The Ultimate Guide to Channel Sales: Where to Start and How to Find Partners

George Vitko 23 Apr 2024

It takes time to assemble a solid sales team and set up all the processes and automations, but once it’s done, businesses will have a functional and repetitive flow of new customers.

Soon after, it will be time to scale their sales operations. While hiring more sales reps is definitely a great option, B2B businesses can also leverage the power of external partners to drive sales.

With strategic channel partners, businesses can create new prospects and revenue streams without the headache of hiring, onboarding, and growing their sales teams as the only method of scaling operations.

Virtually all B2B firms and agencies are leveraging such channel sales to expand their market reach and make long-term partnerships for mutual growth. But what is a sales channel business model, and how does it work?

That’s exactly what we’ll discuss in this article.

Understanding channel sales

In simple terms, channel sales refers to businesses selling their products through various partners such as distributors, resellers, referrals, and others.

In this B2B sales model, firms don’t sell directly to their customers but instead look for strategic partners that can make sales through their channels.

It’s worth mentioning, however, that channel sales are not always the best course of action for all B2B businesses. They bring a lot to the table but have their own fair share of challenges, and there are definitely many things to consider.

Benefits of channel sales for B2B companies

Generally speaking, channel sales have the word ‘sales’ in it, so that’s the greatest value right from the get-go — more sales opportunities.

Here are some other benefits to consider:

Expanded market reach and geographical coverage
Access to specialized expertise and market insights
Cost-effective scalability compared to growing in-house sales teams
Increased product credibility from reputable and established partners
Improved customer experience via added-value partner services.

Challenges of channel sales for B2B companies

If it were as simple as finding new channel partners and watching your revenue grow with no potential drawbacks, it would probably be the most known sales model in the world.

Let’s take a look at some of the challenges of channel sales:

Lack of control over exactly how your product is positioned and sold
Potential exposure to brand damage due to partners’ actions
Revenue sharing with channel partners for their services
Lack of communication with indirect customers
Challenging to manage both sales models and the risk of competition between the two.

Direct sales vs indirect sales (channel sales)

What are direct sales, what are channel sales, and how do they differ? We have the answer.

Direct sales definition is when sales reps find targeted prospects through inbound and outbound sales and marketing efforts, nurture them throughout their buyer journey, and eventually turn them into paid customers. This is a direct sales business model which entails direct-to-consumer sales.

With channel sales definition, it’s the exact opposite, meaning the sales are happening indirectly through third-party businesses and individuals.

With regards to when to opt for direct sales vs channel sales, it gets tricky.

In some cases, direct sales come first in the early stages, when it’s in the best interest of the business to have full control over the product positioning and customer relationships, and only then do they add channel sales to their operations.

In other instances, small businesses leverage channel sales early on to grow their market reach without investing in their own large sales team. Instead, they start hiring more sales reps later on once they grow their product through channel partners.

Types of channel sales partnerships

When it comes to identifying the most suitable sales partnership for your business, it’s first crucial to understand the different types of sales channel partners. There are quite a few examples.

Influencer (or Affiliate) partnerships

In an affiliate partnership, businesses compensate partnered businesses and individuals who promote their products to their audiences. Affiliate partners usually receive a commission percentage of the sales they generate through their promotional efforts.

Pssst…Check out our very own affiliate partner program for reference with up to 50% affiliate fee.

Referral partnerships

Referral partnerships involve businesses or individuals, actual users of products, recommending products to their network, and receiving compensation for successful referrals. Unlike affiliate partnerships, referral partners are users of the product and typically receive rewards for simply referring potential customers, rather than receiving a commission based on sales.

For reference, with our Reply referral program, our users can invite people from their network to try out Reply with a 30% discount. After successful signup, referrals receive 5% of all referral purchases in their Reply balance to cover future payments.

On the other hand, the affiliate partner earns up to 50% of future purchases.

Need a sales boost? Our partnership portal has all the answers.

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Sales agents and consultants

Sales agents and consultants are channel partners that position themselves between the business and the customers, ultimately playing the role of the middleman to facilitate the buying process without having ownership or control over the product itself.

Value-added resellers (VAR)

Value-added resellers specialize in reselling existing products with additional features or services provided by them, creating an even better product with an entirely new customer base.

One example of a VAR could be a tech company purchasing an existing B2C software and customizing it with their specialized business features before reselling it to their corporate client base.

Distributors and marketplaces

Distributors and marketplaces sell numerous different products and services to their audience directly from their platforms.

These channel partners will market products in their niche with the opportunity for customers to educate themselves on the features and prices of different solutions, and sometimes even make a purchase right through their channel.

Managed service providers (MSP)

Managed service providers are organizations that offer IT infrastructure services on behalf of their clients, typically on a subscription basis.

For instance, an MSP may remotely monitor and maintain a company’s network, servers, and cybersecurity systems to ensure optimal performance and security.

Alliance partnerships

Alliance partnerships involve a collaboration of 2+ companies with complementary products in order to grow their customer base and achieve common goals. There are two types of such collaboration: strategic and technology alliances.

A strategic alliance could be 2 software companies joining forces to create an all-in-one bundle for a common customer base. In contrast, a technology alliance could be a collaboration between a cloud storage provider and a cybersecurity firm to develop a seamless data protection solution.

Creating and implementing a channel sales strategy

Now that we’ve got everything covered let’s dive into the step-by-step process of creating an effective channel sales strategy to scale your sales operations and open new revenue streams through the power of partnerships.

Determining your readiness for channel sales (with the checklist)

As previously mentioned, channel sales are not for everyone. It’s important first to take a step back and determine whether your business is ready and would benefit from this sales model.

Here’s a quick checklist to help determine if you’re ready for channel sales:

▢ Company size and stage of business growth → is it a good time to invest resources in channel sales, or are there other strategic priorities at the moment?

▢ Product readiness → is your product or service market-tested, well-defined, and ready for distribution?

▢ Scalability → is your company equipped to handle an increased customer support/success volume via live chat and agents?

▢ Market analysis → is the size and dynamics of your target market such that channel sales would provide a competitive advantage?

▢ Perfected in-house sales process → is your business ready to teach others how to sell your product as a result of fully determining its most optimal sales process?

▢ Location → is there a new geographical target market that your business wants to expand its reach to?

Once you’ve ticked enough boxes, it’s a green light to start building your new channel sales model.

Define your ideal partner profile

The next step in this complex journey is clearly defining your ideal partner profile. In other words — what type of partner and partnership works best for your product and business as a whole?

In simple terms, a company could significantly benefit from partnering with a strategic reseller but only lose money with an alliance partner.

Each type of channel partner brings its own differentiated value, so the most important part is deciding which is most beneficial to your business goals.

Once you’ve understood who your ideal partners are, the next step is determining where to find them and how to best outline your business’ value proposition to them when you do, which brings us to the next step.

Assessing the collective value of channel sales partnerships

By this point, you’ve decided your business is ready for channel sales and outlined your ideal partner profile. Now, it’s time to objectively assess the joint value of the potential channel sales partnerships.

For starters, you need to clearly define what exactly your business can provide to the channel partner, in other words, the value of this opportunity for the other party, meaning that you need to determine how to ‘sell’ your proposed channel partnership.

It goes both ways because it’s also important to clearly define what exactly your business expects in return from the channel partner, whether it’s in the form of broad goals or agreed-upon metrics such as total leads or sales generated.

Incorporate channel sales into your sales process

Channel sales is a complex business model that entails a lot of work and communication to find new partners, optimize the partnership agreements, and ensure everything runs smoothly. For channel sales to be successful, they have to be a completely separate sales process with dedicated professionals running it.

When businesses decide to incorporate channel sales in their sales operations, chances are, their sales reps already have their hands full with tons of tasks, such as prospecting and engagement, so simply adding new (and completely separate) tasks is not the solution.

Instead, businesses ought to create a dedicated sales team responsible for channel sales, be it in the form of bringing in existing reps from direct sales or hiring new people for key positions.

A few key examples could be a channel sales manager, who is responsible for finding and making contact with potential channel partners, and a channel operations manager, who will ensure that partners have everything they need for the partnership to be productive and successful.

Connect with channel sales partners

Much like with direct sales, there comes an inevitable time in channel sales when businesses have to break the ice and establish a connection with the sourced channel sales partners.

Similarly, this can be achieved with inbound and outbound efforts.

With inbound channels, businesses can make their proposed channel partnerships available to the public, for instance, by mentioning the terms and value proposition on their website. It’s then the job of sales and marketing teams to ensure their channel partnership proposal gets across to the right audience.

With outbound channels, it’s virtually no different than with direct sales, where sales reps will proactively reach out with personalized messaging to the most appropriate channel sales partners, tailor their value proposition to capture their attention, see if there’s a fit, and, if all goes well — close the ‘deal’.

Onboard your new channel sales partners

Your new channel sales partners are undoubtedly experts in their field, but they will definitely need your expertise to:

understand your product and how it works,
who are the buyers,
why they buy it,
how it’s marketed,
how to best sell it,
and the list goes on…

It’s for this reason that partner onboarding is a crucial yet often overlooked part of building a fully-functioning channel sales strategy. And just like with onboarding different employees or customers, it’s important to personalize the onboarding experience with only the most relevant resources, training, and product information.

Rather than waiting for your new channel sales partners to inevitably ask questions about your product and its sales process and/or request some additional material to ensure everything runs smoothly, businesses should be proactive in this regard to make a positive first impression and set the foundation for a collaborative and supportive endeavor.

Communicate and empower your partners to perform

Once your new channel sales partners have received the necessary training and onboarding support in the initial stages, it’s equally important to maintain this communication in the long run.

Whether it’s new product updates (features, pricing, etc.) or shifting trends in your niche market, communication channels have to remain open and running to ensure your partners are fully equipped and up-to-date on everything.

This collaboration empowers and motivates them to sell your product to the best of their ability, knowing that they are supported, valued, and kept in the loop.

Measure performance and refine

As with any other business partnership, both parties have their own set of responsibilities to follow. Without defining and measuring key performance metrics, both businesses and the new channel sales partners won’t be able to tell how successful their partnership is.

It also helps either side to proactively make the necessary adjustments to ensure top performance by seeing what works, what doesn’t, what can be improved, and how.

In the example of agency partners, it’s common practice for businesses to regularly share detailed and relevant agency reports to analyze performance, make forecasts, and continuously refine the partnership operations.

Channel sales platforms (and other tools) to consider

Considering the day and age, you probably won’t be surprised that there are numerous examples of dedicated tools designed for channel sales. In a nutshell, they are very similar to traditional sales engagement platforms like Reply.io. Still, rather than focusing on sales prospects, their features are tailored to effectively run a channel sales process.

Here are our top picks:

Partnerstack

Our first and favorite all-in-one channel sales platform, Partnerstack, has everything a business needs to effectively grow and run this sales model.

This platform helps businesses like yours discover the right partners at the right time, promote your partner program with inbound and outbound channels, onboard and train new partners, and track performance through optimized reports and analytics.

All in all, Partnerstack is an excellent addition to your tool stack if you’re pursuing an automated and enhanced channel sales strategy.

At Reply.io, we have a partner program on Partnerstack that is available for everyone to join. It involves sharing affiliate links with their network and earning commissions for promoting our product.

Reply.io

We want to talk about automation, and here is Reply.io—perfect for companies looking to grow their partner networks without the heavy lifting.

Imagine setting up a system that automatically scouts and reaches out to potential partners. With Reply.io, you can create custom email sequences that do just that—send out initial contact emails, follow up, and even engage on social media, all on autopilot.

Here’s how it works in practice: Say you want to connect with potential tech partners. Set up a sequence that starts with a friendly email introducing your company and value proposition.

Follow that with a LinkedIn invite and schedule a few automated check-ins to keep the conversation warm. Don’t forget to use our AI sales assistant (we named it Jason AI—it’s more friendly, you know) to keep your messages sharp and engaging, ensuring each touch feels personalized.

With all these features and native integrations with well-known CRMs (HubSpot, Pipedrive, you name it), you can rest easy knowing your emails are hitting the mark, reaching inboxes reliably, and building your partner ecosystem efficiently and effectively.

Ready to get started? Create your free 14-day account now

Impact.com

The next is Impact.com, another robust channel sales platform with an abundance of core and unique features that will help businesses find and connect with partners and streamline their partner program for maximum success.

Trusted by business giants like Microsoft, HubSpot, and Canva, Impact.com provides separate dedicated features for different types of channel partner programs, from affiliates to influencers and beyond.

Some of the most prominent features include sourcing targeted partners through their rich marketplace (partner database), streamlined management and performance tracking dashboards for each partner, and user-friendly engagement features.

ZINFI

Next in line, we have ZINFI, a dedicated partner management platform that handles every stage of the channel sales process, from administration and onboarding to accelerating sales.

ZINFI automates partner recruiting with top-class training and onboarding features, like generating tailored partner program materials, secure access to in-house sales and marketing resources, and automating co-branding and distribution, to remove the steep learning curve that often comes with a new channel sales partnership.

However, that’s just the tip of the iceberg in terms of what this platform can do, with tons of other useful features such as email marketing and social media management, joint multichannel marketing campaigns, and more, so make sure to check them out.

Crossbeam

Crossbeam is positioned as ‘your own partner ecosystem.’ Truth be told, that’s exactly what it is. This platform leverages relevant data to determine the best people and businesses to produce the best results for your partner program.

Crossbeam has its own partner network with over 19,000 companies, which removes the hassle of finding potential channel partners on your own.

On top of that, you can use this platform for channel management, mapping your partner accounts, building powerful reports, and driving sales with actionable data-backed insights.

PartnerTap

Our final contender is another partner ecosystem platform: PartnerTap. This platform focuses all its features on reseller, alliance, distributor, marketplace, service provider, cloud, and vendor partnerships. In other words, this platform’s got you covered for most channel sales partner strategies.

It has the immaculate ability to proactively identify and suggest potential expansion opportunities with each partner, with an abundance of co-selling automations for both parties of the partner program.

Account data mapping, pipeline hub, program tracking, and attribution, as well as dedicated features for all revenue teams and seamless CRM integration, are just a few of PartnerTap’s top features.

Closing remarks

Wrapping up our journey through channel sales, it’s essential to highlight the invaluable benefits these partnerships bring to the table. From expanded market reach to enhanced credibility and cost-effective scalability, strategic channel sales alliances pave the way for long-term and sustainable business growth.

B2B executives and sales leaders should embrace the power of channel sales partnerships to unlock new avenues for revenue generation on top of all their in-house operations. As you start your transformative journey, remember that investing in channel sales strategies is not just a short-term solution but a strategic move for long-term success.

And, friendly reminder: we invite you to consider participating in Reply’s affiliate program, earning up to 50% recurring commission by recommending Reply.io to your customers and getting all the necessary materials to help you market the platform.