Once thought of as indirect sales channel killer, the Internet has proved to be the main enabler of a global network for indirect sales. Today, indirect sales account for almost half of all global business. Indirect channels including distributors, wholesalers, value-added resellers and retailers have seen their business grow by leaps and bounds because of technological advances. The reason? Indirect sales channels provide the necessary capital, logistics, access to markets, and customer service and support, bundled with the efficiency of the Internet. This combination is a very compelling value proposition.
An indirect sales channel could be a giant multinational company with thousands of sales reps on its payroll like Wal-Mart, or a housewife who’s signed up to sell beauty products to her friends, or a blogger who has decided to promote your products in exchange for some affiliate commission. It doesn’t matter what shape a partner channel takes, or how it is labeled—affiliate, associate, manufacturer's agent, broker, wholesaler, retailer, distributor, aggregator, reseller, value-added dealer, etc. They serve the same purpose: to help a business penetrate deep in dispersed markets and reach more customers, thereby growing its revenue and market share. Below are the three basic variations on selling products through indirect sales channels.
- Sell To: The channel is the customer
In this situation, the whole value proposition is for the channel partner. An example would be Intel selling its chips to an original equipment manufacturer (OEM), or McDonalds selling its franchise to a franchisee.
- Sell Thru: The channel is the salesperson
This is a typical intermediary selling model, where a manufacturer sells its products through distributors, wholesalers, brokers, agents, retailers, etc. For example, car manufacturers sell their cars through a network of dealers.
- Sell With: The channel is the teammate
This is a strategic alliance model, where a manufacturer partners with independent vendors to solve customers’ complex problems using its product or services e.g., SAP or Microsoft selling their complex IT solutions using partners.
There could be many other permutations of using indirect channels, especially when they are employed for customer service and support i.e., authorized service centers, partners that sell and service, partners that only generate leads, etc. Since partners come in many flavors, there is a lot of complexity involved in building an effective indirect sales channel. This chapter takes the complexity out and presents a field-tested process for building and managing a high-performance indirect sales channel.
So, let's start with introducing the framework.