Channel Sales and Partner Programs

Whether you’re a small business that has just set up shop, a fast-rising competitor, or you’re already an established force in the market, channel sales and partner programs can be hugely beneficial towards your revenue and continued growth. Indirect channel sales and partner marketing afford businesses and advertisers the opportunity to expand their reach without taking any major financial risks.  

What are channel sales?  

Direct sales are when a company sells its product or service directly to the customer, using an in-house sales department. Channel sales, on the other hand, are a form of indirect sales; there is no interaction between the company and the consumer. Instead, the company uses a third-party channel sales partner that acts as a middleman. Typically, the company sells its product or service to the sales partner, who then sells it at a consumer level.  

Types of channel partners 

There are a number of different kinds of channel sales partners, below are some of the most common: 

Resellers 

A reseller will buy your product at a discounted rate and then sell to customers as is, with no added extras. You’ve likely seen a lot of tech and electronics companies using this method – like Apple, who frequently uses official resellers.  

Value-added providers 

Value-added providers, also known as value-added resellers, are similar to resellers but they will bundle your product with other products, adding value. For example, many computer companies will use value-added resellers to form brand partnerships, where their computer hardware is bundled and sold with another company’s software pre-loaded.  

Agents 

An agent is another type of channel sales partner. Agents differ from the others as they don’t actually purchase the product from the company, but they still act as the middleman, negotiating deals between the seller and the buyer. Estate agents are the most prominent example of this practice.  

Dealers 

A dealer acts as an intermediary between the manufacturer and the customer. Perhaps the most recognizable example of this is in the automotive industry: car manufacturers will sell their vehicles via car dealerships.   

Distributors 

A distribution channel allows a business to sell its product in different regions. You might have one distribution partner handling sales in Europe and another who handles distribution in the US, for example. This allows businesses to expand their operations without having to fully set up shop in each and every region.  

Wholesalers 

Wholesalers are similar to distributors, with an added layer to the process. Companies sell to wholesalers, who then aim to get those physical products on shelves in stores. The sales reps of the wholesaler are responsible for connecting with and supplying the product to different retail franchises.  

Independent retailers 

An independent retailer operates a retail company, on or offline, independently. They purchase goods from the manufacturer and sell them to customers through their own independent store, without having any affiliation to a major retail franchise.  

Affiliate partners 

Businesses can start a partner program, which affiliate partners can join to promote the business’ products and gain a commission for every sale they facilitate. The customer will transact on the merchant’s own website – but the affiliate, like a social media influencer, for example, will have directed customers to the website with a unique, trackable link.  

Benefits of channel sales 

Using a channel partner is a great way to increase sales and reduce costs.  

Keeping all of your sales, marketing and distribution in-house can be very expensive and time-consuming. Channel partners are a great solution as they specialize in this work and can do it at a fraction of the cost of having a fully-fledged sales team and marketing department. If you choose the right channel partner, you can trust them to understand your business and brand and promote it to the right audiences.  

Channel partners also facilitate growth by making it easy to scale operations. Growth without a channel partner means having to hire more and more full-time salespeople as you scale up – another costly endeavor. It’s easier, and cheaper, to simply add more channel partners as you grow.  

Using channel partners allows businesses to take greater risks. With a channel partner, you could test the waters with a new market, product, or service without having to spend too much on marketing something that might not work out.  

For larger companies – it makes far more sense to use channel sales than direct sales. Companies like Apple or Google are unlikely to fill buildings around the world with salespeople who engage directly with the consumer. With that much product and that much demand, using channel sales is really the most sensible option. Direct sales approach lends itself more to much smaller, brick-and-mortar operations.  

Disadvantages of channel sales 

Direct sales give you complete control over the process and workflow. You’ll be able to manage the entire pipeline, and will be able to measure and assess everything in real-time, using your own internal tools and processes.  

You’ll have a direct relationship and genuine engagement with your customers, which can be extremely useful. Building relationships with your customers can help you gain a better understanding of how to best serve your target market. It would be handy should you ever need to conduct market research or customer relationship analysis.  

When you use direct sales methods, you’ll have complete control over your pricing without losing any potential profit by offering discounted rates to sales partners.  

When you choose to use a channel sales strategy, you have to be willing to give up a bit of control. You’re putting your trust in the hands of your sales partner. They are the experts in sales and distribution, how they go about selling your product is really up to them. A sales partner will not want constant interference or guidance; you’ve chosen them because they know what they’re doing and should be trusted to do it.  

By yielding some control, you’re also giving up access to certain insights about your customers and the sales journey. This can make it harder to make accurate financial predictions; you won’t have as clear an idea of your expected revenue when working with channel sales as you would selling directly.  

You also have to be willing to sell your products at a discounted rate. Channel partners need to make a profit too, so you’re unlikely to find one that will simply buy your product for the full price and sell it for the full price. In most cases, you’d need to offer discounts to partners. So, 100 direct sales would yield a higher profit than 100 sales through a channel partner, but channel partners are more likely to make a higher quantity of sales, so it’s somewhat of a balancing act. 

Connecting with channel partners via affiliate marketing 

Considering the limitations of channel sales, affiliate marketing is one of the best ways to go – especially for newer or smaller businesses. You’re not selling your product to the affiliate partner, you’re simply providing a link and offering a commission should that link generate sales.  

It can be difficult to find the right partners for you and your brand, and you may feel it’s easiest to handle it in-house, but there are plenty of tools available to advertisers that make it easy to connect with valuable channel partners.  

Awin’s suite of advertiser tools provides everything you need to form effective relationships with channel sales affiliate partners. Through the Awin network, you can discover new affiliates, advertise placements and opportunities, arrange commissions, track and analyze sales channels, and more.