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How to Build a Great Channel Sales Program

by Rajesh Gotan

It is rightly said – the creation of a good business is about collaboration and syndication!
Channel Sales Program is one of the tested ways to scale the revenue quickly.  Instead of “One to One”, it’s “One to Many” approach.

The businesses that are running on “One to One” approach have their own marketing teams and other ways to get leads or prospective customers into the system. These leads are handed over to the sales team who go for the closure with the customer. The sales people also have their own mechanism to generate leads and they go out for prospecting – aside from physical meetings and tele calls, they also use networking platforms to generate leads in this digital era.

It is found that some companies do not pursue the path of Channel Sales therefore limiting their expansion. Although, rarely in some cases, Channel Program may not be the best fit, however, in majority of the businesses there is scope and appropriate model to build a Channel Sales Program.

We see testimony to this fact when we look all around us in all industries– Levers, Coke, Pepsi, KFC, Microsoft, LG, Apple, IBM, Sony, Fujitsu, Samsung, Rolex, Louis Vuitton, Levis, Amazon etc.. There is hardly any industry, which sooner or later, has not adopted the Channel Sales Program.  As a matter of fact, some organizations, while turning to Channel Sales Program, observed rapid global expansion and revenue growth.

Therefore, each organization should seriously explore avenues of Channel Sales in the business.   

It is also true that one size does not fit all. Therefore there is no standard Channel Program. For example, the B2B Channel Sales Program cannot be copied as it is in the retail business. 

Let’s understand Channel Sales a Bit More

It is a process wherein you identify companies who have a huge base of your target customers. You appoint them as your reseller for your product, solution or service offering a commercial benefit – it could be the share of your revenue, a per customer fee, profit sharing etc..

Let’s take an example. If you are in sales of a software that is used in finance function, you will need to target the CFO’s. Any third party organization who has huge connection base and relationships with CFO is a right channel for you – it could be a consulting firm. Once appointed as a partner, the channel will take your solution to the target customers. During the entire process, you need to enable the channel to be able to sell. Once sales is done, you pass on the agreed commercial benefit to the channel. Channel sees additional revenue from you and you get more customers and more revenues for your business.

Therefore, it’s a win-win situation for both the parties!

Sales is not just a number; It is the Ultimate goal for any organisation

How to Build a Successful Channel Sales Program?

1. Define the Channel Partner Qualification Criteria

Here you define in detail what a good Channel Partner looks like to you. You may need to build up a qualification form to assess the Channel Partner. The Channel Partner qualification criteria benchmarks generally look like:

    • Turnover  

    • Number of existing customers

    • Customers falling in your target segment 

    • Experience in handling similar products/solutions/services in the past

    • Size of sales team  

    • Size of service team

    • Marketing investments in the past

    • Marketing investments planned for new launches

    • Geographies of presence

    • Investment planned for expansion

    • Profile of key management

By getting the answers of the above questions, you will be able to able to assess if the Channel Partner fits your criteria and at which level – you can define various partner models.

If the Channel Partner deems fit, you should make sure that you are not stepping into each other’s toes. Like you may assign exclusive rights to the partner for select geographies. Make sure that adherence is there and build processes around it. A good Channel Program should be drawn up in such a way that both sides stay invested in its success and are economically benefited. Measurable goals should be defined for the Channel Partner and economic benefits should be linked to such goals. The goals may include number of customers to be acquired, revenue to be achieved, gross margins, number of customers in new geographies etc..

2. Identifying the Prospective Channel Partner Base

Once you have defined the Channel Partner Program and the qualification criteria, you need to identify the companies you feel meet the criteria. 

Let’s say you are into sales of CRM software. Here the System Integrators or the Consulting firms who have a base of customers who require CRM become your target.

Do extensive search and research of such organizations. Make a list of them. After you have done that, identify a champion in the organization who is influential enough to sell your Channel Sales Program within the organization and take you to the CXO level where such decisions are taken.

This step is all about creation of list and identification of influencers and decision makers with their contact details.

“Success isn’t about how much money you make; it’s about the difference you make in people’s lives.”
Michelle Obama

3. Pitching and Acquiring Channel Partners

It’s a similar sales process that you execute with the end customer. Except in this case, aside from your product or service, you will also need to pitch the benefits of Channel Partnership Program. Here the element of key importance is the Return on Investment that the Channel Partner would get.

During this step, the clear roles and responsibilities of the Channel Partner and the support offered by your organization must be detailed in the pitch deck – sales do not come up on their own. A proper plan should also be drawn up in the pitch deck. The deck must bring out absolute clarity of the Channel Sales Model.

Once both parties mutually agree to the model, a detailed contract must be executed incorporating all elements.

4. On-boarding and Enablement of Channel Partners

Signing a contract is the first milestone, however, you must know that you are just half way through. Unless the Channel Partner performs, your organization is not going to benefit. Therefore, Channel Partner enablement is one the key elements. 

Some key steps include:

    • Training them for selling your products or services

    • Provide them with the thorough understanding of the competition

    • Provide them with all necessary sales and marketing material

    • Providing a handholding resource during the initial sales calls

    • Orient them with the processes of your organization

It takes 3-6 months for Channel Partner to be on its own and start to action.  

5. Marketing and Support to Channel Partners

Marketing and support is an on-going part of the engagement. It is now time to execute the marketing plan detailed in the agreement. You need to provide the pitch deck, email and calling scripts or for that matter anything that being used by your inside sales team in the organization while engaging the customers.

Measurable goals should be set for monitoring the plan like number of emails, number of phone calls, number of customer visits and most importantly the desired outcome that has been set to be achieved by the Channel Partner.  You should also provide the Channel Partner with a Single Point of Contact or a Hot Desk for the customer’s or Channel Partner’s queries that can be best answered by your organization.

6. Remuneration and Reporting of Channel Partners

There should be a transparent process to track the performance of the Channel Partners. In today’s scenario, it’s important to have IT enabled processes. CRM’s are being extensively used for partner management. In such systems, each key activity or the outcome of every Channel Partner is recorded. Using these systems, there is a reporting mechanism that gets available to Channel Managers to keep a track on every key indices. Such systems also calculate the pay outs to Channel Partners. 

Such a tracking and reporting mechanism makes periodic meetings between Channel Managers and Channel Partners much more insightful – the gaps can be identified and correction plan can be drawn.

7. Continued Engagement and Upselling

Channel Program is not a onetime process. It is month after month and quarter after quarter.  The Channel Partner becomes your conduit to the end customers. Whenever there is a launch of new product or service or any enhancement in the current product, the Channel Manager should reach out to Channel Partners and keep them abreast. In the ever changing business scenario, a continued engagement is required between Channel Partner and the organization in order to maximize the mutual business benefits. The approach should be no different than what you adopt while selling directly to your customers. The Channel Partners should be treated like the internal Sales Managers of the organization. 

8. Downside and Risk Mitigation in Channel Sales

At the end of the day, the Channel Partners are interested in their own benefits and they do not love your products and services. A thorough homework should be done before signing up with Channel Partner. Channel Partner development is a very long cycle. Therefore, you should strive towards developing Best in Class channel model by continual improvements.  You should always keep the benefit of Channel Partners in mind – if they do not benefit from you, they will move away which will result in loss of the entire effort and opportunity.

However, it should be a win-win situation. If a Channel starts becoming unreasonably dominating, you should always have back up plan of appointment of new Channels or placement of your direct sales engine in the market. The agreement should have a clear exit route for you.

Summing Up 

If you are not in a Channel Model currently, hopefully the above article gives you insights to develop a Channel Sales Program that may become a winning proposition for your business. Channel Program can no way replace your internal efforts, but a well formed Channel Sales Model will certainly accelerate your business vis a vis your stand-alone efforts. 

Wishing you all the very best!

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