In the channel sales model, companies sell their goods/services through third parties: affiliate partners, resellers, value-added providers, etc.
Building partnerships allows a brand to get a wider reach for their products. However, channel sales don’t involve the use of agent networks. Although third parties can sell your goods or services in different cases, in channel sales, by “partner” we only mean a person with their own business and products. The share of your product sales shouldn’t exceed 50%. Otherwise, the other party would be an agent, not a partner. And that is a completely different sales method.
Partners can reach out to you first and offer their help with promotion or selling your products, or vice versa. Usually, a company hires managers to be in charge of channel sales and work on making new partnerships.
The Rules of Channel Sales
- The main reason for building a long-term partnership is the ability of a partner’s product line to help with selling your own products.
- Channel sales require as much attention as direct sales.
- The main source of the channel sales efficiency is a well-set-up business process, not the motivation of managers.
- The best level of interaction between partners is an automatic exchange of warm leads – contacts of potential buyers that are ready to make purchases.
- Partners should be approximately equal in size and sales rates.
When Are Channel Sales the Most Effective?
There are three main cases when channel sales are effective:
1. A new player enters the local market, especially if it is a foreign brand with its own products.
2. A new brand/manufacturer appears on the local market.
3. A company decides to supplement its sales or change a sales strategy.
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