What You Need to Know About the Transition from Direct to Channel Sales

By Al Case, ESR’s Principal Analyst and Research Fellow

Selling through alternate distribution channels was not a subject addressed by many mainstream sales training companies as little as four years ago. Reseller channel sales was considered a specialty subject and it was addressed by a limited number of sales training companies. Many other training companies treated channel sales as though it was some flavor of direct sales. That isn’t the case at all.

Over the past 3 to 4 years, several significant events have occurred:

  1. The state of the economy has dramatically affected the cost and profitability of sales via a direct field sales force. Although still highly effective for big-ticket items, direct sales is significantly less profitable, and can even destroy margins for smaller ticket sales. The geographic distribution of buyers versus sales personnel can significantly affect the cost of direct sales, making channel sales a much more profitable alternative.
  2. The ubiquity of Internet information and the increased use of audiovisual Internet-based communication with customers has significantly shifted the method of communication between buyer and seller from face-to-face to electronic media. That obviates, for many companies, the need to necessarily conduct business via an direct field sales force. This communication vehicle can work to the sellers advantage in both providing information directly to the buyer as well as directly to the channel sales representative.
  3. These electronic media have also made it significantly easier to both train and regularly communicate with channel sales teams. Face-to-face meetings can be conducted for pennies, online. Communication with alternate distribution channel is highly cost-effective.  Although channel sales teams need to be carefully directed and managed, much of that face-to-face, a lot of the training can certainly be delivered virtually.

Several large sales training firms have begun to offer training in channel sales.  A stunning example is the result of Miller Heiman’s acquisition of (the ESR highly-rated) Channel Enablers last year.

Depending on the industry that you sell into, increasing economic pressures are making it necessary for many sales training companies to begin investigating and acting upon channel sales requirements immediately.What are the action items for sales training companies that have not yet entered the field of channel sales?

  • Realize that processes, methods, and approaches for managing a direct sales force are very different from managing a reseller channel.
  • Immediately begin researching the subject matter of channel selling within your target market. Analyze your existing customer base to determine how many of your customers are presently employing alternate channels or are considering doing so.
  • Investigate the cost of acquisition of either channel sales training talent (hire personnel or contract) and/or licensed sales training materials from a person or firm that specializes in it.

And for selling companies considering transitioning to a channel or hybrid model: To make the most important point just once more. Direct field sales capabilities do not directly map into what is required for channel management success. Skills transference from one area to another is not automatic. So taking your best direct rep and assigning them the new role of channel manager will likely not lead to any success.

Photo source: Fotolia.com

Comments

  1. Simon says

    Hi Dave,

    Thanks! Food for though there.

    Can you recommend any reading materials on channels sales (for $100k+ items, in telecomms)? We are struggling to make our indirect channels more effective.

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