Using an indirect channel or agents to sell product is the most common form of selling. Most major brands use indirect channels to sell their products. Think of companies like Coca-Cola, Panasonic, Sony, American Airlines and many others. By using agents, these companies are able to meet the demand for their products globally which would not be possible using only direct sales. It is usually less expensive (up to 25%) to address and serve a large number of small buyers using an indirect channel versus direct sales or dedicated employees. Therefore, a successful channel not only generates higher margin revenue but can also expand market presence into new verticals or geographies. According to the Association for Strategic Alliance Professionals (ASAP), “40% of all revenues for the top 1000 companies in the U.S. are derived through channel sales”. To benefit from channel sales is fairly straight forward but it requires clear objectives, a solid strategy, agent recruitment, thorough on-boarding process, competitive compensation, effective go-to-market campaign, efficient ordering and fulfillment process, agent support and a solid product.
That may seem like a lot but much of what is required should be in place to support either a direct or indirect channel. While executing upon each of these elements may still not result in a successful channel, not having them will guarantee failure. ASAP found that 60% of all channel partnerships deteriorate or collapse because of lack of communication. Consequently, strategies, processes, and portals aside, having channel managers who are empowered to speak on behalf of the company and convey information from the channel is critical. Building a channel is not an overnight task but effective channel management and continuous alignment between company and agents dramatically shortens the time to achievement.
Telecommunications uses channels sales as a primary selling vehicle. This benefits carriers that want to develop a channel because there are many experienced agents ever investigating expanding their product offerings, searching for better sources of existing products, or just want better support and compensation. Carriers should embrace these agents as they already have familiarity with the market and are the trusted advisors to a base of customers. The knowledge and experience agents have can be readily leveraged to communicate with prospects in a language they can understand.
It is estimated that two thirds of telecommunications services are sold through an indirect channel. ANPI and many carriers are taking advantage of this growing and successful trend.