I spent almost 2 decades at Oracle where the Channel was critical to the continued growth of the business and, for the last 5 years there, I led the EMEA Sales teams for Cloud via all Oracle's Alliances & Channel partners. This experience means I get what "good looks like" and I also know the pitfalls and how to avoid them!
Expanding market reach is paramount for sustained growth. Doing this by investing in Marketing, and hiring more Sales & BDMs can be a very effective strategy. Another approach to achieving this is by setting up an Indirect sales channel. This method involves leveraging third-party partners, such as resellers, distributors, or value-added resellers (VARs), to sell your products.
So, if you're at the "accelerate growth and scale-up" stage of your business, read on for a step-by-step guide to setting up an effective Indirect sales channel
1. Understand Your Market and Products
Sounds obvious right? But, before diving into indirect sales, conduct a thorough market analysis to understand the demand, competition, and potential partners. Identify which of your products are best suited for indirect sales. Typically, products that require less customization and have widespread appeal are ideal candidates.
2. Define Your Channel Strategy
A clear channel strategy is essential. Decide whether you’ll use resellers, distributors, VARs, or a combination. Each type of partner serves different needs:
Resellers focus on volume and broad market reach.
Distributors handle logistics, warehousing, and distribution.
VARs add specific value through customization, integration, or additional services.
3. Identify and Recruit Channel Partners
Look for partners who align with your business values and have a solid reputation in the industry. You can do this by attending trade shows, joining industry associations, and use online platforms to connect with potential partners. Looking at the partners your competition use will also give you valuable insights. During the recruitment process, ensure that potential partners have a robust sales network, technical expertise, and a good track record.
4. Develop a Comprehensive Partner Program
Create a partner program that outlines the benefits and requirements for your partners. This program should include:
Training and Certification: Provide thorough training on your products and services.
Marketing Support: Offer co-branded marketing materials and joint marketing initiatives.
Sales Incentives: Develop a competitive commission structure and incentive programs to motivate partners, see below.
Segmentation: If possible, segment your territory and/or target customer base so that Indirect and Direct don't compete. There's nothing worse than having both channels target the same prospects and going head-to-head!
5. Incentive Schemes: Upfront Discounts and Rebates
An effective incentive scheme is crucial for motivating your partners. Here are two popular methods:
Upfront Discounts
Provide your partners with upfront discounts on your products. This approach reduces their initial investment and makes it easier for them to offer competitive pricing to end customers. Upfront discounts can be particularly appealing to partners because they immediately improve their profit margins.
Rebates
Rebates are incentives given to partners after they achieve specific sales targets or milestones. This type of incentive rewards performance and encourages partners to push your products more aggressively. Rebates can be structured in various ways, such as quarterly or annual payouts based on sales volume or growth metrics.
5. Implement a Partner Relationship Management (PRM) System
A PRM system helps manage relationships with your channel partners effectively. It provides a platform for sharing resources, tracking performance, and facilitating communication. Choose a PRM system that integrates well with your existing CRM and other sales tools.
6. Provide Ongoing Support and Training
Regular training sessions and support are crucial for keeping your partners up-to-date with product updates and sales techniques. Establish a dedicated partner support team to assist with technical issues, marketing campaigns, and sales strategies.
7. Monitor Performance and Gather Feedback
Use your PRM system to monitor the performance of your partners. Track key metrics such as sales volume, customer feedback, and market penetration. Regularly gather feedback from your partners to identify areas for improvement and to ensure they feel supported and valued.
8. Foster Strong Relationships
Building and maintaining strong relationships with your partners is vital for long-term success. Regularly engage with your partners through meetings, events, and communication channels. Recognize and reward top performers to foster loyalty and motivation.
9. Scale and Optimize
As your indirect sales channel grows, continuously optimize your strategy. Analyse what’s working and what isn’t, and be willing to make adjustments. Scaling may involve expanding into new regions, adding more partners, or introducing new products to the channel.
Conclusion
Setting up an Indirect sales channel can significantly boost your market reach and revenue. By understanding your market, defining a clear strategy, recruiting the right partners, offering a lucrative incentive scheme and providing continuous support, you can create a robust and effective sales channel. Remember, the key to success lies in fostering strong, mutually beneficial relationships with your partners. With a well-executed indirect sales strategy, you can achieve new heights of growth and success.
If you'd like to know more, fell free to contact me.
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