It is often the case that companies have a hard time scaling their revenue. One of the reasons for this is that the employees doing the selling for their company only have so much time in the day.
One choice that companies often make is to hire more and more sales reps. While this can be a solution, the problem is that the cost of finding, hiring, and then training salespeople is often quite expensive and time-consuming.
Another alternative for business is something called channel sales. This process is where you choose to distribute products to a channel partner that will do all the selling and marketing of your product on your behalf.
The Details of This Type of Selling
When a company chooses to sell in this manner, it may find affiliate partners that receive a commission every time they make a sale. They can also use a value-added provider that may put your product with one of their own to add value to customers. In short, this is a type of selling where you partner with someone that does not work directly for your company.
Some of the Benefits of This Process
When you use this type of sales model, there are many benefits to a company. For starters, this may enable you to downsize your current sales team, thus saving your company money.
Another benefit is that you may create trust with potential customers based on your partner. If your potential partner already has an excellent brand reputation in the market, partnering with them will make your product more reputable.
When you choose to work with several partners, you may be able to bring in a similar amount of revenue as adding several salespeople but at a much lower cost. The speed you can bring in new partners is often much quicker than finding new salespeople.
This sales method also lets you test out new sales models and theories quite quickly. This process also gets done in a much lower-risk environment than taking on the entire process yourself.
If your product requires any training, support, or implementation for customers, partnering with the correct vendor to do this on your behalf will save you time and money. It also allows you to reach a broader customer base without risking your existing customer base.
Some of the Downsides of This Model
While there are plenty of benefits to companies for this type of sales model, there are also some drawbacks. These drawbacks must get carefully considered by your company to make sure this type of sales model works for you.
For starters, your company will have far less control of the sales process. If a deal is not going well, it can often be difficult for your in-house sales reps to get involved.
In addition, since you are giving up control of the sales process, you also have no say in the timeline of the selling process. This variability can lead to unpredictable revenue streams that often frustrate a company.
If you have worked hard to build a good brand reputation, it can often get tarnished by working with poor partners. That is why it is vital to carefully research partners to understand their place in the market and how they currently do business.
Sometimes, using brand partners can cost you more than making sales in-house. It is important to remember that these partners will get a significant piece of the pie when they make a sale, so it is essential to do some comparison shopping to see the best net proceeds model for your company.
Since your partners will be doing all the interaction with your new customers, any feedback about the process can often be slow in getting back to you. This lack of understanding can make it quite difficult for a company to do continuous market research to understand the perception of their products.
This type of sales model offers tremendous benefits to a company regarding scalability and speed. If the net profits of this process work for a company, this is a great way to get a wide variety of products to the market quickly and efficiently.
