A new year means new goals and preparation for channel organizations. Hence, we’re going to walk you through some building blocks to get your channel organization right for the upcoming year. To start 2021 with a bang, we interviewed Edwin Rubens—Founder and Owner of Channel Concept Company. He is a channel expert with an impressive track record at HP, Fujitsu, Intel, and others. Let’s start by discussing the main challenges of sales organizations.
What are the top 7 challenges for organizations?
All businesses want to grow and be successful. Before you can reach your goals, you have to overcome these main challenges:
- Revenue growth - Look at the numbers. Most companies in the world want to make money and support customers.
- Scalability - Businesses want a nice product, solution or software services to grow at a faster pace.
- Lack of resources - If you want to grow, you need more people. However, you have to hunt for people with the right mindset or skillset.
- Internationalization - The world has no barriers or borders so you can expand internationally.
- Working capital - Of course, you want to invest and grow but you need money to build quality products for your customers.
- Reach of customers - Broaden your reach to sell more to more customers and make profits.
- Disruptive events - Be aware of new players in the market or bankrupt companies.
Why is indirect sales a growth lever?
Why is an indirect sales model powerful? First, let’s get back to the basics. In a traditional sales model, you have a company and sales reps who can help your business earn money. They manage four or ten customers each depending on your product or services. If you want to grow your business, you have to hire new salespeople and train them. However, there is a limit to the number of salespeople that you can hire.
In contrast, an indirect sales model involves collaboration with resellers to sell your products, solutions or services.Every reseller could have three salespeople on average. If you have four resellers with sales teams that can handle 15 customers each, then you can reach around 60 customers. To manage this, you don’t need multiple salespeople. Instead, get one or two people to manage resellers to help your business grow and expand.
Just looking at this sales model proves that indirect sales is a lot more scalable and manageable for an organization’s growth. To put it into perspective, here are some of the main benefits of an indirect sales model:
- More reach, same resources
- Exponential growing model
- Scalable (local and global)
- Less dependent on single sales resource
- Workcapital finance by reseller or distributor
- Broader reach to customers
- Adapt to new business models
If you look at the top hundred worldwide companies, more than 70% are running an indirect sales model. Intel, Microsoft, Cisco, HP and Dell are just some of the few top companies with an indirect sales model.
Building blocks for a successful channel organization
There are three main building blocks for a successful channel organization:
- Channel connection
- Channel competencies
- Channel communication
The first segment is channel connection. Here are the elements of this building block:
- Coverage and segmentation - How are you going to spread your resources with your partners in the market?
- Joint business planning - Companies with joint business plans with vendors grow faster than those without it by double digits.
- Executive sponsorship - Be aligned with your resellers
- Partner relationship - How are you going to build a relationship with your partners on all levels?
- RTM (route to market) simplification - How to route to market? For new markets, make the process easier.
- Partner product training - Make sure they understand your product and solution software.
The next segment is channel competencies. Here are the elements of this building block:
- Competencies and training - Train your own salespeople and the people under your partners. The better you train them, the better they can sell your solution.
- Governance model - When collaborating with partners, make it clear who’s communicating with who and how you’re going to do that.
- Processes and tools - Equip resellers with tools and processes to improve their performance and sales numbers.
- Culture - You’ll want to work with people and organizations who have the same culture as your organization. Tell them how you work, what you expect, how you treat people, and the way you treat your own people.
- Compensation - Have a good compensation model because resellers also want to make money.
- Learning - Make partners learn the right things to do.
The final building block is channel communication. Here are the elements of this building block:
- CRM - Have the right customer relationship management tool in place.
- Standard tools - Automate and standardize tools to prepare for seamless expansion of your business.
- Portal - Build a centralized portal where partners can find their data.
- Compensation models - Develop a compensation model but ensure it is transparent and fast. If you can’t pay partners on time, then the relationship will turn sour.
- Business planning - Conduct business planning within your organization to establish a consensus on where you want to go.
- Onboarding - Onboarding must be strict and easy. The easier it is for them to onboard or have the right skills, they can start selling, expand and grow.
All these building blocks and elements must be in place to run a successful channel organization.
From theory to practice
There are a lot of bases organizations must cover to be successful. To put theory into practice, Edwin Rubens shared a nine-step sales channel concept that can help you achieve crucial parts to implement the building blocks. Here are the questions you should consider with your partners in mind:
- Who is in the team?
- What is your mission / intention / goal?
- Who is the target partner?
- What do they want?
- Which services or products do you offer?
- What is the message or value proposition?
- What is the structure you need? (the 3 building blocks)
- How do you communicate?
- What is the organization you need?
Implement something with these building blocks in mind. If you have no idea how to build your partnership, you won’t be able to succeed. Now how to put the theory into practice? Edwin Ruben has a stairs model that shows the steps you need to consider when running your organization.
First, look at the culture and establish trust with your team and focus on the structural building blocks we explained previously. Then, you can run your business, communicate with partners and ensure your business grows. Finally, expand by taking care of your partners, initiatives, marketing and start accelerating.
The support for the start and the next steps
Experienced salespeople and sales managers will know that indirect sales management is a lot harder than it looks.To guide you to the right path, we highly recommend getting in touch with Edwin Rubens and checking out his company website at Channel Concept Company. We created an ebook on the top 5 tools to use for indirect sales in 2023. With the right knowledge and resources at your fingertips, you can start the new year with a bang.
We thank Edwin Rubens for the provided data.