What is Sales Channel Development? Phases, Advantages and Disadvantages

Generating more and more revenue is one of the biggest challenges for salespeople and companies do their best to make most out of working hours of their salespeople. However, it is impossible to make use of 100% of the working hours of a salesperson, because of the other job responsibilities.

Therefore, companies invest to develop sales channel such as a company gives the responsibility for their sales to a third party such as affiliate partners, resellers, value-added providers, distributors, and independent retailers etc. These people don’t directly work for your organization.

Different phases of sales channel development

1) Emerging Growth

This phase refers to times when a company is building a new sales channel, which includes various activities such as to recruit and involve these partners successfully. In the emerging phase, companies are usually engaged in making proper plans and procedures to make sure that everything is in place. In addition to this, it also includes establishing a profile for the ideal partner.

Different elements included in the emerging phase.

1) Signing up a contract or deal with first partners and preparing them to sell.

2) Designing and creating material related to the market which can help partners to generate leads.

3) Specifying and writing guidelines for partners and detailing the role of each party.

4) Organizing the training materials (Online or in person training)

5) Selection of channel manager

6) Purchasing and installation of software support system. investing in efficient software in the beginning phase will help you in the future.

7) Designing and implementing strategies for outreach sales partner prospects.

8) planning for further expansion of business such as which markets to venture and in what order.

Emerging phase is very important for every business. the more planning you in this phase the more benefits you will get. Hence, it is advisable for you to plan a lot so that your future phases will be smooth.

2) Scaling

When the basic channel management process is established and sales are maintainable. At this point, the company wants to upsurge its revenue. This phase of the channel management process is called scaling.

The scaling phase of sales channel development process will include followings.

1) Channel management group to recruit more staff to handle recruitments and onboarding facets are expanded.

2) The more use of technology, for example, use of automation in day-to-day work and taking the training online rather than in-person training. You can make use of PRM.

3) Establishing centralized content storage and enhancing media libraries for partners’ use.

4) Creating and implementing survey and feedback forms for partners to address problems faced by them efficiently.

5) Initialize market development funds to increase the availability of resources for partners.

6) Working to minimizing the channel conflicts such as restructuring the sales process and clearing the overlapping area.

7) Structuring plans to recruit global sales partners.

8) Structuring guidelines for eliminating underperforming partners.

3) Continuous Improvement

The scaling process is a never-ending process unless a company doesn’t want to progress. To keep on the scaling process requires major investments or expansions after when a company has reached a plateau point. At this time, the focus of the company becomes to keep the sales sustainable and using optimizations to enhance revenue to increase sales beyond the total capacity.

The continuous improvement process phase of sales channel development includes followings.

1) Focusing on the new products rollout and enhancement in the existing products.

2) A software system should be fully centralized, in case, it has not been done already.

3) Working on improving the aftersales support, post-sale upgrade initiatives, and other similar long-termed profit generation methods.

4) Providing helping hand to partners to heighten their workflow.

5) Increasing promotion as well as awareness about the business such as by making trade show presentations.

A continuous process is a sub-part of scaling phase and it never ceases. A company can always become better and find more and more avenue to be walked. Moreover, the market never remains the same all the time, the change in the market make it inevitable for a company to change or improve its working style.

However, there is one more phase that every successful company would want to avoid. The fourth phase is called “Sub-optimization” and any company can slip into it if things don’t go well.

4) Sub-Optimized

Sub-optimized is the only phase that prevents a company from generating revenue and increasing outreach.

Followings are the “signs” that a company should be aware of all the time.

i) Difficulties of partners because of working with so many software solutions.

ii) Management issue with partners. Failure in identifying the underperforming salespeople and dealing with them.

iii) Vague and fallacious lines of communication.

iv) Customers’ unsatisfaction and recurrent complain related to service or product.

v) customers complain about the lack of support from the recruited partner.

vi) Issues within the organization such as the lack of communication between the marketing manager and other departments (such as R&D or Marketing).

vii) Frequent expansion of business without the expansion of technical and personnel resources.

To avoid this phase, a company should spend a great amount of time to evaluate business plans and don’t rush to enhance business further without making sure the stabilization of current business.

Advantages of Sales Channel development

i) Effective selling :

The sales channel is the best low-cost method to increase your sales. You can establish your sales channel by co-marketing, revenue sharing, incentives per unit sold or any other plans. you can scale your business effectively by including more partners globally. One partner manager can handle multiple partnerships, hence, help you to enhance revenue generation at the place of having an entirely new sales team.

ii) Low marketing, sales, and distribution cost :

There are many well-established and trustworthy channel partner who has a great track record and have proved their brand value already. Recruiting one of these sales channels to handle your business will help you to reach new customers to enter a new region, market in co-effective ways at a very low-cost.

iii) Low investment for venturing into a new market :

Once your business is sustained on its own and generating revenue regularly. You are required to try your luck in the new market. you can venture into a new market with the help of local sales channel partners. This can be done at the initial low-cost. You are not required to manage new companies and hire new people to handle sales in remote areas.

Disadvantages of Sales Channel Development

i) Less Predictable Revenue :

By handling over of sales into the hands of the third party you lose control over the revenue generation and thus it becomes difficult for you to predict revenue because never share full information on customers with you.

ii) Less Control over Sales Process:

Sales channel will act as an intermediator between you and your customers and you will never truly be able to reach your customers. hence, loses a chance to influence them.

iii) Partner discounts:

When you recruit a sales partner to handle your sales you do this by sharing some advantages with them. Most of the time, you are required to sharing 30% – 50% of your revenue.

Tips for establishing and managing a sales channel

1) Get an overall and by-channel sales goal :

Establish a sales and pipeline growth discipline with all your sales channel partners. Make sure to align your partners with your sales goal in mind. being explicit about this will save you from future issues.

2) Have an accurate sizing of the channel :

Keep yourself informed with the information such as how many approximate numbers of prospective customers involved, how much sales potential each customer holds. Do your calculations beforehand that how much of amount of revenue you can expect from one sales partner or other.

3) Have vivid monthly sales growth, revenue generation, and lead generation from a sales channel partner :

No sales channel will get you huge revenue from the first month of the partnership itself. In addition to this, check what are the leading-indicator metrics such as offer penetration, message penetration, the impression of their communication channel etc. on the basis of which you can expect more revenue from in coming months. It is very important for you to have a vivid and quantifiable method to measure your success.

4) Design a common sales tool kit for all partners :

Make sure that all your partners are using the same means to propagate your company’s name and increase your sales growth. They should be made access to things such as messaging platforms, sales collaterals, ad copy, sample email message, case studies, white papers, and webinars etc.

5) Give them extra benefits in the initial months of partnership :

This will help your sales channel partner to get into the habit of creating awareness, business and leads in your way. For instance, you can pay them for inbound leads generated in the first month and later pay them only for closed deals. This will help you to establish a partnership with your sales channel partner at a good note.

Mistakes that you must avoid in Sales Channel Development

A successful business learns from its mistakes and it works hard to learn how to sell their products in a more efficient way. It keeps making constant efforts and try new and different things and adjust their products to enhance sales. In this section, you will learn about a list of some mistakes that can prove “Sales Channel Development” unsuccessful for a company. Therefore, do read and keep these things in mind before getting into a partnership with a Sales Channel Partner.

1) Spending way too much money and time to get ready standard legal contract before fetching market.

2) Spending way too much time on building a sales channel partner programme before actually getting into action and engaging market.

3) Getting into a partnership with a sales channel company in a far-off market too quickly without evaluating the partnership.

4) Not respect the priorities of your partner’s company and try to thrust your interest on the top of the list.

5) Planning of direct salespeople to manage your partners.

6) Spending way too much time to get into a partnership with already established companies or global top-of-the-market potential partners, where you already know that partnership will be a sure shot success.

7) Spending too much efforts and time to look for a sales channel partner who can handle all of your market activities.

8) Spending too much time and money on one sales channel partner.

9) Not getting into partnership with sales channel partner because you may doubt them to be your direct competition when they are clearly not.

10) Getting into partnership with a sales channel partner who gives you an unrealistic sales timeline.

11) Handling and managing your sales partner very strictly rather than supporting them.

12) Having expectation from your partner to be able to generate revenue without proper training.

13) getting into partnership only by meeting the CEO of the company and without interacting with its sales team.

14) Failure to know about the present market status or track history of your sales channel partner.

15) Not having a clear objective in mind before the search for a suitable sales channel partner.

16) Spending too much time for legal agreements when you have already found a suitable sales channel partner.

17) Discussing too early about technology and revenue generation before even partner fit for your business.

18) Not being open to understanding your partner’s business and being way too rigid for the “standards” of your business model.

20) Not being supportive of your partner to help with sales and product delivery.

These are a few mistakes that you should avoid before investing to get in a partnership with a sales channel partner. It will help you to select the right sales partner that will prove to be beneficial for you in the long run.