Channel sales is how most of the world makes money.
In fact, 75 percent of world trade flows indirectly through channel sales, according to Forrester principal analyst, Jay McBain.
Channel sales refers to indirect sales, or when a third-party resells a product or service they bought from a distributor.
These partnerships are huge moneymakers, and the technology industry is all over it.
According to McBain, 64 percent of all dollars in the technology industry flow indirectly, through channel sales.
So where do you fit as a partner? How do you find the right distributor or managed service provider in the technology industry?
In this beginner’s guide, we’ll define channel sales and give real-world tips on how to find the right distributor for digital solutions.
What is Channel Sales?
Channel sales is a sales model through which a company sells its products and/or services through third-party resellers. Channel sales is also called indirect channel or indirect sales.
To further explain channel sales, consider how we buy car insurance. We purchase it from an agent or a broker, who purchased it from an insurance company. So we, as the customer, don’t buy insurance directly from the insurance company but consider the agent as a “trusted advisor” for car insurance.
In the same way, a third-party partner is often one who specializes in selling in a particular market. Some partners specialize in selling to enterprise companies, while others focus on small and medium sized businesses.
Channel Sales Versus Direct Sales
So what is the difference between channel sales and direct sales? In channel sales, the reseller doesn’t work directly for the distributor. They’re partners. In direct sales, on the other hand, a sales rep works directly for the company as an in-house employee and represents the company.
Both channel sales and direct sales are sales methods, which means the strategy you use depends on your business and goals.
With direct sales, there’s no middle man. For this reason, the business has access to the communication and feedback from the customer. However, direct sales is more expensive than channel sales.
Types of Indirect Sales Channels
There are many ways to partner with a parent company (manufacturer) and sell its products.
Third-parties who sell products from manufacturers include:
- Channel partners
- Value-added resellers (VARs)
Channel Sales Roles
While each of these third parties provides indirect sales, they have different relationships with the manufacturer, or managed service provider.
Here is a rundown of each channel sales role:
- Resellers – These parties purchase a product from a manufacturer and sell it to the customer under the resellers’ own brand.
- Channel partners – A channel partner is much like a reseller, but they have a deeper relationship with the manufacturer. Through a partner program, the parent company provides training and marketing materials and holds the third-party seller to certain expectations. Partnerships typically offer incentives to sell such as reward programs for the most sales.
- Value-added resellers (VARs) are resellers who take the third-party solution and add their own services to the mix.
- Dealers – These are third-party sellers who sell on behalf of the parent company without their own branding.
- Distributors – A distributor resells a product on behalf of the manufacturer as well, but doesn’t have a close relationship with the parent company.
Channels Sales in Technology and Digital Solutions
Channel partner programs are big in the technology and digital solutions industries.
In the technology industry, channel sales refers to the third-party relationship between the makers of the software or hardware platform and the customer.
Our company, for example, is a manufacturer of a SaaS platform. The platform supports dozens of digital marketing and business productivity tools with marketing automation, a sales CRM, and a client-facing portal — all under a single login. This is our full stack of cloud solutions.
As of now, we offer this end-to-end platform to more than 20,000 channel partners who, in turn, use the platform to sell their products and services to millions of local businesses.
Examples of our channel partners include marketing agencies, independent software vendors (ISVs), and media companies.
So if you are a digital marketing agency, for example, you could purchase our full stack of cloud solutions and use them to cater to local businesses.
In this scenario, our third-party resellers specialize in both the type of product they’re selling and the buyer they are selling to.
Our partners sell digital solutions to small and medium businesses.
And this is why finding the right manufacturer is important for partners.
6 Tips to Finding the Right Cloud Services Provider
Whether you’re new to channel sales or a seasoned partner, there’s a lot to consider when picking a cloud services provider. If you want your business to grow, you need the right partnership. You need a partnership that’s a good fit for you, the cloud services provider, and the end customer.
Here, we’ve rounded up six tips for finding the right manufacturer in the technology industry.
1. Check their reputation.
Reputation goes a long way, both in the channel and with the end user. It’s important to work with a manufacturer that has a good reputation with its partners. This means partners are happy and they have an organized partner program with onboarding and training resources.
Check online reviews to research the product as well as the partner relationship. You can also check sites like the Better Business Bureau (BBB.org) to find out the company’s ratings and read customer reviews.
2. Do they have a full stack of cloud solutions?
As a business, you can have a full stack of solutions that will grow with your business. You’ve found a great sales CRM to use in-house, but what about marketing automation and industry tools? When you find a company that offers a full stack of solutions, you can use these solutions to streamline operations and save money.
3. Confirm your target customer: enterprise or SMBs?
Who are your products and services designed for? Who are you selling your products to? These have to be the same audience. If you specialize in providing digital solutions to SMBs, for example, you want a platform that supports local internet marketing services. Look for software, features, and tools you can use that best cater to your customers.
4. Do they offer training and marketing assistance?
A good partner program includes training. Look for a program that offers product training and materials to help you make the most of their products, and also help you sell additional products and services when necessary.
5. Is the product white-label?
If you want to sell under your own brand, you will need to find white-label products and services. This means you can actually take the product and sell it under your own brand.
6. Do they have a Marketplace?
In addition to a full stack of cloud solutions, some providers have marketplaces with wholesale-priced solutions. For example, Vendasta has a Marketplace with hundreds of third-party products that companies can resell to their SMB customers.
This is a huge opportunity for business, especially if you’re a digital marketing agency.
Why Partner with Vendasta?
Vendasta partners are a little different than traditional SaaS channel partners. Our partners are businesses like digital marketing agencies, independent software vendors, and media companies.
So how do you know if you’re a right fit?
Here’s a scenario that might make you the ideal Vendasta partner:
You are: a digital marketing agency. You sell services such as review management, SEO, Social Media Marketing, and Content marketing to local businesses.
You need: a sales and marketing platform that supports your clientele: small businesses. Even better, your clients can log into this platform to see how they’re doing and review key reports and analytics.
You also need: digital products and services. Your business is booming and clients are asking for related digital solutions that you simply don’t offer at the moment. You need additional digital solutions plus others you can upsell. As a Vendasta partner, you gain access to digital products you can resell under your own brand. For example, you can provide your customers with products such as affordable marketing videos and eCommerce AI chatbots. Now that’s a partnership.
Vendasta’s Channel Partner Program
Vendasta’s channel sales program is for companies looking to provide digital solutions to SMBs. It is a white-label platform that allows you to use and sell our products under your own brand.
And when your clients grow, because they will, we also provide fulfillment services, including content writing, SEO, web design and more.
The best part? We offer it free, so you can start using it today. We invite you to partner with Vendasta and provide your customers with competitive digital solutions. Get started today.