Sales channels are simply the routes to market you choose to sell your products or services. Channels fall into one of two main categories: indirect channels where you sell via a third party such as Amazon or direct channels whereby you sell direct such as via your own company website.
Direct Sales channels are where you sell direct to the consumers of your product or services. In B2B Salesforce.com sells direct to all their consumers throughout the world. They have no partner, reseller or affiliate network. Many people credit the Salesforce business model as the first successful direct sales channel model for a global SaaS brand.
The benefits of Direct sales channels are they allow vendors to remove the margins associated with distribution partners, and therefore lower their price to consumers. It allows them complete control over their sales process and provides them direct access to their consumers to build relationships and brand loyalty.
Indirect sales channels are channels where you sell through a third party. For example, Amazon is an indirect sales channel for many manufacturers in the B2C world. Microsoft sell licenses through a network of LARS (large account resellers) who sell licenses to commercial businesses. In B2B there has been a trend to move away from selling indirect as brands seek a direct connection with their consumers.
An indirect sales channel can provide fast access to consumers who already have a relationship and brand loyalty with your partner or distributor. Indirect sales channels can provide a faster and lower cost access to local markets that would be difficult and expensive for you to reach.
In some cases a Partner network may form an essential part of your distribution and post sale support. The benefits of Direct sales channels are they allow vendors to remove the margins associated with distribution partners, and therefore lower their price to consumers.
It allows them complete control over their sales process and provides them direct access to their consumers to build relationships and brand loyalty.
| Direct Sales Channels | Company owned website | Retail Outlets |
Salespeople | Telesales |
| Indirect Sales Channels | Dealers & Distributors | Franchised Stores | Manufacturers Reps | eCommerce & Auction Sites |
Digital sales channels can be direct and indirect and include selling direct from your own company website, selling indirect via an affiliate programme, selling via Value added resellers, selling via value added resellers.
Part of Channel planning in Sales Management includes strategy which simply means what approach will you take to sell? This can be very simple or very complex depending on many variables.
For example:
Products/services that need more post sale support such as cars have primarily been sold via Dealer networks. (This is changing)
Products and services that need less support may be sold direct such as video editing software.
Products and services that need customising to meet customer needs may be sold via Value added Resellers such as enterprise software applications.
Products and services that need local distribution may be sold via traditional field sales such Pension Products (IFA’s).
As you would expect there is no one size fits all, however, every manufacturer/producer has the same simple goal – How do I maximise market penetration for the minimum cost?
They also have the same problem – how do I consistently motivate, incentivise and coach my channel to sell more?
If you do want to reach the right customers in the digital age, you need to choose your channels wisely and find out where your audience is.
Whilst this isn’t the most creative strategy we suggest the following starting point for choosing the right sales channels:
a) What channels are your consumers on?
b) What channels are your competitors on?
In many cases when vendors try to engage on multiple channels they simply dilute their efforts, so it’s wise to limit the number of channels you engage with.
Whilst outsourcing sales to your channel undoubtedly allows you to save from hiring your own direct sales team, every channel as to be supported.
Supporting and enabling your sales channels takes time and money if you want to do it right.
Once you have selected the right channels and become present on them, you should be able to help whenever your consumers are using their favourite platforms.
With this in mind you should research your consumers before choosing which channels you want to use. To create the right channel strategy for your brand, you will also need to decide on the best way to introduce and promote your products and services.
What’s right for one consumer, company and channel won’t always be right for another. For instance, Facebook is typically more suited to the consumer market whereas LinkedIn is more suited for Business to Business.
Market segmentation affects sales channels as you will inevitably have limitations on the budget and resources available.
As an example you may sell via a network of distributors in order to target SME’s but retain the option to sell direct to large Enterprise accounts who want to deal with the OEM (Original Equipment Manufacturer).
By segmenting the market you can maximise your penetration and minimise your cost of sales.
At the most basic level you should segment your target markets into three groups based on revenue.
Once you have segmented your market depending on the resources you have available you could have the highest revenue producers in group A as Direct sales managed by you the vendor.
Group B could be managed via distributors and group C could be classed as un-managed and in effect they become a self service channel.
In most cases if you have a range of sales channels, it’s usually a wise move to unify various teams within your enterprise and create a multichannel strategy.
There can be many benefits of bringing the channels together into a multichannel sales strategy such as, to align or even differentiate pricing, to reduce overheads or maximise profits.
Where Omnichannel differs is when done correctly, the end user has a seamless brand experience across all channels. Rather than focus on the sale the customer journey and loyalty become equally important.
Practical examples of this could be a Live Chat operator checks and shares the stock availability in a store to allow the customer to pay and collect locally.
A successful channel management strategy is likely to see internal and external teams come together to drive more brand engagement, which in turn drives sales.
The best way to develop your sales channels is via extensive research and testing. This doesn’t have to be expensive, but it should be thorough.
After you have identified the channels, you should run a series of tests to see which channels perform the best. Only once you have data and facts can you begin to develop your channel sales strategy.
Please note: when testing channels it’s not enough to use lead generation data alone. The sales leads may never convert to sales so you must take into account revenue generated versus COCA (cost of customer acquisition).
Every sales channel should have a growth plan in order to maintain existing sales and provide future growth.
The best sales channel for small business are web based because they allow them to scale quickly and remove many of the traditional barriers to sales such as geography, travel and people.
A small, well optimised website can compete with much larger international brands.
The best sales channels for SaaS Businesses are to have one direct sales channel via your website and then have two indirect sales channels.
Of the indirect channels the first would be a referral programme and the second would be a partner or affiliate programme.
Please note the channels mentioned above are sales channels and should not be confused with marketing channels which are completely different. For example LinkedIn is a great marketing channel for SaaS however, you cannot sell anything on LinkedIn (currently).
You would need to take the sales leads from LinkedIn and direct them to your website or partners in order to generate a sale.
The best sales channels for B2B are direct via salespeople for enterprise sales and web based for products and services aimed at SME’s.
Most businesses need a combination of the above. You should also use partner and affiliate programmes when targeting SME’s to help widen your market penetration.
Channel marketing involves supporting sales teams so that awareness around a product is raised. It also focusses on increasing customer knowledge so potential buyers are ready to interact with members of your sales team and in effect further along the buying process before they talk to sales.
Channel marketing strategies can focus on educating the prospect on the potential problems and implications not just building product awareness.
If a product already has a high profile, your strategy may be centered upon maintaining awareness of what’s great about your product and what makes it different from those offered by your competitors.
Todays consumers and customers are arguably more informed than ever. They are able to access all the information they need from wherever they are.
As long as they are connected to the internet, they can source important details about your products and services within just a few touches of their screens.
As part of your research into understanding your consumers you should:
a) research online groups and organisations using tools like LinkedIn groups
b) run test campaigns with new distributors before committing to long contracts
c) Use distributors insights and customer relationships to gather market knowledge
Look for common pain points in online discussions and forums
c) run quick polls to test engagement levels
d) run “test” campaigns to see what messaging works best.
e) run surveys to better understand consumer needs.
f) focus groups
Consumers expect brands to have a rich understanding of their needs, be consistent and enhance their lives.
There are many channels you can use to reach your customers in the modern world, and it seems new ones are appearing all the time. Developing a quality channel planning strategy is essential, but most companies can’t build a strong presence on each one.
Supporting and incentivising any channel can be expensive, so you will need to budget wisely.
Avoid spreading yourself to thin when you are building a channel marketing strategy – its better to focus on one or two channels and get them optimised before adding channels in that you may not have the time or budget to make profitable.
For example many companies choose to be present on each and every social media network they can think of, but it may be more effective to focus your efforts on the ones that your customers are using the most.
Marketing on any channel can be expensive, so you should start small and test everything before committing to larger advertising spends.
The single, most powerful way to engage that vendors can use to engage their channel is to generate new sales leads for them to close and make money from.
Brands should avoid replicating what their competition are doing and be innovative both with their products and the way they present them to the market. Differentiation is key, as simply copying your rivals is unlikely to be successful and places you in the “me to” category where consumers use price as the differentiator.
Furthermore, what’s right for your competitors may not be as effective for you, so it’s always best to build strategies that are specifically aligned to your needs, circumstances and the requirements of your customers.
By all means you can take inspiration from what others have done, but it’s wise to ensure your strategy as a whole is unique to your brand.
It would be unusual to hire an Accountant who is neither qualified nor experienced, so in order for your Channel Sales Planning to be successful you may need to seek out external help.
It may not be possible to achieve what you want to without assistance from outside specialists who know the pitfalls from experience.
As new entrants to channels and markets making the right decisions at the right time is critical. Often large brands will dangle the potential of large orders in exchange for exclusivity. This may or may not be the right move for your brand. Every decision need to be evaluated on its merits with the wider context in mind.
For example the most common pitfall is where exporters rush to sign up International dealers who immediately “park” the new product or service.
They never intended to sell it but equally they didn’t want anyone else selling it in their territory.
It’s easy to get legal agreements that preclude this sort of thing from happening, however, you will still lose market traction, money and time while the lawyers from each side make money bringing the contracts to an end.
Do you go with the market leader and become a page in their catalogue, or do you go with the disruptive new entrants who are out to make a name for themselves?
It’s no surprise that the most successful multichannel marketing strategies have seen companies working with channel partners who understood their needs, but are also aligned by culture and values.
Social Media cannot be ignored but equally, you should be very careful choosing any social media as part of your channel sales strategy.
These platforms exist to make money, and they will use any data your company pages, your employees and customers generate to sell to your competitors.
In addition, Channels you don’t own carry an inherent amount of risk.
Millions of Companies built up their presence on Facebook only for them to sell their customer data to their competitors.
Millions of companies built up their presence on Facebook only for them to be locked out and their pages closed.
That’s not to say they were wrong, you can make hay while the sun shines if that’s the best, most efficient route to market.
If you do decide to use Social Media you should partner with a data specialist, so you can get the insights you need to create profitable campaigns and drive your business forward.
They can provide an objective view to help you make the right decisions.
It may not be easy to get everyone on board with your new strategy initially, but they are likely to become more enthusiastic when they can see clear evidence that your methods are working.
It’s vital to keep your consumers at the forefront of your mind when creating a multichannel marketing strategy.
Offline marketing remains relevant for many businesses, with some older consumers more likely to encounter your brand in newspapers and magazines rather than online.
Despite the lockdown and increase in hours people are spending online offline should still be considered.
For example advertising at large, televised sports events may fit with some brands.
Multi-channel marketing is focussed upon utilising various digital and traditional channels in order to reach your customers.
Additional channels that you can utilise to target your customers include text messages, social media, email marketing, chat, social media, direct mail, TV, radio, video marketing, podcasts and your website.
Studies suggest that most companies that use strong multi-channel marketing strategies keep around 89% of their customers.
To build a successful channel planning strategy, you need to have clearly defined goals in mind. You can only start creating your strategy once you have set your goals or objectives.
Once you have determined your goals, you should create a sales and marketing plan. If the goals and objectives are the destination the sales plan is the roadmap that you follow to reach your goals.
The plan will help you to start deciding which channels, how to engage those channels and which KPIs to track.
Part of this planning requires you to get a firm idea of who your customers are so you can find a way to connect with them, so you will need to carry out substantial research.
Where possible you should be automating your processes using software like marketing automation, email marketing, ad buying programmes and CRM systems, which track the interactions you have with your consumers.
For example marketing software can start creating profiles for customers from the moment they first interact with your brand online.
These profiles are then updated as they continue to interact with salespeople on and offline.
Many people mock McDonald’s, however, there are many things they do extremely well, and we can learn from. For me, one of the pillars of McDonald’s success has been their consistency.
No matter where you are or who serves you, there is a level of consistency not just in the food, but the whole experience.
Your users experience should remain consistent across every channel. This means your tone of voice, logos, colours and so on should be the same on each channel.
If you don’t have a unified brand experience, this could leave your consumers confused and confused people don’t spend money.
Achieving this level of consistency is difficult when you sell via Indirect channels like partners, distributors or franchisees.
Car manufacturers spend millions annually on marketing and training with their dealer showroom network to try to achieve this type of consistency.
You need to find a way of tracking your results so you can see how well your campaign is working. Analytic software will give you key information on your performance on each channel and give you the insights you need to make changes to your campaign.
Some ideas that you can choose to measure would be:
Net Promoter Score to measure brand loyalty
Repeat purchase scores to measure quality and service
Upsell Ratio to measure sales
Iain Swanston has spent over 30 years in B2B sales selling, training and leading teams both domestically and internationally. In addition he serves as an Associate at Strathclyde University Business School where he has delivered the sales content for the Masters in Entrepreneurship since 2015.
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