Interested in a way to increase your revenue without having to rely solely on an in-house sales department? Salespeople are great, but they only have so much selling time in a day. Even if you hire the most driven people and provide them with the necessary tools to increase productivity, it still comes down to having enough time.
The answer could be to hire more sales reps. Some businesses choose to go that route. That could be the answer, but there’s another, more efficient solution. Plus, hiring more salespeople and taking into account the training process that goes with it, can be very costly and will cut into your margins.
An indirect sales channel could be just the solution when you’re looking for an effective, low-risk sales model that can be easily adjusted with the growth of your business.
What are Indirect Sales Channels?
What are indirect sales channels? Most simply put, it is a strategy that uses third party distributors, resellers, wholesalers, dealers etc. to sell your product for you. Indirect sales channels are the exact opposite of direct sales in that your own, in-house team of salespeople are selling directly to your customers, either through your own location or online. An example of a direct sales channel versus an indirect sales channel would be Nike. If you go to a Nike store or the Nike website to purchase a pair of their shoes you would be using a direct sales channel. Buying them through websites like Zappos and Amazon, or purchasing them at any other sporting goods stores is an example of an indirect sales channel.
Efficiency is just one of the many benefits that comes with using an indirect sales channel. For example, you can drastically cut costs while bringing in the same amount of revenue using one channel manager paired with numerous channel partners. This saves money and manpower, as opposed to the five or six salespeople you'd hire instead. After you’ve created your strategy, and worked out the kinks, it’s often times more convenient to hire new partners than it is to hire a new salesperson.
Built-in trust, rapid testing, product maturity, and customer success are just some of the many benefits that come with integrating an indirect sales channel strategy into your business.
Factors to Consider Before Integrating an Indirect Sales Channel
Keep in mind that indirect sales channels can be a very powerful way to increase revenue and efficiency within your company, but only if you’re selling the right kinds of products. Here are some deciding factors to think about if you’re considering integrating this strategy into your business:
Product maturity - The success of your product is determined by which stage of the product life cycle it lies in. For instance, if your product is fairly new and doesn’t have all the knots worked out yet, direct sales will allow you to get the quick feedback you need to make the necessary improvements.
Easily Marketed - This means that your product is uncomplicated and able to be sold quickly without a lot of research and touchpoints. On the other hand, if it’s full of intricacies and needs to be explained to a potential customer in order to be used, an indirect sales channel is probably not the right choice for you.
Well-Researched Sales Process - It is imperative to have a well-designed sales process when deciding whether or not to implement an indirect sales channel. One where you can describe your buyer personas, pain points, buying triggers, average sales cycles etc. quickly and easily. Each of those aspects are crucial to making sure your indirect sales channel partner has all of the information needed to effectively identify and then sell to your buyers.
Why Companies Choose Indirect Sales Channels
Even if your company does have a successful direct sales program, many still choose to incorporate indirect sales channels into their strategy. Some may choose to focus solely on these channels, but that’s dependent on the type of business it is. Below are some of the key reasons companies choose to implement an indirect sales channel strategy:
Lower Sales and Marketing Cost - As opposed to using an in-house direct sales team, indirect sales channels are much lower in overhead costs. They also capitalize on the effort and cost a partner has put into building the business and its client base.
Established Trust - Many salespeople have a hard time with the concept of cold calling. One of the most difficult aspects of selling a product is establishing trust. Indirect sales channels allow you to use the trust and relationships your partner has already established. Since your partner has already established relationships with potential clients, you’re able to create a brand presence with little effort.
Lower Risk - Indirect sales channels are a relatively low-risk way to try out and evaluate a new market. This is due to their higher efficiency and lower costs. You’re able to try new campaigns, products, packages, and promotions with a partner. You’d be risking much more if you were to try those things in direct sales.
Could an Indirect Sales Channel Benefit Your Business?
While indirect sales channels can be a significant investment of your time and energy initially, it has the potential to completely transform your business and take it to the next level. You can broaden your market much more easily than you could relying solely on direct sales because of the trust your partners have already built up with their customers. You’re able to experiment with less risk, while, at the same time, having the flexibility you need based on your goals and the size of your business. In the end, indirect sales channels give you the ability to form new business relationships that will continue to benefit your business for years to come.