally being available.
Mistakes to avoid
An successful business innovates rapidly, learns from mistakes, and makes informed adjustments to its operations quickly.
In this section, we share examples of mistakes that can make channel development a costly misadventure.
- Spending too much time and money in legal work before actually engaging in the market
- Spending too much time on building a program before you know what works and what doesn’t
- Forging a channel partnership without having done the hard work to build the ideal partner profile
- Failure to respect the priorities of your partner’s company and to impose your interests on them
- Planning for direct salespeople to manage your partners
- Spending too much effort and time looking for the “perfect” sales channel partner
- Spending too much time and money on one sales channel partner
- Getting into partnership with a sales channel partner who gives you an unrealistic sales timeline
- Handling and managing your sales partner strictly rather than supporting them
- Expecting your partner to generate revenue without proper training
- Getting into partnership only by meeting the CEO and not interacting with its sales team
- Failure to know about the market status or track history of your sales channel partner
- Not having a clear objective in mind before the search for a suitable sales channel partner
- Discussing technology and revenue generation before knowing if the partners fit for your business
- Not being supportive of your partner to help with sales and product delivery
Unlock your business potential with a sales channel
Whether you are looking to build a channel from scratch, or want to access extra capacity to help your in-house team, we can help. We’re ready to engage when you are. Download our eBook to learn more.