You have decided in favour of indirect sales of your products through distribution partners, referred to as the channel sales in IT. Or you are contemplating whether you also want to sell indirectly in the future, side by side with your direct sales model, e.g. because you are currently introducing a new product. Read here about how you can establish a powerful partner management system at your company.
What advantages does a distribution partnership in channel sales have to offer? Who are the right partners are for my sales organisation? What can we expect from each other? The following suggestions should help you in answering these questions.
Many arguments support direct sales of your products through distribution partners in channel sales:
It is essential for your partner management to find partners who fit your service range. Generally, partners and manufacturers have to have matching structures, target customers and potentials to be financially successfully together.
Your decision has been made and you are on the search for suitable distribution partners. For this purpose, a so-called partner on-boarding process is usually triggered. Typically, you need about 300 to 350 partners in Germany for nation-wide sales representation. Although this varies by product and market, it represents a common figure in our experience. No small challenge!
Thus, you hire partners or channel account managers or appoint employees from your existing sales team in the beginning, who will take on this task with the support of your marketing department. With your ideal partner profile, you now select the corresponding candidates and conclude the partner agreement with them after a few interviews with the potential partner’s management.
Your marketing department has done good work and developed a partner programme, which includes different partner levels, according to which the partners are categorised and committed depending on your sales volume. This process is very elaborate and contains many quantitative and qualitative ordering criteria, which are developed in a separate project. We often see that initial mistakes are made precisely here already.
Besides the talks with the distribution partner’s management, you also have to talk with the individual sales employees of the partner: What does he think about your products and solutions? How do these match his sales targets? Would he like to market your solution? Which customers does he manage?… This communication is elementary because it is the partner’s sales employee and not its management who sells your offers after all!
After two to three years in partner distribution, you find that only about 10-20% of your distribution partners make sustainable sales. The remaining majority does not transact any sales or only very rarely. In other words: Each Partner Account Manager (PAM) was assigned 25 partners but only 3-10 partners per PAM generate sales sustainably.
This is the second large hurdle in partner management: The sales management of all partners was not structured sustainably. What does that mean exactly? It means that the distribution partner has little personal contact with your company. You have to understand that a partner has many manufacturers in his portfolio and each of these manufacturers expects a maximum sales time from the partner’s sales staff. Meaning, you compete with many other manufacturers for the “favour” of the sales staff.
You can resolve this dilemma using different solutions. An effective measure is tandem sales!
In tandem sales, you form teams of PAMs and inside sales employees, who manage the distribution partners together. One inside sales employee supports, for example, three PAMs. While the inside sales employee contacts the partners exclusively by phone, the PAM continues to manage his or her top partners intensely and, according to the recommendation from inside sales or as needed, he or she visits the partners that are not working sustainably yet.
Your tandem sales model systematically pursues a common goal. You will see how the portion of actively selling partners will have increased substantially after an appropriate start-up time of about one year.