A Beginners Guide To Channel Sales

Last Updated on January 25, 2024 by Asfa Rasheed

As a company looking to increase sales, you may believe your options are only to hire more people. The good news is that there is an alternative that does not require hiring any new employees. 

This alternative has the name channel sales. When you do this type of selling, you partner with someone else who will do all the selling on your behalf. 

The Types of People or Companies You Can Choose To Partner With

One of the most common methods of doing this type of selling is using something called affiliate partners. This choice is where a partner receives a commission every time they sell one of your products. 

Another alternative is to use a value-added provider. This choice is where somebody takes their own product and pairs it with yours, thus adding value to the end-user. This type of arrangement often benefits both companies trying to sell their products. 

No matter what type of partner you choose to use, they all share the common theme of being a third party that sells on your behalf. When companies go this route, it affords them the opportunity to increase their revenue without a substantial increase in expenses.

Some of the Benefits of This Type of Selling to a Company

One of the primary benefits of this method of selling is that companies not only save money by not having to hire new employees, but it also can allow them to scale back their current salesforce. The obvious benefit of this is that sales can increase while expenses dramatically decrease. 

Doing this type of selling is also a great way to build more trust with potential customers. When a company partners with someone with an excellent reputation in the marketplace, this association can also improve the selling company’s position.

Doing this type of selling is a great way to test out new sales theories and plans in a speedy fashion. These tests also occur in a much lower-risk environment due to a lack of cost for the selling company.

For companies with products that may take some additional implementation, support, or training for potential customers, some partners can do this work on behalf of the company. This choice allows the company to sell a somewhat complex product without the cost associated with ongoing training.

Some of the Drawbacks of This Type of Selling for a Company

There are plenty of benefits to companies doing this type of selling, but there are drawbacks to be aware of before getting started on this type of endeavor. These drawbacks need to get taken into consideration to make sure that this type of model works for a company.

One of the biggest challenges companies face when using this type of sales model is the lack of control they will have in their sales process. If problems occur in the process, it is often tricky for in-house sales reps to get involved in the process to find a solution. 

When companies give up control of their selling process, they have little say in how long sales will take to occur. This variability can lead to uneven revenue streams, hindering a company’s ability to forecast revenue. 

When companies let someone else sell on their behalf, they may run the risk of doing damage to their own brand reputation. This risk makes it vital for a company to do good research about potential partners to make sure they also have good reputations within the marketplace. 

Since any company you partner with will most likely be taking a good size piece of the pie during the sale, companies need to make sure that this model is better for their bottom line. If your company spends more on partnering than you would hiring your own employees, then this is not a good option for these companies. The benefit of this type of selling is how quickly a company can bring new products to market without incurring additional costs. If the net result for a company is better than in-house employees, this is a great way to scale up sales significantly.

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