Direct selling and indirect selling are the two main approaches of getting your product or service to market. In this post, we want to delve further into the indirect selling approach and show you how you can manage your indirect channels in a more effective way.
This is becoming more and more relevant in today's markets due to the rising trend of technology companies trying to cover new ground which they cannot reach through direct selling.
What is indirect selling?
Indirect selling, or channel business, means that a company uses a middleman (often referred to as a partner, Value Added Reseller [VAR] or distributor), to put their customers in touch with their product or service instead of selling directly to the customers themselves.
The first point to note is that going down an indirect channel route is not for everybody. It is important to understand the needs of your customers and what they really want from you. Do not waste your time developing indirect channels if your customers are already happy that you are using a direct approach.
Dell's direct selling strategy, for example, has worked very well for them. Why? Because it is convenient for their target customer base who can purchase a computer with exact specifications and personal touches without having to leave the comfort of their own home. Of course, Dell now also has multiple indirect routes to market in order to expand their reach however their direct sales method will always be the company's core selling strategy.
If you do decide that an indirect sales strategy is for you, it will allow you to greatly expand your reach geographically without the need to hire more sales reps to cover the new territory. In most cases, you may also benefit from international expansion and entry into new markets without the need for extensive market research costs by going through local distributors. This can often be a great idea for small companies or startups who want to enter new markets in a cost-effective way.
Once you have decided that an indirect route is right for your company...
How do you manage it effectively?
Firstly, you need to define your company’s overall goals and work on aligning them with the objectives you have for your indirect channel. If you are planning to design, re-design, re-activate or re-structure your indirect channel, you need to be thinking about the following phases:
Pre-design Creating an attractive and simple partner program focusing on the programme steps, training and main benefits.
Design 1. Define the list of potential partners/distributors which could fit with your portfolio of solutions, taking into account:
a) Prioritisation depending on partner type b) Geography c) Revenue, solutions portfolio and current clients
2. Approach the potential partner list:
a) To explain who you are and why the partner should join your program b) To find synergies between you and your potential partner c) To work on a business case for more proactive activity d) Signature of LOI and/or NDA, as a sign of compromise
3. Onboarding process and signature based on:
a) Follow-up and assistance during the onboarding process b) Selection of partner type c) Negotiation and closure
4. Activation of the partner based on:
a) Technical training and certification b) Commercial training c) Press release to the market d) Sales & marketing objectives - business case e) Salesware deployment providing commercial messaging
5. Channel management is the key to success if you are able to lead your partners through a win-win partnership, offering knowledge and sharing opportunity leads in order to increase sales. It is essential to carry out weekly cadence calls and provide technical and commercial support.
Ready to start!
We have given you a few simple steps to keep in mind before launching an indirect channel strategy. Based on our experience, an effective indirect channel strategy must be accompanied by a sales acceleration initiative in order to feed the potential of the channel and make it work in sync with the partnership.
One of our main focuses with our clients is in designing, introducing and developing their indirect channel with the goal of growing their business and helping them reach markets they don't currently have access to.
If you are thinking about designing your own effective channel strategy, we would advise you to firstly identify and evaluate the steps detailed above. After having done this, please don't hesitate to get in touch with us for further information or clarification on any of the points mentioned.
Article written by:
Pedro Abelardo Domínguez
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