The Complete Guide to Channel Sales

Imagine you’re buying software. You hire a consultant to find the best software, purchase it through a reseller, and renew the licence through third-party support. Now, imagine you’re the software company. You just found a buyer, sold a product, and landed a renewal—all without ever making a single direct sale. 

That’s the power of an effective channel sales strategy, or selling through partners. It’s a great way to grow your business without spending more time and money on your sales team. Keep reading to learn the ins and outs of channel sales: why it matters, how we do it here at Salesforce, and how you can make it happen for yourself.

What you’ll learn:

• What is channel sales?
• What is the difference between channel sales and direct sales?
• What are channel partners? Types and examples
• Why use channel sales? Benefits and advantages
• Drawbacks of a channel sales model — and how to counteract them
• How to build and execute a great channel sales strategy in 7 steps
• How to measure channel sales program success
• How Salesforce is reimagining channel sales

What is channel sales?

Channel sales (aka partner sales) is a B2B sales model where a company sells its product through partners. These partners come in various forms, from alliances to resellers to brokers, and they can step in to prospect, sell, and grow existing customers. Channel sales is also known as indirect channel sales strategies because the company doesn’t sell directly to the customer.

What is the difference between channel sales and direct sales?

Direct sales means your company sells directly to the end customer. For example, you sell a service through your website or a product through your retail store’s in-house sales team. However, channel sales uses third-party sales teams to sell products instead.

Many companies use a mix of direct and indirect sales channels. Some customers may prefer buying through a specific channel (for example, buying iPhones at Best Buy instead of the Apple Store), while others might prefer buying from the manufacturer. Below are a few examples to help illustrate this point.

What are channel partners? Types and examples

There are many different kinds of channel partners, depending on your business type and where they step in during the sales process. Here are the most common types of channel partners:

• Alliances are partnerships between companies that sell complementary products. For example, a software company might offer a cloud storage add-on through another tech company.
• Distributors buy directly from businesses, market and sell to customers in their operating regions, and then sell to stores. For instance, a beverage manufacturer sells directly to distributors, who then sell to stores.
• Franchisees pay to use a brand’s identity and business model to sell its products. The franchisor is the original business. Think McDonald’s, Subway Sandwiches, and Planet Fitness.
• Resellers purchase products from the manufacturer intending to resell them, often adding features or services to enhance value. 
• Independent brokers arrange transactions in exchange for a commission. For example, insurance companies often sell through a network of brokers or agents who build relationships directly with customers. 
• Retailers sell goods to the public, often in small quantities. For example, condiment manufacturers typically sell through grocery stores or online retailers, not directly to consumers.

Why use channel sales? Benefits and advantages

The benefits of channel sales all point to one thing above all: revenue growth. Consider this: In the world of software alone, channel sales revenue is expected to reach $70B this year — up from $30B in 2019, according to IDC. Below are core reasons why partner direct and channel sales-driven revenues are on the rise:

• Grow revenue by expanding into new markets, faster. Partners can introduce your brand to customers not in your existing circles and help you scale up sales faster than you could.
• Enjoy built-in trust. When customers already know and trust your partner, the partner’s credibility benefits you, too.
• Amplify your reach and enhance brand awareness. Partners can give your marketing efforts a gravity assist based on their pull, whether by hosting local events, hosting webinars, or training customers.
• Reduce your margins. Indirect selling can powerfully boost your bottom line because it sidesteps many of the expenses that come from maintaining a direct sales team.
• Improve the customer experience. Partnerships can add value to your solution with complementary products and services. If your customers prefer to buy one complete experience, indirect selling allows you to serve better how they want to buy — without having to build it all yourself.

Drawbacks of a channel sales model — and how to counteract them

For all its benefits, partner selling comes with a few common pitfalls. Here are key challenges and how to overcome them: 

• Less control over customer experience. The partner represents your brand to the end customer, but you don’t control their interactions with customers. However, if you provide an excellent partner experience, that often translates into an excellent customer experience.
• Less knowledge about customers. With indirect selling, the partner doesn’t always tell you who’s actually buying. One way around this is to use product registration. As soon as the end customer registers the product, a direct connection between you and the customer is created. That way you can survey the customer to uncover unmet needs and make sure the partner provides a great experience.
• Potential conflicts. When you use a hybrid of direct and indirect selling, sometimes your partners may feel like they’re competing with your own salespeople. Create clear guidelines around what products are sold through the channel versus direct sales to minimise this issue.

How to build and execute a great channel sales strategy in 7 steps

When building a channel sales strategy, you can’t go wrong by defining your ideal channel partner, setting them up for success with thoughtful onboarding, and supporting them with resources as they go out and sell. Here are the steps to take:

1. Determine what kind of partner you need

Before you seek out your channel’s sales partners, determine your goal and the type of partner that will support it. Then, choose a partner based on that profile. If you’re stuck, return to the “Why use channel sales” section above and identify the best partner based on your goals.

For example, if you want to enter a new vertical or industry, you’d find partners with existing reach in that space. Or, if you want to improve the customer experience after the sale, you’d find partners who can provide value-added services, such as training and support.

2. Evaluate the joint value you and your potential partners bring to each other

Get clear on these key questions before contacting potential partners or inviting them to contact you.

What can you offer potential partners? They will want to know what support you intend to provide, such as comprehensive training, access to sales and marketing tools, technical resources, a dedicated account or channel sales manager, incentives, and rewards.

What’s your value proposition? Here’s your chance to convey the opportunity’s value. Why would a partner choose to do business with you? Demonstrate the revenue that partners will gain from the collaboration over time. 

What are affiliate partners, and your expectations of them? Outline the details of the partnership, including the total timeline, the products they’ll sell, and service level agreements (SLAs) for engagement. Agree on shared goals and metrics to perform against, like completion of training or certification, leads generated or converted, and total revenue brought in.

3. Understand the roles of a channel sales team and begin hiring a channel sales team

Your channel strategy and sales program needs dedicated staff to support it and your partners. Depending on the size of your company, these positions may be spread across many or a few individuals. Here are some of the key roles and responsibilities you’ll want to think about covering, along with key skills required for each.

Channel sales leaders 

Channel sales leaders are responsible for meeting partner revenue targets and improving pipeline health. They direct their organisation’s channel sales strategy. They need years (often decades) of experience in the indirect selling motion, deep knowledge of the partner ecosystem and customer base, and a strong grasp of the business and its products.

Channel sales managers 

Channel sales managers are on the front lines of channel sales programs. They’re responsible for building relationships with channel partners and direct sellers and opening up lines of communication between them to support collaboration. They also need to understand the customer, the product, and the market to recommend new insights that grow revenue. Finally, they monitor channel sales metrics (more on that below) to optimise the channel sales program by overcoming issues and capitalising on opportunities.

Channel marketing managers

Channel marketing managers create materials and campaigns that partners use to market directly to your end customers. Channel sales partnership marketers must be very clear on the value proposition of products and services and how to position them effectively.

Channel operations managers

Channel operations managers help partners become productive and successful by building scalable tools and processes. One important responsibility includes designing and managing the partner portal, where partners log in to access resources and get deal insights

4. Recruit channel sales partners

Once you’ve defined your team, goals, and program structure, it’s time to recruit your partners. Here are two approaches:

Inbound recruitment: Inbound recruitment happens when potential partners come to you. For instance, you can set up a form on your website where potential partners can express interest in selling your products. Then, someone inside your parent company, can vet the application and determine if the partner is a good fit. This can be a cost-effective way to grow your partner network, but you may need to supplement this with outbound recruitment to attract the right partners for your needs.

Outbound recruitment: Another option is to identify and contact partners proactively rather than waiting for them to contact you. For instance, many vendors rely on events like trade shows to highlight their solutions and attract prospective partners. These initiatives can be time-consuming and costly but may be effective in helping you find the ideal partners.

5. Onboard new channel sales partners

Remember that while new partners likely have industry experience, they may not know your product or service or understand how to make it relevant for each region, industry, or persona. That’s why partner onboarding is so important.

Onboarding also gives partners a first impression of your business and how easy it is to work together. Don’t wait for partners to request materials. Instead, guide partners through a step-by-step process and offer thorough training on sales must-knows, helping them ramp up more quickly. 

At a minimum, your onboarding program should get partners up to speed on the following:

• Products and features
• Pricing structures
• Selling processes
• Goals of the partnership

Personalise the partner experience with relevant content and recommendations. Onboarding should be trackable to see a partner’s progress over time. If a partner plans to sell one specific product, don’t overwhelm them with specs on other products that aren’t suitable for them.For more about onboarding partners and personalising the partner experience, check out this Trailhead module.

6. Support your channel partners

You’ve brought new partners up to speed, but the race isn’t over. They need ongoing support throughout their involvement with your company. Below are some ways to show your support and set partners up for success.

Provide instant access to product resources: In addition to onboarding materials, partners need just-in-time information to help them address specific customer issues. These include product specs, marketing assets, and presentation templates. Make these resources available on demand to make partners more productive and reduce back-and-forth with your channel managers.

Offer support through peer groups: Be sure partners have a communication line open for when questions arise. You can also consider offering an online sales community for partners, where they can find applicable success stories, ask questions of each other, and share best practices. 

Provide prepackaged campaigns: Some partners lack a dedicated marketing department or resources, so offering them prebuilt campaigns, trade shows in a box, or brandable content makes marketing your offering easier. 

7. Motivate channel sales partners

Most partners work with multiple companies — including your competitors. That means you want to stay at the top of your mind with your partners and motivate them to sell your products. Here’s how:

Create an incentive compensation program: Salespeople tend to be driven and competitive, so creating performance tiers for partners to attain can keep them engaged with your brand and excited to level up. Be transparent about the benefits of each level, such as better margins or other incentives. Use charts and dashboards so partners can monitor their progress and tap into their competitive spirit.

Celebrate partner success: Highlight both the big accomplishments and small wins of various partners. Whether a mention in an email newsletter, a banner in your partner portal, or a speech at a partner summit, these shoutouts will make your partners feel proud and valued. Plus, the rest of your partners will be eager to see their own names in lights.

Know when to fold: One of the reasons it’s so important to define goals is that you can effectively determine when the partnership isn’t working. Data can provide validation for the sometimes difficult decision to part ways. For example, you might agree on revenue benchmarks after a certain time period and end the relationships if they’re not met.

How to measure channel sales program success

To measure your channel sales, monitor metrics that track partner contributions to revenue and pipeline coverage (the revenue amounts represented by deals currently in the pipeline). Here are the most important metrics to look at: 

• Partner pipeline for the year
• Partner pipeline for the quarter
• Total revenue driven
• Attainment against forecasted expectations
• Partner leadership scoreboards, using dashboards and reports
• Return on investment (ROI) of total marketing funds

The key to successfully tracking all of these is ensuring you have a partner relationship management (PRM) solution as part of your CRM. This keeps all of your data and functionality in one place, making it easier to track performance. It’s also easier to create individual partner goals.

How Salesforce is reimagining channel sales

Insights by Ryan Nunez, Vice President of Partner Alliances, Salesforce

At Salesforce, more than 90% of our deals over $1M involve partners. Big deals don’t get done around here unless partners are engaged. That’s because selling doesn’t just happen during the sales presentation. It happens in all the little interactions before and after—from the huddle with the reseller in the parking garage to the back-channel phone call to the partner: “Hey, can this company really deliver like they say they will?”

To ensure we influence all those conversations, we seek to build surround-sound deals, where prospects are surrounded by partners who help identify opportunities and drive the deal forward. Here are three examples of how we make that happen.

1. We lean on partners and channel sales reps to identify and increase customer value before and after closing the deal.

We’re thinking about how to excite partners to work toward adoption and business outcomes so that we can keep customers. This requires us to reimagine a closed deal as the beginning of something, not the end. The renewal date looms in the future, and we have to do everything we can to make the customer successful and get them to stick around and buy more. 

So, we’re beginning to focus our partner sales program on the pre- and post-sale experience and incentivise our partners to keep growing our customers into the future. We’re progressing on this vision by defining new roles for partners who drive customer success, such as Partner Engagement Managers, Partner Solution Engineers, and Partner Sales Acceleration Leaders. 

We’re also defining key milestones in the post-sale journey. At Salesforce, that includes post-sales handoffs and sharing a wealth of enablement materials. Tracking these milestones helps us know whether we’re on the right track, and our partners are uniquely qualified to drive this success-minded motion.

2. We use a reseller portal to provide real-time updates on channel sales deals

We used to see our account executives struggling to gather updates from reseller partners. Sharing information took multiple follow-ups and a pile of documents. So we worked with our technology team to build a new portal—using Salesforce PRM—that helps our sales team and our partners collaborate more easily. This portal integrates with Slack to fit with modern working methods and honour the reality that our sellers are constantly on foot.

Today, our resellers manage leads and opportunities directly through the digital partner community, and our sellers can see updates on their mobile devices. They can also see updates in fields for sales stage, close date, and partner comments. Of course, some pre-built reports and dashboards give resellers a snapshot of their book of business, including insights into sales performance and trends. This makes it easy to identify the next best actions and jump-off points for new sales plays.

3. We evaluate partner involvement and channel sales opportunities during forecast calls.

Every week, we meet with our account executives on forecast calls to assess the health of their deals. One of the most important questions we ask during these calls is: “How is the customer planning to implement this, and which partners are you talking to?”

For two reasons: if partners are not identified in a large deal, that’s a red flag. First, they bring in a specific industry, domain, or target market expertise. Second, they’re instrumental in expanding the view of our customer relationships, priorities, and obstacles. So, we coach our sellers to look at existing partner relationships associated with the account and opportunity, and to identify partners they’re perhaps not talking to, or who can be brought in to strengthen a customer’s plan to consume and use our technology.

To help the seller find partners, we have an inside partner team with field coordinators and partner alliance managers. They use Partner Finder and AppExchange to identify the best partners based on qualities like their industry and relationship depth, footprint on existing accounts, certifications in our technology, and whether they’re running similar sales plays. This partner matchmaking helps us all improve our pipeline health, deal size, and likelihood for success — bringing our biggest deals to life. 

Say, “Howdy Partner” to your very own channel sales program

An effective sales channel strategy and sales program helps you grow revenue without growing costs. What could be better? By thinking through each process step — from recruiting and onboarding, co-marketing and selling, all the way to specialisation and success — you can reap the long-term benefits of indirect