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For more sales, dip your toes in the channel!

A well-established but sometimes-overlooked method of generating additional revenue growth for a business is to engage a channel partner to share the sales workload. We look at the types of partnerships available and their potential benefits to your balance sheet.

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For more sales, dip your toes in the channel!

A well-established but sometimes-overlooked method of generating additional revenue growth for a business is to engage a channel partner to share the sales workload. We look at the types of partnerships available and their potential benefits to your balance sheet.

One of the biggest challenges as a fledgling business is generating sales leads and converting those opportunities into customers. 

You can invest a huge amount of time in sourcing the relevant prospect data, establishing contact with your audience, responding to enquiries, securing meetings, following up warm leads, creating bespoke quotations and then trying to close each deal. 

If you are doing all the required prospecting and selling on your own, it’s a wonder you have any time left to think about things like marketing, new product development, invoicing, taxation and filing accounts. 

Here’s a potential solution – have you considered channel sales? 

Channel sales is a method of selling in which a company distributes its product or service through third-party providers. 

Using a channel strategy can be an easy way for your company to increase revenue without significant upfront costs while outsourcing at least some of the sales effort. It can also diversify your income streams so you are not solely reliant on your own commercial prowess. 

It will cost you a percentage of revenue – a channel partner will require a commission per sale – but when you consider that the sales your partner makes are ones you probably would not have made yourself, and that all the associated ‘grunt work’ was done by someone else, the benefits are clear. 

Here are the key Plus Points of a channel sales strategy: 

Wider reach: when using a channel sales partner, you leverage their existing reputation, distribution and customer base, which should lead to more sales. 

Cost-effectiveness: engaging a channel partner will cost your company very much less than hiring an additional salesperson. 

Credibility: if you can partner with a channel seller that already has a large customer base and a solid reputation in its market space, it can enhance the positive image of your offering.  

New verticals and territories: a good channel partner can help you enter markets that are difficult to reach without specific expertise or knowledge, such as overseas territories or niche commercial sectors. 

Let’s take a look at some of the options available to you for channel sales: 

Reseller: a good example would be a wholesaler, which buys your product from you in quantity and then sells it on to its own customer base (which ideally will be much larger than yours.) Resellers generally take care of the entire sales process, which means you won’t have to do much very much work other than count the additional revenue.  

Affiliate: an agreement with an affiliate partner will typically involve them marketing or referring your company within their own commercial networks and then taking a percentage cut of each sale. This is a good strategy if you are a small company with a promising product or service but currently lacking significant brand awareness or presence.  

White Label: this is a sales channel in which your company provides a completely unbranded version of its product to – a usually much larger – partner who then sells it bundled in with other products from its own suite of offerings. This tried-and-tested route to market for tech innovations is replete with small niche providers having their successful product eventually bought outright by their white-label partner for significant sums. 

Import & Export: could your product or service fly in other countries? Import/export partners will buy, ship and distribute your product from bases in other continents or even globally.  For service providers, some channel partners offer formal licensing agreements and other commercial frameworks to help establish your brand’s foothold in otherwise-inaccessible overseas territories. 

Sounds good? It is! Just make sure you avoid these common pitfalls: 

Loss of Control: when your channel partner is managing the sales process, it means you are reliant on the efficacy of their commercial staff for some of your revenue. If their sales figures aren’t at the expected level, it may not be in your gift to investigate what is actually happening on the ground, identify improvements and make adjustments. Ensure that there is regular consultation on this. 

Lower Profits: with any channel sales arrangement, the inevitable trade-off is that you will have to exchange a percentage of your revenue for more sales, more customers and wider exposure. Negotiate terms that ensure you still make viable profit from the arrangement.  

Adverse Events: your channel partner ultimately becomes an extension of your brand.  If they don’t treat their customers well, if they are involved in controversy or become associated with shady practice, it could have a negative commercial and reputational impact on you. Select a partner whose values are aligned with your own. 

Do you lead a small business? You could benefit from Help To Grow, a practical management training programme delivered by industry-experienced staff from Birmingham City Business School, accredited by the Small Business Charter. Click the button below to find out more: 

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