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featureed image Published 2015-09-16, by Seth Jacobsen

What Startups Need to Know Before Planning a Channel Strategy

When starting a new business, there are many important decisions to be made. One of them is: Who is going to sell your products?

In today’s competitive market, many startups are using an indirect sales network of independent dealers or resellers instead of, or in conjunction with, an internal staff. The sales channel offers many advantages, such as additional “reach” without the overhead of an internal sales force and a staff that already has sales infrastructure in place. With the right approach, new partners can be recruited (and on-boarded) quickly.

There’s no such thing as a free lunch, however, especially in the business world. An indirect sales channel comes with its challenges, too. Channel partners are not employees and usually sell other products, including those of your competitors.

Thus their commitment to your company is contingent upon the support you provide and the success they achieve. And communication with partners is usually sporadic because their time and effort is divided among several vendors. Another potential problem is channel conflict, a highly unproductive situation in which indirect sales partners are competing with each other (or your internal sales staff).

Planning a Channel Strategy

If the channel is managed effectively, the advantages of indirect sales far outweigh the drawbacks, making it a viable option for most emerging growth companies. The key is to plan a sales channel strategy that will produce results in the short term (when many startups fail) and over the long haul, ensuring continued success.

Partner relationship management (PRM) software  enables you to track and monitor the performance of your channel partners as well as provide training, product information and sales data. PRM includes a pragmatic, systemized approach to lead management, thus protecting sales opportunities and virtually eliminating channel conflict.

SEE ALSO: Partner Relationship Management Playbook 

Point Solutions are Not the Answer

Many startups try to address their channel management issues with short-term fixes, or “point solutions.” These include the use of Salesforce.com for lead management and Excel spreadsheets for tracking training sessions. Other point solutions involve using SharePoint, Dropbox or Google Docs to store and manage documents and sales materials.

These applications may be adequate for a small number of partners in the short run, but they are not systems that can be easily integrated. As the sales channel grows, the use of point solutions will likely become complicated and unmanageable as the task of migrating data from one application to another becomes increasingly burdensome.