As published on Forbes.com
I often speak and write about how best to stand out from the competition. This year, I have been delivering many keynote addresses and workshops for companies with distribution channels or indirect sales organizations. No matter how you describe it, indirect selling introduces the challenge of channels. When you sell through channels, you get some great benefits, and have to avoid the pitfalls in order to achieve success. I end with the greatest mistake businesses make with their channel partners. In my prior business we were a channel partner and we had channel partners for our products. I hope to help you avoid some of my biggest blunders.
Channels Provide Reach
We recently ordered window treatments for our newly renovated home. It would not be practical for the manufacturer to sell directly to each and every homeowner. So, they leverage a sales channel. The channel could be a home improvement store or direct representative. In either case, the manufacturer is putting their livelihood in the hands of a third-party who has access to the customer. That channel representative sells the product, and then orders from the manufacturer. Even better, the channel partner takes responsibility for installation. The company that manufactures the blinds does not have to measure the blinds, make the sale, or install the product. They just get to focus on what they do best, and the channel profits from the connection between the product and the consumer.
Channels Know Local Markets
In my prior business, we had channel partners throughout the world. They knew the local customs, had established relationships, and knew how we needed to adapt our products to meet the needs of local businesses. Our partners could make things happen in hours that would otherwise have taken us months or years assuming we could have ever learned everything we needed to know. They had already established trust in the market, so the customers would generously pass that trust from our partner to us.
When you go through a sales channel, you are making a conscious decision to have someone else take responsibility for selling your product or service. You don’t have to incur the labor cost, but you will give up margin. Channels have their own set of issues:
- They will never be as passionate about selling your stuff as you are.
- Where there is potential overlap, you’ll find channel conflict. You might give a partner a specific territory, let’s say Arizona. Then another partner who has New Jersey has a client who also has an office in Arizona.
- There is inherent competition. Most channel partners do not exclusively carry just one company’s products. Instead, the way channel partners succeed is often by selling multiple products in a single visit.
The Biggest Mistake Business Make With Channels
With these challenges, there is one common mistake I see made all too often. Consider this. Are your best partners the ones who a) Know every last detail about your products; or b) Know best how to sell your products and how to uncover the right opportunities? Nearly every time I ask that question, the response is in favor of selling skills not product knowledge.
The great mistake is that when companies convene an annual meeting of their partners, they generally focus all of their attention on sharing product knowledge. Many of the progressive, top performing companies I see have shifted their focus toward joint training on the best way to sell in your market.
If you and your partner sit side-by-side learning a common method of selling, think about how easily you’ll work together in joint opportunities.
One Last Big Point
If you know that your channel partners carry your products and products from other companies, remember that you are selling at two levels: The first level is to understand what problems you are great at solving for your end customer; The second level is to understand what problems you solve and what opportunities you present for your partner. Just a hint – they are usually NOT the same thing.
It’s Your Turn
Which channels do you see doing a great job of working with their partners? Where do you see disasters?