The indirect sales business model has been growing in leaps and bounds in recent years. Advances in technology, particularly online technology, has helped indirect sales move from being a relatively niche form of business to one of the dominant sales models in the world.
With and more companies moving towards a partner-based sales structure, due to its lower direct costs and easier opportunities for expansion, you need to have a basic understanding. Here are 9 foundational indirect sales terms you need you know in order to succeed.
If you are just beginning to explore the possibilities of shifting your own business towards indirect sales, there is a lot of new terminology to learn, as well as the business concepts behind those terms. It can all be overwhelming. Start with learning and understanding these basic terms:
Indirect Sales (Aka Channel Sales)
A sales model where the vendor\producer of a good or service does not sell directly to the public, but rather sells to intermediary partners who handle most duties relating to sales and post-sales support, in exchange for percentages or other benefits.
Any sales pathway linking the original producer of a good or service to its customers. In the case of indirect sales, the primary sales channel is third-party sales partners.
In this context, a high-level view of an entire indirect sales operation, including all elements from originating vendor down to individual sales representatives. It is usually conceptualized as an ecosystem due to the many interconnected “moving parts” that make it resemble ecosystems in nature. Also similarly to natural ecosystems, disruptions within a channel ecosystem can have broad systemic effects.
Combined marketing efforts between a vendor and their sales partners, intended to drive leads towards an appropriate partner to make a purchase. Channel marketing can encompass virtually any established form of marketing, from print ads to Search Engine Optimization.
A set of business skills relating to overseeing a collection of channel partners, performed by a Channel Manager. Channel management will generally include recruiting new partners, implementing methods of onboarding and training, overseeing partner performance, handling communications between elements of the ecosystem, and acting as a point-of-contact liaison.
The high-level planning and goals relating to the growth of an ecosystem. This generally focuses on strategies for growing and maintaining the ecosystem itself – separate from the products being sold – although there will be overlap with product strategy.
Any situation where one or more sales partners are in direct conflict or competition with each other, such as having multiple partners all targeting the same regional demographic. Channel conflict can be extremely detrimental to a partner ecosystem, leading to inefficiencies or even the loss of sales partners. An ideal ecosystem has low levels of conflict.
Incentive programs are vital to most indirect sales ecosystems, being one of the best methods to motivate individual sales partner employees to push a particular brand’s products. Good incentive management seeks to provide incentive programs which boost awareness and investment in that brand’s products.
Partner Relationship Management (PRM)
A software system akin to Customer Relationship Management (CRM) solutions, but geared for the needs of indirect sales operations. A typical PRM platform includes all the features of a CRM, along with additional modules for tracking and communicating with sales partners.
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