One of the biggest challenges to scaling revenue? Your salespeople only have so much time. Even if you hire the most focused people, invest in tools that boost their efficiency, and remove all distractions, there’s a limited number of selling hours in the day.
Some companies choose to hire more reps, and while that might work — it's not the only solution. Plus, recruiting, hiring, and employing salespeople is expensive and cuts away at your margins.
So what else can you do? Well, something called a channel sales model presents a viable, potentially game-changing opportunity — instead of hiring more reps, you distribute your products via a channel partner that can market and sell the product for you.
Table of Contents
- What is channel sales?
- Sales Channel Strategy
- What are channel partners?
- Types of Channel Partners
- How to Create a Sales Channel Program
- How to Know Whether Channel Sales is Right for You
- Sales Channel Partnership Platforms
- How to Measure Your Channel Sales Program
- Grow Your Business with Channel Sales
What is channel sales?
In a channel sales model, a company sells or distributes its offering through a third party (or multiple third parties). Those could be:
- Resellers
- Affiliate partners
- Wholesalers
- Consultants
- Value-added resellers
- Independent retailers
- Dealers
- Agents
- Distributors
- Consultants
- Any other third party a business can tap to sell its solution on its behalf
We‘ll dig deeper into these various entities a little later, but if you’re eager to learn more right now, you can click here to skip ahead to that section.
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Why use channel sales?
We‘ll explore the key benefits of a channel sales strategy in depth later in this article, but here’s a high-level overview of some reasons why you might use channel sales:
- To access new markets.
- To lean on an external workforce.
- To affiliate yourself with trusted brands
- To experiment with new bases
As with the last section, we‘re going to lock in on this concept later — but if you’re really eager to get to that immediately, you can click here for a more thorough look at the benefits channel sales can pose.
Channel Sales vs. Direct Sales
In channel sales, a company sells and distributes its products and services via a third party. In direct sales, a company sells its products and services directly to a consumer. Companies that use a channel sales model don’t always need an in-house sales team, though they might use a mixture of direct and channel sales.
Shocking as this might sound, your sales team is responsible for directly selling in a direct sales model. In channel sales, you typically rely on third parties to sell your product or service. When considering adopting a channel sales model, you should take a few factors into account. Let's take a look at what those might be.
Sales Channel Strategy
A channel sales strategy works much better for some businesses than it does for others — so before you jump into putting one of these programs together, you need to take some time and determine whether it suits your organization.
Should my business use a channel sales strategy?
Not every business is fit for a channel sales strategy, and whether you should leverage one rests on a few factors. You need to ask yourself some key questions to determine whether pursuing channel sales suits your interests — those include the following.
Does my business have the resources to handle increased demand?
A channel sales strategy is, at its core, an expansion method. You're diversifying your sales channels, getting more eyes on your brand, and ultimately setting yourself up to move more of your product or service. So if you want to pursue channel sales, you need to be equipped to handle all of that.
If you don't think you have the means or necessary production infrastructure in place to accommodate increased demand, you might want to wait on leveraging a channel sales strategy.
Is my sales process effective, repeatable, and accessible enough to suit channel partners?
How you sell your product or service might be the key sticking point when establishing an effective channel sales strategy. So if you want your strategy to work, you need to have a provenly effective sales process, a firm understanding of your target market, and an accessible way of conveying those elements to channel partners.
If you‘re still refining your sales process or getting a feel for who you’re trying to appeal to, you might wind up leaving channel partners high and dry — leading to an ineffective strategy that doesn‘t do much for anyone involved. So if you’re still “getting there” sales process-wise, a channel sales strategy might not be for you (yet, at least).
Am I willing to trust potential partners with my brand reputation?
A channel sales strategy is, in large part, about trust. You‘re letting people outside your organization sell your product on your behalf — that means you’re forfeiting a fair amount of control without losing too much accountability.
If your channel partner does something wrong, the prospect or customer on the wrong side of that mistake is going to associate it with your product or service. If the thought of that is too stressful for you, you might not want to leverage channel sales.
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What are channel partners?
A channel partner is a company that sells and distributes a manufacturer’s product. As we touched on earlier, channel partners can include resellers, affiliate partners, distributors, value-added providers, independent retailers — basically, anyone who doesn’t work directly for your organization.
Aside from making your product more broadly accessible, channel partners serve a similar target buyer and have existing collateral or content that appeals to that buyer.
It might be tempting to partner with as many channel partners as possible, but it’s best to choose only a few and to do so carefully.
Just like trying to sell to everyone reduces your focus and actually harms your overall results, trying to partner with everyone is a bad idea. Being choosy will pay off — resulting in a much longer and more productive partnership.
What makes a good channel partner?
The process of finding partners is a lot like finding prospects: First, you need to define what an “ideal partner” looks like. Let’s take a look at some of the aspects that you should look for.
Complementary to Your Product
The partner’s product or service should fill a gap in your offering or help your customers use your offering more effectively. For example, HubSpot’s marketing agency partners help small businesses take full advantage of HubSpot’s marketing software.
Aligned With Your Market
You should also consider whether your partner’s customers would benefit from your product. Are they demanding additional support, features, or solutions that your partner can’t currently provide? Are their customers the right fit in terms of geography, use case, and size?
High Technical Expertise
Identify how much technical knowledge your partner would need to sell (and potentially service) your products. You might have to do very little education and support — or you might have to do a great deal. Although training a partner requires more time and resources, it also gives them an additional incentive to work with you.
Tip: If your average selling price (ASP) is low, and your partners resell your product relatively infrequently, investing so much into training them isn’t wise. Make sure you’re tracking how much revenue the partner is bringing in compared to the average return.
Similar Sales Process
Your partner’s sales process should be compatible with yours. Ideally, there’s a natural point in their sales or services process for introducing or upselling your product.
Manageable Commitment Level
Ask yourself how much commitment would be required for success. For example, maybe your partner would need to spend one full day per quarter at your office getting training. On the other end of the spectrum, perhaps all they need is a basic understanding of your product, which they can learn from one 30-minute video.
Once you’ve crafted your ideal partner persona, rank the characteristics by importance. This exercise will give you a framework for evaluating specific partners.
Types of Channel Partners
1. Resellers
A reseller purchases a product from the company that produces it and resells it to the intended end-user for profit. Essentially, a reseller serves as an intermediary between the company that makes a product, and the final customer. In this scenario, the customer will typically go straight to the reseller to initiate the purchase and the reseller will work with their sourcing companies to fulfill the order.
Example
A department store that buys clothing from brands and sells them in its brick-and-mortar locations would be considered a reseller.
2. Affiliate Partners
In an affiliate partnership, a company will pay commission to website owners, businesses, and individuals who promote their products. Affiliate partners are typically paid a percentage of each sale they are responsible for bringing in.
Example
The HubSpot affiliate program is a well-known B2B affiliate program and the Amazon affiliate program is popular among those in the B2C industry.
3. Distributors
Distribution channels provide products directly to the consumer. Some distribution channels are agents, websites, or businesses that serve as intermediaries between the companies that produce the products and the final buyer.
Example
A website that sells toys on behalf of a range of smaller, more boutique toy companies would be considered a distributor.
4. Wholesalers
A wholesaler is a type of distributor who specializes in getting physical products on store shelves to be purchased by consumers. Wholesalers typically have sales reps who work to sell their products to retailers.
Example
Common examples of wholesalers include suppliers who sell food and other goods to restaurants.
5. Value-Added Reseller (VAR)
Value-added resellers are companies that specialize in purchasing and reselling technology products with additional software or features that are above and beyond the standalone features of the product.
Example
An example of a value-added reseller would be a computer company that sells hardware with another company’s software pre-installed.
6. Independent Retailers
An independent retailer is a business owner who runs a retail company that is not tied to any major brand or franchise.
Example
If an entrepreneur founded and operates a clothing boutique without the support of a parent company, they would be considered an independent retailer.
7. Dealers
Dealers sell products directly to end consumers but operate differently than retailers who sell several variations of a wide variety of products.
Example
The most common type of dealer is an automobile dealer, who sells and leases cars directly to the end-user.
8. Agents
In this channel, agents serve as an intermediary who does not have any ownership over the products or services they are selling. Agents facilitate deals between buyers and sellers, assisting with the negotiation process.
Example
A common example is real estate. A real estate agent or broker is not the owner selling the property to a buyer — however, they do oversee the process until an agreement is reached and the deal is closed.
9. Consultants
Channel consultants support the creation and efficiency of sales channels. Individuals in this role often connect retailers, manufacturers, distributors, and vendors to ensure the smooth delivery of a product to its customers. Though channel consultants do not directly sell, they play an integral part in making sure sales channels are running smoothly.
Example
A representative from a cybersecurity firm brought in to onboard a team to a new security platform its business recently invested in would be considered a consultant in the context of channel sales.
Free Sales Plan Template
Outline your company's sales strategy in one simple, coherent sales plan.
- Target Market
- Prospecting Strategy
- Budget
- Goals
Download Free
All fields are required.
How to Create a Sales Channel Program
1. Craft relevant, useful content to attract partners.
Use your ideal partner persona to craft relevant, useful content. For example, if you want to work with staffing firms, you might write an ebook on how to place consultants or host a virtual networking event for staffing firms to meet job candidates.
The partners you attract should be highly relevant to your industry. Once you’ve attracted a few prospective partners, reel them in by focusing on their needs.
2. Focus on the partner’s needs.
Once you’ve started talking to a potential partner, make their needs the focus of the conversation. They won’t be interested in working with you unless they’re also benefiting. Figure out how you’d be able to help — by enabling them to sell additional services, reach new clients, or enhance the value of their product or service.
Once you’ve established a few partnerships, choose a structure for the partnership.
3. Choose a structure for the channel sales partnership.
There are three main ways to structure channel sales.
- You and your partner can sell together. Your products improve each other. For instance, if you offer catering services, you might partner with a company that provides event clean-up. This type of partnership helps companies add more value to their customers.
- You can sell through your partner. Department stores are a classic example — they curate items from a range of third-party brands. Variety is typically the key. If you can find a partner who’s already selling several similar products to yours, they may be a good fit for this type of partnership.
- Your partner can sell for you. These partners incorporate your product into theirs — in fact, the end user may never know about your company. When you go to the supermarket and buy the store brand, you’re actually buying an independent brand that’s been packaged with the grocery store’s label.
You don’t have to use one method exclusively. Many companies use two or even three of these simultaneously, along with a direct sales model. It all depends on your needs.
4. Motivate your channel sales partners to sell.
Channel sales is extremely challenging because you’re trying to motivate people you have no direct influence over. If a regular salesperson doesn’t meet quota, you can work with them and/or put them on a performance plan. If a partner isn’t selling — well, there’s not much you can do, apart from “fire” them from the program.
To get partners to sell, you’ll need to develop excellent resources that they can use to confidently sell your product. Make sure they’re armed with clear, comprehensive, prospect-ready product specs, testimonials, customer examples, competitive comparisons, email templates, call scripts, meeting agendas, and objection-handling cheat sheets.
5. Communicate often with your partners.
If your partners rarely hear from you, they won’t be as invested in the program. They also won’t know the latest news, product updates, and strategic announcements. On your end, you might not discover issues until they’ve festered for a while.
The solution? Maintain regular contact with your partners. Send a periodic email, create a Slack room, make a Facebook group, hold partner “office hours,” run webinars, host meetings at your office — whatever you need to do to stay in touch.
6. Offer extra rewards.
While earning commission on deals is a compelling incentive, some companies (like HubSpot) add additional reward systems to their partnership.
This lets you create “superpartners” and drive specific desired behaviors. For example, you might have a tiered system: One tier for basic partners, a higher tier for partners who sell over a specific amount per month or year, and a third tier for partners who sell over an even higher amount per month or year.
Depending on their tier, offer advanced marketing support, tickets to exclusive events, strategic consulting, meetings with your executives, access to beta features, premium listing in your directory, opportunities to interact directly with your audience, features in your email newsletter, and so forth.
7. Use a sales channel partnership platform.
For scaling multi-channel businesses, keeping data related to your partnerships organized can be a challenge. Using a tool designed to keep your channel data streamlined can be a helpful option, such as PartnerPortal. This will not only allow you to keep track of revenue generated by your sales partners but also sustainably grow your channel sales program.
It takes a lot of time and energy to get a partner channel system up and running. If you need money sooner rather than later, focus on direct sales for now. Firas Raouf, an expert in early-stage B2B tech companies, recommends building at least $20 million in revenue before launching a partner sales program.
How to Know Whether Channel Sales is Right for You
If you’re planning to adopt a channel sales model over a direct sales model, it’s important to consider the state of your company, product, sales process, and more.
Key Factors to Consider With Channel Sales
Company Size and Maturity
Small companies can use partners to grow their business without needing to invest in hiring and training a sales team. Once they’re larger, they can bring their own reps on board (or if channel sales is working, continue with what they’re doing!).
Product Maturity
If your product is still in the early stages, you might want to take advantage of a direct relationship with your customers so you can quickly and efficiently assess what’s working, what’s not, and what to build next.
Sales Process Maturity
Before you can teach other people how to sell your product, you need to understand how to sell it yourself. If you haven’t defined the various stages of your sales process, the most important buying triggers, which customer stakeholders are typically involved, how long the average deal takes to close, and so on, you may want to postpone a channel sales initiative.
Location
If your offices are spread out, it might make sense to use a channel sales model. That makes creating multiple sales teams unnecessary. Of course, you can also use an inside sales model where appropriate.
Revenue Needs
It takes a lot of time and energy to get a partner channel system up and running. If you need money sooner rather than later, focus on direct sales for now.
Channel Sales Pros
Adopting a channel sales model has significant benefits to consider. Apart from the fact that you could downsize your sales team, you’ll also enjoy built-in trust, increased efficiency, rapid testing and experimentation, and increased customer success. Let’s go over these one by one.
Built-in Trust
If your channel partner is already well-known within a market or vertical, you don’t have to do the work of establishing a brand presence. Your product will automatically seem more credible because of their endorsement.
Increased Efficiency
One channel manager paired with several channel partners can bring in the same amount of revenue as five or six salespeople at a fraction of the cost. It can also be easier to bring on new partners than to hire a new salesperson – especially once you’ve created the program and worked out the kinks.
Rapid Testing and Experimentation
Channel partners let you experiment with new customer bases, products, packages, promotions, and/or marketing campaigns in a low-stakes environment.
Customer Success
If your customers need training, onboarding, implementation support, and service, partnering with vendors who offer these services lets you focus on closing new business without sacrificing your existing users.
That all sounds great, right? But channel sales does have some cons — let’s take a look at them below.
Channel Sales Cons
While adopting channel sales has tangible benefits, there are a few drawbacks that make it less than ideal for some businesses.
Less Control Over Sales
You’re not directly managing the sales process. Your reps might not be able to jump in and take control if a partner is mismanaging a deal. They also might have zero say over the timeline of the deal — which can be frustrating and lead to unpredictable revenue.
Brand Risk
If you partner with someone who has a poor reputation or treats customers badly, you’ll look worse by association. That’s why it’s important to choose a channel partner who’s known for a good reputation and excellent customer service.
Reduced Profits
In exchange for bringing in and/or closing deals, your partners will get a piece of the pie. You’ll make less on individual sales (but keep in mind, it’s probably cheaper to acquire each one).
Harder to Manage
It can be difficult to update your sales strategy, change your messaging, add a new product, or make any kind of major shift. You’re not simply rolling out a change to one group — you’re asking multiple external groups to adapt.
Slower Feedback Cycle
Because your partners are talking to some or all of your customers, feedback will take longer to get to you. And that feedback might not be 100% accurate — even if your partners are trustworthy, they may ask bad questions, use unreliable methods of gathering and/or analyzing the results, or unintentionally give you a biased interpretation.
Potential Competition
Things can get very messy, very quickly when your direct salespeople compete with your partners for the same business. Suppose a rep decides to cut their partner out of the deal because they don‘t want to give up the commission. If the partner finds out, they’re unlikely to ever pass the rep leads again. This leads to a case of channel partner conflict that could result in the relationship being severed.
Sales Channel Partnership Platforms
Here are a few sales channel tools that can support your business as your channels and partnerships become more complex.
1. PartnerTap Ecosystem Sales Platform
PartnerTap’s partner ecosystem platform helps companies drive more revenue with and through partners. Customers use PartnerTap to automate account mapping, automate pipeline sharing, and auto-connect sales reps to co-sell with partners on their mutual accounts. Data from PartnerTap helps companies identify new logo deals and source more pipeline with each partner.
PartnerTap is also part of the HubSpot Ecosystem, and its tools integrate flawlessly with your CRM.
Pricing: Free Channel Edition; and enterprise pricing available upon request.
2. Crossbeam
![[alt] a sales channel partnership platform called crossbeam](https://knowledge.hubspot.com/hubfs/channel-sales-3-20241023-4948703.webp)
Crossbeam provides powerful software to manage channel partnerships. A major upgrade from spreadsheets, notable features of Crossbeam’s tool include real-time forecasting, instant account mapping, and cross-partner lead generation.
Crossbeam can also connect directly
Pricing: Free; Pricing available upon request
3. Channeltivity
Channeltivity’s partner relationship management software provides an all-in-one channel management solution. This cloud-based tool has an extensive set of features including a channel partner portal, partner training materials, distributor management, a commission management platform, and more.
Channeltivity also offers a HubSpot edition of its software that provides real-time pipeline visibility for businesses and partners.
Pricing: $1,899/month (Standard Edition); $2,199/month (HubSpot Edition)
4. Allbound PRM
Allbound designs its partner portal technology to strike a strategic balance between customization and automation. Channel managers can tag partners based on region, industry, company size, and other descriptors so the platform only displays content relevant to individual users. Multi-tiered learning tracks and accompanying quizzes automatically award new portal permissions as partners advance their learnings. Plus, Allbound’sChannel Insights grants full visibility into engagement and partner sales performance.
As a HubSpot-certified app, Allbound integrates with your CRM for comprehensive pipeline visibility and consistent practices across your sales ecosystem.
Pricing: Available upon request
How to Measure Your Channel Sales Program
Wondering what success looks like? Here’s what to measure for every aspect of your channel sales program.
1. Total Number of Partners
This metric can help you gauge how effective you are in establishing partnerships — how well you can conduct outreach and how solid your relationship-building skills are.
2. Recruitment Quota Attainment
This metric is sort of an extension of the one above. It can tell you how solid your recruitment efforts are relative to the goals you set for establishing partnerships.
3. Partner Attrition Rate
Attrition rate typically refers to employee or staff turnover. In this context, it's a measure of how many of your partnerships fail over a given period.
4. Percentage of Partners Recruited by Channel
This metric gauges where your partnerships are coming from. For example, 50% might come from networking groups, 20% from proactive outreach, and 10% from referrals.
5. Average Cost of Recruiting and Onboarding a New Partner
This measure helps you tell how cost-efficient your channel partnership-building process is.
6. Average Length of Time to Recruit and Onboard a New Partner
This metric helps you determine whether your recruitment and onboarding processes need to be reevaluated or streamlined.
7. Total Number of Partner Deals Registered
This metric gives you a picture of the volume of deals your channel partners are able to make.
8. Average Value of Partner Deal
This shows you how effective your partners are in selling your product or service.
9. Percentage of Accepted Partner-Submitted Deals
This is another metric that helps you gauge the success of your channel partners' sales efforts.
10. Percentage of Closed Partner-Submitted Deals
This point is a natural extension of the one above.
11. Average Sales Cycle Length
This metric can help you gauge how effective your partner training is and which partners are particularly effective.
12. Percentage of Partners Who Registered Leads in Past Month or Quarter
This is another key channel sales success metric.
13. Percentage of Partners Using Provided Sales and Marketing Collateral
This metric helps you gauge whether the materials you're providing partners are accessible and effective.
14. Percentage of Partners Who Attend Optional Events and/or Ongoing Training
This metric can help you gauge partner enthusiasm and the effectiveness of your training methods.
15. Average Partner Satisfaction Score
This measure can let you know if you need to tailor your training and support to better suit partner needs.
16. Percentage of Partners Who Attempted Certification
This can tell you whether your partners find your certifications useful and unimposing.
17. Percentage of Partners Who Completed Certification
This metric can tell you whether your certifications are accessible enough.
18. CAC for Each Partner Sale Versus Direct Sale
This helps show you how profitable your channel partner strategy is.
19. Retention Rates for Partner Sales Versus Direct Sales
This shows you whether the relationships developed during your partner sales have staying power.
20. Cross-Sell and Upsell Rates for Partner Sales Versus Direct Sales
This metric shows how effective your channel partners are at generating extra revenue.
Looking for someone to manage your channel partner relationships? You’ll need a channel sales manager. Below, you’ll find a general definition of a channel sales manager, plus a sample job description you can use in a job posting.
Grow Your Business with Channel Sales
While building a channel sales program is a major investment, it can make a huge difference to your company. Not only will you reach new customers, but you’ll develop mutually beneficial relationships in your industry and grow your revenue as a result.
Editor's note: This post was originally published in June 2017 and has been updated for comprehensiveness.
Free Sales Plan Template
Outline your company's sales strategy in one simple, coherent sales plan.
- Target Market
- Prospecting Strategy
- Budget
- Goals
Download Free
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![What is Enterprise Sales? [+ How It Differs From SMB and Mid-market Sales]](https://www.hubspot.com/hubfs/Sales%20Enterprise.png)
