Channel sales, also known as indirect sales or partner sales, are sales facilitated through third parties instead of directly through a company’s sales team. These third parties may be agencies, influencers, or distributors. This is a common go-to-market strategy amongst B2B (business-to-business) software companies.
Channel sales is often a far more efficient system for driving revenue than direct sales, since the company doesn’t have to hire a sales team. Rather, the company only pays if and when partners make sales. Typically, partners are paid a cut of the sale, so it doesn’t require the same degree of overhead investment or risk as hiring and training an inside sales team.
That being said, to unlock maximum growth potential, many companies opt to use both direct and channel sales. Since partners will likely have access to different audiences than your sales team, it’s often worth investing in both. The programs are usually complementary as opposed to cannibalistic.
Example: Lavender Ltd. drove 30% of their revenue last year via channel sales, up from 20% the year before.
A channel partner works with another organization to market and sell their products or services through indirect channels. Channel partners may be vendors, affiliates, resellers, value-added resellers, agencies, retailers, managed service providers, systems integrators, or other such entities. Channel partners normally undertake co-marketing efforts together.
Channel partners work together as part of a channel partner program, which help companies sell more product to a wider audience through indirect channels. A company can work with different kinds of channel partners simultaneously.
Example: Lana worked with two kinds of channel partners, affiliates and referral partners, to sell and market her company's software.