What Is Channel Sales? A Comprehensive Guide

Table of contents

1. What Is Channel Sales?
2. Example of Channel Sales
3. Difference between Channel Sales and Direct Sales
4. Common Types of Sales Channels
5. Limitations of Using Channel Sales + How to Avoid Them?
6. How to Build and Use an Effective Channel Sales Strategy?
7. Improve Channel Sales Strategy with Goodmeetings
8. FAQs

Do you ever wonder how some businesses reach customers more effectively without doing all the selling themselves? They use channel sales.

Let’s say you need to buy a new phone. You go to a store and purchase it there, then buy accessories from another shop. 

Did you realize the phone manufacturer just made a sale and sold accessories — all without ever selling directly to you?

That’s channel sales in action! 

This method involves partnering with third parties to market and sell products. Did you know? Companies using channel sales strategies can grow their revenue faster than those who don’t.

In this guide – we’ll break down what channel sales is, how it works, and why it’s a solid strategy for businesses aiming for growth.

What Is Channel Sales?

Source: Goodmeetings

Channel sales is a strategy where businesses partner with third parties to market and sell their products. Instead of selling directly to customers – you can use distributors, resellers, or agents to reach a wider audience. 

This approach helps you – 

• Grow faster
• Reduce costs
• Access new markets

Omni channel sales allow you to focus on production while the partners handle sales and customer interactions. It can be a great strategy if you are looking to expand your business. 

Fun Fact: 86% of shoppers say they use at least two different marketing channels before making a big purchase.

Related: 15 Best Sales Methodologies You Need to Know

Example of Channel Sales

Apple uses channel sales to sell its products. Instead of selling only through its own stores – Apple partners with retailers like Best Buy and online platforms like Amazon. These partners market and sell Apple products – helping Apple reach more customers. 

This strategy allows Apple to focus on innovation and production while its partners handle the sales and distribution – making it easier for customers to buy Apple products wherever they shop.

How Does Channel Sales Work?

Omni channel sales work by partnering with third parties to sell your products or services. Here’s how it works.

1. Partnership Setup: A business establishes relationships with partners like – resellers, distributors, or agents.
2. Product Distribution: These partners receive the products and take on the task of selling them to customers.
3. Marketing and Sales: Partners use their own marketing strategies and sales networks to reach potential buyers.
4. Support and Service: Partners may also handle customer support and service needs.
5. Revenue Sharing: The business and its partners share the revenue from sales – usually based on an agreed-upon percentage or commission.

This approach allows the business to reach a wider audience and expand its market presence without directly managing every sale.

Related: How to Increase SaaS Sales – The Ultimate Guide

Difference between Channel Sales and Direct Sales

Source: Goodmeetings

Choosing the right sales strategy can greatly impact how your business reaches its customers. Here’s a comparison between Omni channel sales and direct sales to help you understand their key differences.

Aspect	Omni Channel Sales	Direct Sales
Sales Approach	Uses third-party partners like distributors and resellers to sell products.	Sells products directly to customers through the company’s own sales team.
Customer Interaction	Indirect, through partners who handle the sales process.	Direct, with the company’s sales team engaging with customers.
Market Reach	Often broader, leveraging partners’ networks and market reach.	Typically narrower, limited to the company’s own sales efforts.
Control	Less control over the sales process and customer experience.	More control over the sales process and customer experience.
Cost	Can reduce costs related to sales and marketing but involves sharing revenue.	Higher costs for managing sales and marketing directly, but no revenue sharing.

Fun Fact: 95% of Microsoft’s money comes from its partners.

Related: How to Be a Good Salesperson: Tips & Strategies for Success

Common Types of Sales Channels

Did you know? About 73% of retail shoppers use different channels when buying products and services.

Sales channels are various ways through which businesses reach and sell to customers. Here are some common types.

• Retail Stores: Physical locations where customers can browse and purchase products directly – such as malls and specialty shops.
• Online Stores: These are e-commerce websites where customers can buy products over the internet. Examples include company websites and online marketplaces like Amazon.
• Distributors: Intermediaries that purchase products from manufacturers – and sell them to retailers or directly to customers.
• Resellers: These are businesses or individuals who buy products from manufacturers or distributors. They sell these products to end customers, often adding value through services or support.
• Wholesalers: Companies that buy products in bulk from manufacturers – and sell them in smaller quantities to retailers or other businesses.
• Agents/Brokers: Individuals or companies that act on behalf of a business to sell products. They often earn a commission on sales.
• Franchises: These are independent businesses that operate under the brand and business model of a larger company. Examples include fast-food chains.
• Direct Sales: Sales made directly to customers through the company’s own sales force. It often involves face-to-face meetings or direct communication.

Related: 12 SaaS Sales Metrics You Should Care About in 2024

Why Should You Use Channel Sales? Advantages and Benefits

Did you know? Omni channel sales make up 75% of all business transactions around the world. 

Here’s why you might want to consider using this approach.

• Wider Market Reach

Channel sales partners, like distributors and resellers, already have established networks and customer bases. By working with them, you can reach more customers than you could on your own. This means your products can be sold in more places, including regions you might not be able to access directly.

• Cost Savings

Setting up and running your own sales team and marketing efforts can be expensive. Channel partners handle these tasks for you. This can save you money on hiring staff, marketing campaigns, and other sales-related expenses.

• Focus on Core Activities

By using channel sales, you can focus on what you do best, like developing and improving your products. Your partners take care of selling and customer service, letting you concentrate on your core business activities.

• Local Expertise

Channel partners often know the local market well. They understand customer preferences, cultural differences, and regional trends. This local knowledge can help your products fit better with local needs and increase sales.

• Scalability

As your business grows, it can be challenging to expand your direct sales operations quickly. Channel partners can help you scale up more easily by handling new regions or markets, allowing you to grow without the need for a large, in-house sales team.

• Reduced Risk

Channel partners take on some of the risks associated with sales. For example, they might handle the costs of marketing and inventory. This reduces the financial risk for your company, as partners invest their own resources to sell your products.

• Faster Market Entry

Getting your products into new markets or regions can be time-consuming if you handle it all yourself. Channel partners who are already established in those areas can help you enter new markets faster, accelerating your growth.

Related: Sales Pitch 101: How to Create a Perfect Sales Pitch

Limitations of Using Channel Sales + How to Avoid Them?

Using channel sales can offer many benefits, but there are also some limitations to consider. Let’s take a look at these limitations and how you can avoid them.

• Less Control over Sales Process

When you rely on partners to sell your products, you have less control over how they handle the sales process. This means you might not have full insight into how your products are being marketed or sold, which can affect the customer experience.

How to Avoid: Clearly outline your expectations and provide training for your partners. Regularly check in and communicate to ensure they understand your brand’s standards and sales goals.

• Channel Sales Conflicts

If multiple partners sell your products in the same area, they might compete with each other. This can lead to channel sales conflicts and reduce the effectiveness of your sales efforts.

How to Avoid: Define clear territories and roles for each partner. Ensure they know their specific market areas and responsibilities to minimize overlap and competition.

• Quality of Customer Service

The partners you work with will handle customer service. If their service isn’t up to your standards, it can negatively affect your brand’s reputation.

How to Avoid: Set high standards for customer service and provide your partners with the tools and support they need to meet these standards. Monitor their performance and gather feedback from customers.

Related: 12 Sales Dashboard – Examples and Templates

• Dependence on Partners

Relying heavily on channel partners means your sales success is linked to their performance. If a partner doesn’t perform well, it can impact your sales results.

How to Avoid: Work with multiple partners and regularly review their performance. Maintain a diverse network to reduce dependence on any single partner.

• Margin Erosion

Channel partners typically take a cut of the sales revenue. This means your profit margins may be lower compared to direct sales.

How to Avoid: Negotiate favorable terms with your partners. Find a balance between the costs of using partners and the benefits they bring.

• Brand Representation Issues

Partners represent your brand when selling to customers. If they don’t align with your brand values, it can hurt your brand’s image.

How to Avoid: Choose partners who share your values and understand your brand’s message. Provide them with consistent branding materials and guidelines.

• Complex Management

Managing multiple partners can be complex and time-consuming. You need to ensure they are all aligned with your goals and performance standards.

How to Avoid: Use a channel management system to track and coordinate activities with your partners. Regular meetings and clear communication can also help streamline management.

Related: Sales Conversion Rate 101: How To Measure and Improve Yours

How to Build and Use an Effective Channel Sales Strategy?

Source: Goodmeetings

Building and using an effective channel sales strategy involves several key steps. Here’s a detailed guide on how to do it.

1. Define Your Goals

Start by setting clear goals for what you want to achieve with your channel sales strategy. This could include:

• Revenue Targets: Determine how much additional revenue you want to generate through channel sales.
• Market Expansion: Identify new regions or market segments you want to enter.
• Partner Performance: Set goals for the performance of your channel partners, such as sales quotas or market share targets.

Having specific, measurable goals will help guide your strategy and track your progress.

2. Identify the Right Partners

The next step is to choose channel partners that fit your business requirements. 

• Market Experience: Look for partners who have experience and a strong presence in your target markets.
• Reputation: Assess the reputation of potential partners to ensure they have a track record of reliability and success.
• Capabilities: Evaluate their resources, such as sales teams, marketing capabilities, and customer service infrastructure.

The right partners can help you reach more customers effectively. Choosing well-aligned partners increases the likelihood of achieving your sales goals.

3. Develop a Partner Program

This is the most important step. Create a program that outlines how you will work with your partners. 

• Onboarding: Develop a process for onboarding new partners, including training and integration.
• Incentives: Design a reward system for achieving sales targets, such as commissions, bonuses, or other incentives.
• Resources: Provide partners with access to sales tools, marketing materials, and technical support.

A well-designed program motivates partners and provides them with the support they need to succeed. It also establishes clear guidelines for how the partnership will work.

Related: 10 Best Sales Engagement Platforms to Boost Your Sales Performance in 2024

4. Provide Training and Support

Make sure your partners have the knowledge and tools they need to sell your products effectively. 

• Training Sessions: Offer initial and ongoing training on product features, sales techniques, and market strategies.
• Sales Tools: Supply partners with sales aids such as brochures, demo products, and software.
• Technical Support: Provide resources for troubleshooting and technical assistance to help partners handle customer queries effectively.

Training and support empower your partners to sell your products more effectively. It helps them understand your products deeply and address customer needs.

5. Set Clear Expectations

Clearly define what you expect from your partners in terms of sales targets, marketing activities, and customer service. 

• Sales Targets: Define specific sales goals or quotas.
• Marketing Efforts: Outline what marketing activities partners should undertake, such as promotions or advertising.
• Customer Service: Specify the level of customer service you expect, including response times and support standards.

Clear expectations help avoid misunderstandings and guarantee that partners know exactly what is required of them. It also provides a basis for evaluating their performance.

6. Create Effective Marketing Materials

Provide your partners with marketing materials that are easy to use and align with your brand. 

• Product Information: Provide detailed and accurate product descriptions, features, and benefits.
• Promotional Content: Create ready-to-use ads, brochures, and flyers.
• Brand Guidelines: Make sure all materials align with your brand’s image and messaging.

Effective marketing materials make it easier for partners to promote your products. Consistent branding and clear information help drive sales and reinforce your brand’s identity.

Related: AI Sales Cold Calling – Benefits, Use Cases, Tools and Best Practices

7. Monitor and Evaluate Performance

Regularly review how well your partners are performing. You can do this by.

• Sales Metrics: Measure sales volume, revenue generated, and market penetration.
• Customer Feedback: Collect feedback from customers about their experiences with your partners.
• Compliance: Make sure partners adhere to your guidelines and standards.

Monitoring performance helps identify successful strategies and areas needing improvement. It allows you to address issues promptly and make data-driven decisions.

8. Communicate Regularly

It is important to maintain open and regular communication with your partners. 

• Updates: Share information about new products, changes in strategy, or industry trends.
• Feedback: Provide regular feedback on their performance and discuss any challenges they’re facing.
• Meetings: Schedule regular check-ins or meetings to review progress and discuss strategies.

Regular communication builds strong relationships and ensures that everyone stays aligned with your goals. It helps partners feel supported and informed.

9. Adjust and Improve

Be prepared to make changes to your strategy based on feedback and performance data. 

• Evaluate Results: Regularly review performance data and partner feedback.
• Adjust Strategies: Modify your strategy based on what’s working and what isn’t.
• Implement Improvements: Make necessary changes to improve efficiency, effectiveness, and partner satisfaction.

Adjusting your strategy helps you stay responsive to market changes and partner needs. Continuous improvement ensures that your channel sales efforts remain effective and relevant.

Related: AI in Sales Enablement Explained: Practical Use Cases & Top Tools

10. Build Strong Relationships

Invest in building long-term relationships with your partners. Here’s how you can do it.

• Recognition: Acknowledge and reward their successes and contributions.
• Support: Offer ongoing assistance and resources to help them grow.
• Collaboration: Work together on joint initiatives and share insights for mutual benefit.

Strong relationships enhance collaboration and loyalty. Partners who feel valued and supported are more likely to invest effort in promoting your products and achieving shared goals.

Improve Channel Sales Strategy with Goodmeetings

Source: Goodmeetings

Let’s say you’re a sales manager working with many channel partners. Keeping track of each meeting, getting insights from the meetings, and maintaining good communication can be tough. But what if there was a tool that could make all these tasks easier? Enter Goodmeetings – the ultimate platform for top-performing sales representatives.

Goodmeetings is an AI-powered tool that automatically records, transcribes, summarizes, and analyzes all your sales meetings. It helps to speed up your sales process, improve your sales team, and give you insights for faster, better decision-making. 

Related: 15 Best Sales Automation Tools to Boost Your Revenue in 2024

Here’s how Goodmeetings can improve your channel sales strategy.

Source: Goodmeetings

• Call recording: Capture every word in meetings. Ensure no detail is missed for effective follow-ups.
• High-quality transcriptions: Convert conversations into searchable text. Quickly reference key points.
• Call analytics: Analyze call data to understand interactions and improve your sales pitch.
• Multi-language support: Communicate clearly across diverse markets.
• Video meeting library: Archive and search video meetings for training and review.
• Automated action items: AI identifies and organizes tasks. Stay on top of follow-ups.
• Human-level summaries: Get concise meeting summaries. Save time with quick takeaways.
• Meeting performance insights: Assess and enhance meeting efficacy with performance analytics.
• Customized dashboards: Tailor dashboards to view relevant meeting data.
• Deep CRM integration: Seamlessly connect meeting insights with your CRM.
• AI-generated key moments: Focus on critical meeting moments highlighted by AI.
• Coaching: AI-powered coaching offers feedback and insights to boost sales skills.
• ‘Ask me anything’ at meetings: Quickly get answers from past meeting details.
• Sentiment analytics: Understand client reactions and adjust your approach.
• Screenshare analytics: Track engagement during screenshares to improve presentations.

Related: Getting Started with the Goodmeetings Notetaker

Goodmeetings simplifies your workflow, helps you make better decisions, and boosts your channel sales strategy.What’s best is that you can start using Goodmeetings for free with a 7-day free trial offer. Moreover, you can also opt for a free demo to see how it works.

Boost Your Channel Sales With Goodmeetings!

FAQs

1. What is Omni channel sales, and how does it benefit my business?

Omni channel sales involve using multiple sales channels to reach customers. This strategy improves customer experience and boosts sales by ensuring your brand is available wherever your customers shop. It allows for a consistent shopping experience across all platforms, from online to in-store.

2. How can I develop a successful channel sales strategy?

A successful channel sales strategy includes identifying the right sales channels, training your team, and setting clear goals. By focusing on your target market and understanding their preferences, you can optimize your sales efforts and improve performance. 

Related: SaaS Sales 101: Definition, Models & Best Practices

3. What are the key aspects of channel sales and distribution?

Channel sales and distribution involve using intermediaries like wholesalers, distributors, and retailers to reach end customers. This approach helps expand market reach and increases sales opportunities. 

4. What is a sales channel B2B?

A sales channel B2B is a way for companies to sell their products or services to other businesses. This can include direct sales teams, distributors, or online platforms. 

5. What are the benefits of distribution channel sales?

The benefits of distribution channel sales include – broader market reach, reduced overhead costs, and increased sales opportunities. 

6. How can I manage channel sales conflict?

Channel sales conflict occurs when multiple sales channels compete against each other, leading to issues like overlapping territories or pricing disputes. To manage this conflict, establish clear guidelines, communicate openly with all parties involved, and use tools like Goodmeetings to track interactions and resolve issues effectively.

Wrapping UpChannel sales is a powerful approach for expanding your market reach and boosting sales by leveraging various partners. By working with distributors, resellers, and other intermediaries, businesses can tap into new customer bases and increase their sales potential. To streamline your channel sales efforts, Goodmeetings offers AI-driven tools to improve sales strategy and performance.

Ready to Transform Your Channel Sales Strategy?

Use Goodmeetings Now!