Channel Sales FAQ

What is the definition of channel sales?

Channel sales are indirect sales that occur through your distribution channel. Channel sales are facilitated by channel partners – intermediary agents and businesses – who influence the purchasing decisions of the end-consumer.

Over 76% of industrial marketers rely on some type of intermediary to sell their product to the end consumer.

What is the difference between direct sales and channel sales?

Direct sales use your own company’s sales reps to sell to the end consumer. Channel sales rely on channel partners and other intermediary businesses to sell your products to the end-consumer.

What is channel strategy?

Channel strategies are the plans you use to improve your channel sales. These can include building brand awareness, increasing sales, reducing “cost-to-serve,” providing training and enablement, or gathering more complete data to personalize your marketing to channel partners.

How can I improve my channel sales?

A channel sales incentive program is an effective way to improve the profitability of your sales channel by increasing channel sales, improving channel marketing, and inspiring a greater degree of loyalty and collaboration with your channel partners.

What are channel incentives?

Channel incentives are rewards, recognition, discounts, SPIFFs, or rebates that are used to motivate channel partners to prioritize your brand. Depending on their role in your sale channel, channel incentives can be used to inspire channel partners to recommend more of your products to end consumers, include a greater percentage of your product in their product mix, provide more referrals, or to include contact marketing data for your end consumers.

What are channel incentive program best practices?

  • Define a specific, measurable goal for your channel incentive program. Objectives for channel incentive programs might be increasing revenue from your distributor sales reps or inspiring your dealers to include more complete data on warranty registration submissions.
  • Select KPIs (key performance indicators) you can use to track progress towards your goal. Make sure these align with the desired behaviors you want to see from your channel partners.
  • Identify your target audience. This is the group of channel partners whose behavior you want to change.
  • Segment your audience, so that you can personalize your channel incentives and marketing, and more effectively analyze data. You can segment channel partners by region, territory, dealer, or their level of engagement with your brand.
  • Choose incentive technology and platforms that will empower you to capture data, create the necessary integrations with your CRM, and make your channel incentive program more engaging.
  • Personalize your rewards to match your target audience.
  • Market your program, during onboarding and through the lifetime of your channel sales incentives.
  • Track and analyze data. Try to spot trends you can capitalize on and spot potential problem areas as soon as possible.
  • If your channel incentive program is performing well and generating substantial ROI, it might be time to increase your budget or identify ways you can expand your program.
  • Every few years take the time to regroup and plan ways to refresh your channel partner incentive program. Usually you will want to do this once the ROI from your channel partner incentive program begins to taper off.

How do you develop a channel partner?

Developing channel partners depends on giving them value, providing enablement, and building relationships. The success of your partnership depends on finding ways to align organizational goals and to consistently create win-win situations. A channel partner reward program is an effective way to develop relationships with channel partners and encourage them to work more closely with your company.

What do channel partners do?

Channel partners are intermediary businesses who help to get your products into the hands of the end-users. Channel partners can be distributors, contractors, dealers, vendors, wholesalers, consultants, value-added resellers, or referral partners. The exact role of what they do depends on their place in the distribution channel, but often they help your business through sales (direct or indirect), marketing, or logistics.

What is channel revenue?

Channel revenue is the additional revenue that is generated from your channel partners through a sales channel that your direct sales strategy would’ve been unable to penetrate. Here’s a simple example: If you are a manufacturer, any revenue that was generated by your distributor’s contractors would be channel revenue.