Indirect sales to develop your business?
Do you want to grow your business quickly, with little risk and less investment? Implementing an indirect strategy is recognised as the quickest and least risky way to grow a company's turnover.
An unavoidable phenomenon
Today, over 60% of a company's turnover is generated through distribution networks (resellers, integrators, hosting providers, consultancies, wholesalers, etc.). All the market leaders have structured an indirect approach, whether in hardware or software. This is also the most appropriate solution for publishers of SaaS solutions who want to develop rapidly in order to reach their financial break-even point.
The advantages of an indirect sales network
In the words of IBM's chairman: "it allows us to be present where the customer buys". A distribution network will therefore enable you to significantly improve your sales coverage rate: go international, enhance your offerings with business skills, meet complex customer needs and finally provide the local service that customers expect so much.
Direct or indirect?
These 2 "routes to market" are not mutually exclusive. Direct sales generally target the top end of the market, with high average turnover baskets. Networks of commercial partners, on the other hand, will address the rest of the market, while also having the possibility of collaborating with direct sales organisations. The leverage effect provided by indirect sales is a major argument in favour of addressing a high-volume market: a single sales resource can manage dozens of sales representatives and therefore achieve very high sales productivity.
Over 60% failure rate!
While the indirect mode is unavoidable, it is also a source of considerable frustration. Over 60% of sales partners fail to meet the expectations and sales targets set by their suppliers. And on closer inspection, the fault lies mostly with the publishers or manufacturers who have failed to structure the establishment of their partner networks: opportunistic commercial approach, no methodology for recruiting or developing partners, no dedicated team, no alignment of the company behind its commercial partners.
A corporate project
Implementing an indirect strategy cannot be improvised. Without a strong commitment from senior management, there is no chance of success! In fact, an analysis of partnership best practices shows that the best software publishers and manufacturers on the market have all aligned their various departments (from R&D to support and marketing) to really help their commercial partners. They have implemented best practices through a methodology, dedicated resources to recruit, develop and manage their partner ecosystem, invested in management tools (such as PRM - Partner Relationship Management) and structured their internal and external processes.
What questions should you be asking to ensure the success of your indirect sales strategy?
Does senior management have the will to set up a new sales channel?
This commitment needs to be translated into "ad hoc" investment.
Is the company's vision and ambition clearly expressed?
Be aware that your partners will be taking risks by choosing you. So you need to reassure them that you want to work with them on a long-term basis by clearly setting out your vision and your ambition for joint development.
Is your gotomarket clear enough to avoid channel conflicts?
You need to be very careful about how the different channels work together (particularly the direct sales force and reseller partners). This requires a precise definition of the territories allocated to each type of distribution channel and compliance with operating rules.
What is the profile of the resellers, integrators or other partners you want to recruit?
Your objective is to have a network of competent, committed and involved partners. To achieve this, you need to define the recruitment criteria for your future partners in advance. And don't forget that the best partners are those who see you as strategic to their own development!
Are your solutions channel ready?
Do your offerings meet partners' expectations? Partners will judge you on 4 criteria: the robustness of your offerings, the notion of "easy to do business with", the reputation of your products and, above all, the potential gains and margins they will generate with their own services, which they will invoice to your joint customers.
What will be the financial impact of implementing an indirect strategy?
Compared with a direct approach that is not scalable, and thanks to the leverage effect, the ROI of an indirect strategy is quickly demonstrated. However, a minimum level of investment is required at the outset: a dedicated sales manager, a good value proposition to recruit the best partners, a partner portal or even a PRM, a start-up plan (the famous 100 days) to ensure the successful launch of new partners. AND the implementation of business plans for each strategic partner.
What resistance is there internally?
Traditionally, you will have to deal with some resistance within your organisation. Don't forget that the success of an indirect strategy depends on the alignment of your company's various departments. A simple message to pass on: "consider resellers, integrators and consultants as a natural extension of our direct sales force"!
Conclusion
Indirect sales offer an essential development opportunity for any ambitious company. But this "routes to market" approach cannot be improvised. The key to success lies above all in the willingness of senior management to structure and implement best practice partnerships.
The expert contributors are authors who are independent of the appvizer editorial team. Their comments and positions are their own.
Article translated from French