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Building an Indirect Sales Distribution Strategy

Learn how to build an indirect distribution strategy that will benefit all stakeholders and maximize your potential growth. 

July 21, 2020 | 6 Min Read

Why Do Indirect Sales Programs Lag When They Provide Value?

Posted By
Cat Cook
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Why Do Indirect Sales Programs Lag When They Provide Value?

Indirect sales has consistently proven to be the highest-generating source of revenue for manufacturers. Yet despite the fact that increasing revenue is a top priority, the majority of manufacturers put little effort into growing or supporting indirect channels. If your business lacks an indirect sales program, or if you’re not nurturing yours to help it reach its full potential, you’re likely missing out on significant earnings and growth opportunities.

Here’s a closer look at the benefits of indirect sales for revenue growth and customer retention, why some manufacturers fail to take advantage of this powerful strategy, and how PRM can quickly improve channel marketing and communication.

Indirect Sales Programs: Facts and Figures

The opposite of in-house direct sales, indirect sales is a strategy which uses third-party entities to sell products. While getting indirect sales channels up and running can involve some investment of time and capital, there are significant benefits to doing so. And yet many companies fall short when it comes to putting indirect sales to work for them.

After soliciting input from more than 125 partnership programs, Crossbeam’s 2020 State of the Partner Ecosystem reveals eye-opening findings. More than 93% of respondents said that while indirect sales partnerships have a “measurable impact” on revenue, just 28.5% said they “agree” or “strongly agree” that their company is aware of and implementing best practices for partnerships.

The Crossbeam data further reveals that larger companies, in particular, are under-investing in partnerships. While medium-sized companies with 50 to 99 employees were most likely to agree with the statement, “Partnerships are well integrated into the sales and marketing process at your company,” companies with 500 or more employees were the only cohorts to disagree with the statement.

Furthermore, indirect sales models offer other benefits, too, including the following:

  • Faster expansion
  • Increased brand recognition
  • Streamlined operations
  • Reduced operational overhead for lead acquisition and sales
  • Improved customer access
  • More opportunities for experimentation across everything from new products to new marketing campaigns

Crossbeam’s takeaway leaves little room for doubt: “When companies invest in partnerships, they see returns.”

All of which begs the question: With so many benefits, why are so few organizations maximizing the potential of indirect sales?

Making Sense of the Sales Program Paradox

So what is to blame for the gap between the potential of indirect sales programs and the failure of many companies to realize their potential, according to the Crossbeam report? These statistics speak for themselves: While more than 75% of survey respondents revealed that their businesses measure the value of partnerships based on directly attributable revenue, more than 76% of partner managers said getting proper attribution was either “somewhat challenging” or “very challenging.”

Given that most executives will insist on seeing ROI before allocating resources to an alternate sales channel, a lack of concrete evidence can make it a hard sell. “The data shows that there is a disconnect in impact (or perceived impact) and the executive team’s willingness to acknowledge or reward that impact,” the Crossbeam report concludes. In other words, without the ability to prove the worth of indirect sales, companies have little incentive to take a chance—even if all evidence points to the benefits of doing so.

Additionally, indirect sales can present other challenges, as well. These include:

  • Lack of managerial control over sales partners
  • Difficulty coordinating efforts like product rollouts
  • Slower feedback cycles between companies and their end-customers

There’s good news, however: All of these challenges can be mitigated by a single solution: partner relationship management (PRM).

The PRM Solution for Indirect Sales Partners

PRM is defined as “the combination of strategies, methodologies, software, and cloud-based applications that businesses who sell through a distribution channel use to communicate with their distribution partners.” It typically refers to the technology services used to both implement and manage sales channel strategies across distribution partners, and provides a single mechanism through which manufacturers can manage channels. Well-implemented and -executed PRMs transform disconnected processes and information like data, leads, orders, and training material into a single, streamlined application.

In addition to making it easier to manage indirect sales programs while empowering sales partners to conduct better business on your behalf, PRMs also yield actionable insights which both prove the value of the channel while simultaneously revealing possible areas of improvement.

While customer relationship management (CRM) has seen meteoric growth since its debut, PRM remains underutilized. This is especially confounding given that a third of the world’s business is generated by sales partners. When combined with other strategies, such by recruiting the most qualified reps and comprehensive onboarding, PRM offers tremendous potential for leveraging your indirect sales program.

Your company can’t succeed without effective sales strategies. However, the degree to which it succeeds hinges on harnessing the full potential of the resources at your disposal. This includes not only indirect sales partners, but also PRM. To learn more about PRM and how it can help your business grow and thrive, schedule a growth consultation with a member of the ManoByte team today.

 

channel marketing

Topics: Indirect Sales Channels

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