Channel Sales Playbook: Understanding the Basics
Part 1 of 4: Breaking Down the What, Why, and When in the World of Channel Sales
📌 You are here 👉 Part 1 - Channel Sales Playbook: Understanding the Basics
Part 2 - Channel Sales Playbook: People & Commitment to Success
Part 3 - Channel Sales Playbook: Secrets to Onboarding Partners Who Actually Sell
Part 4 - Channel Sales Playbook: Learnings from Successfully Scaling a Partner Business
Over the past few years, building channel sales teams has been a frequent topic of conversation when speaking with founders and other sales leaders.
Before starting Leap, I was tasked with building Yelp’s channel sales team. From being the first sales rep on the ground to leading teams of managers and reps, I was fortunate enough to see the business grow from $0-$40M in annual recurring revenue in 5 years.
What is Channel Sales?
Channel sales, or as some call it, Partner sales, is a business strategy where a company collaborates with various partners, such as resellers, distributors, or referral agents, to market and sell their products or services. Instead of directly reaching out to customers, these partners take on the role of selling on behalf of the company. It's an effective way to expand market reach and increase sales while leveraging the expertise and networks of these trusted partners.
Channel sales enable companies to tap into partner resources and expertise, while reducing the need for in-house sales teams. Companies like Google, Hubspot, and Cisco all have large Channel Sales departments focused on working with and supporting partners.
What different types of channel partners are out there?
Reseller Partners. These partners are actively selling a product or service in a market and assist with the acquisition and maintenance of clientele for a company. It’s common for resellers to package different products together or sell many products stand alone. As an example, marketing agencies could sell Google, Facebook, and Yelp ads to their clients in one bundled package, or separately.
Referral Partners. From affiliate links to advisory boards, these are connectors and lead generators for a company. Referral partners are there to open doors for the company to come in and close the deal themselves.
As you do your research into Channel partners, you’ll hear a few other terms like “value-added resellers (VARs)” that add additional services or customization, and “System integrators (SIs)”, which are basically consultants that come into your organization to help you set up complex systems like IT or CRM solutions.
Why do companies commit to building Channel teams?
In one word: trust. Channel partners are trusted by the prospects you’re aiming to acquire and hold onto.
Channel sales offer a more cost-efficient approach compared to solely relying on a direct sales team in the long term. Instead of investing in building and maintaining an extensive in-house sales team, companies can leverage their partners' resources and capabilities to drive sales and revenue without the heavy overhead costs.
When do you launch Channel Sales?
I love Channel Sales, but sadly, when I speak to most early stage founders, I end up recommending not to move forward with a channel strategy. If your company doesn’t have an ironed out outbound sales motion, then don’t expect a partner to figure it out for you. Don’t outsource sales too early. Don’t get stuck having a single point of failure: one outside partner that doesn’t really care about your business. Be responsible for driving your own growth. Understand all the objections of your ideal client profile, and how to overcome them and sell your product in a repeatable way.
The moment to start investing in a reseller program is when your organization can comfortably onboard batches of new direct sellers, present them with a playbook, and have them consistently hit their sales targets over a 6 month period of time.
As a rule of thumb, that moment tends to fall around $10-$20M in annual recurring revenue.
Referral partner programs can be launched earlier, but they should not be prioritized over figuring out the sales motion on your own. They can drive leads early on in a company’s existence but beyond that don’t rely on them as a consistent growth engine.
In the next post, we’ll dive into what is necessary to successfully launch channel sales within your company.
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