How the Right Channel Sales Strategy Grows Revenue

sales-channelI often work with companies that take their products and services to market through distribution channels. This type of indirect selling brings with it some inherent challenges.

And even though good benefits accrue to the company selling through channels, they do not offset the pitfalls. In one of my prior businesses, we served as channel partners for a number of major insurance companies; we also worked with channel partners for our products and services. From this experience, I’d like to offer you some insight on how we capitalized on our partnerships, along with sharing hot-of-the-press-data from the 2016 CSO Insights Channel Sales Optimization Study.

Channels Provide Reach

Recently, my wife and I worked with an interior designer to order new furniture for our living room. Most furniture manufacturers sell through channels because it would be impractical to sell directly to every homeowner.

Working with designers is a great way to leverage a sales channel. The channel, in addition to the interior designer, can be a furniture store or direct representative. Either way, the manufacturer puts its livelihood in the hands of a third-party who has access to the end-user customer.

That channel representative sells the product and then orders from the manufacturer. Even better, the channel partner takes responsibility for final installation and, in many cases, for service. The company that manufactures the furniture does not have to measure the couch or chairs, select fabrics, make the sale, or install the product. The company focuses on its core competencies and the channel profits from the connection between the product and the consumer. My designer, with whom we have a solid relationship, sold us the furniture at cost and added a percentage for her value. 

Channels Know Their Markets

In my prior business, we built a network of channel partners throughout the country. They knew the prospective client, enjoyed great relationships, and knew how we needed to adapt our products and services to meet the needs of their clients.

Our partners could make things happen with one or two phone calls whereas, in our direct selling model, it took months or years to reach the level of success we sought. Our channel partners had already established trust and credibility in the market so that the clients would transfer that trust and creditability from our partner to us. Going forward, we had to continue to earn it. The ability to move into a high-valued prospect under favorable conditions was a godsend to growing revenue.

Challenges of the Channels

When you go through a sales channel, you make a conscious decision for someone else to take responsibility for selling your product or service. While you don’t have to incur the labor cost,  you will give up margin. And channels present their own set of issues:

  • Channels can never be as passionate about selling your wares as you are.
  • Wherever potential overlap occurs, you’ll experience channel conflict.
  • Inherent competition is common. Most channel partners do not exclusively carry only one company’s products. Instead, they succeed by selling multiple products in a single consumer visit.

I’m working with a company right now in the worksite employee benefits business; its reps never enjoy access to the end buyer. If they’re lucky, they get spread sheeted to the finals.

Your Biggest Channel Mistake

Against the backdrop of the challenges above, one common mistake occurs all too often. First, however, please answer this question: Are your best partners the ones who a) Know your product and services in detail?; or b) Are the ones best positioned to sell your products and services and know how to uncover needs?

In most situations, I observe that it is the latter. They deliver good relationships, good selling skills, and possess some knowledge of your products and services.

Here’s where I believe the biggest mistake is made: When companies convene an annual sales meeting of their channel partners, they generally focus all their attention on sharing product knowledge.Recently, however, I’ve witnessed several forward-thinking companies focus their attention on teaching their partners how to sell; then they combine that effort with internal support to do

Recently, however, I’ve witnessed several forward-thinking companies focus their attention on teaching their partners how to sell; then they combine that effort with internal support to do more joint selling.

You may have an excellent relationship with your channel partner, but that partner will leave good sales opportunities on the table if he hasn’t built and uses a strategic selling process for large opportunities.

Early in my career, one of my product manufacturers reached out with an offer to train our salesforce in Strategic Selling®. The manufacturer conducted the training for us, helped us to learn the strategic selling process, and taught us a common sales language.

When its reps interacted with our salespeople, it was more about discussing the strategy on key opportunities and less about products and services. The manufacturer had helped us see its value as part of the whole product we sold to our clients.

If you and your partner sit side-by-side learning a common method of selling, think about how easily you’ll work together in joint opportunities.

Let’s take a moment to dive into the excellent data uncovered by CSO Insights in its latest channel optimization study.

Select Results from 2016 CSO Insights
Channel Sales Optimization Study

2016-cso_insights_channel-sales-optimization-study-11-1

To begin to optimize channel performance, first, determine what services your company needs to provide your partners. Then follow up by setting the standards for effective execution. To gauge how well companies do in this area, the CSO Insights study asked participants to assess how their channel partners would rate various support services they provide.

The chart above summarizes responses. Topping the list is partner sales support. With 62.9 percent of firms receiving a “meets or exceeds expectations” rating, we continue to see the increased adoption of virtual selling.

In CSO Insights’ 2016 Channel Sales Optimization Study, we found that 82.6 percent of firms surveyed were actively using web-based meetings to engage customers. This action makes it easier for companies to provide pre-sales support to both direct and indirect sales teams.

If your channel partners carry your products, and you know that they carry products from other companies, remember you’re selling at two levels:

  1. The first level is to understand what your end-client/customer looks to solve and how your product or service fits;
  1. The second level is to understand what problems you solve and what opportunities you present for your partner─normally not the same. In reality, you have two client/customers: your channel partner and your end-user. While you must satisfy both, sometimes you can reach the end user without developing a win-win relationship with your channel partner.

Please take our assessment of channel partner strategy and determine what areas you need to improve. Then take pleasure in the fact that you are closer to growing revenues than ever before.

See you on the upside,

Bill

For more information, go to www.pleinairestrategies.com
Or call William L. MacDonald in San Diego at PleinAire Strategies LLC at 858.759.8637 or 213.598.4700

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