Indirect Sales Explained: Key Strategies and Advantages

Indirect Sales Explained: Key Strategies and Advantages

Expand your market reach without the burden of creating a large sales team from scratch.

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Nine out of 10 sales teams currently use indirect sales, and of those who don't, 58% expect to within a year, according to the latest State of Sales report.

I've seen how indirect sales can be a game changer for businesses looking to scale quickly. It's a strategy I've personally used to help companies expand their market reach without the heavy lifting of building a large sales team from scratch. By using the networks of distributors, resellers, and affiliates, businesses can access a wider audience with minimal direct involvement.

Read on to discover the key strategies and benefits associated with indirect sales.

What you'll learn:

• What is indirect sales?
• Types of indirect sales strategies
• Advantages of indirect sales
• Indirect sales tips and best practices
• Indirect sales tools: What to look for

What is indirect sales?

Indirect sales, also known as partner sales or channel sales, brings in third-party resellers, brokers, and distributors to generate new sales without adding headcount.

Indirect sales vs. direct sales

Indirect sales relies on partner resources - networks, knowledge, and existing relationships - to amplify a company's sales efforts. This approach allows businesses to scale quickly and efficiently, keeping costs down.

In contrast, direct sales do not use third-party sellers. Instead, sellers interact directly with customers, often making a significant investment in a sales team, resources, and infrastructure necessary. With all the current disruption, noise, confusion, and AI entering the sales world, this distinction is crucial. Best practice is having both and it is very hard to build indirect sales channels first if you don't have a strong understanding of your sales motion.

Additionally, understanding the distinction shapes your company's sales strategy, customer interactions, and overall business approach in both short and long-term revenue growth and retention.

How indirect sales contributes to business growth

This sales model allows businesses to reach a broader audience by using the established networks and expertise of their partners. Indirect selling is like having an army of octopuses supporting you. Each partner is a single octopus, each with up to eight arms. Those arms could be their sales team, current customers, their potential prospects, or other relationships. Working together, these partners create new opportunities you might otherwise have missed.

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Types of indirect sales strategies

There are several strategies you can use to reap the benefits of indirect sales. Understanding these strategies can help you choose the best approach for your business needs and market conditions. Let's look at a few:

Reseller and distribution channels

Resellers and distributors - often called value-added resellers (VARs) - purchase products from companies to sell to end customers. I've found VARs to be particularly effective in sectors where services such as installation, customization, or training are needed. Their ability to provide a full solution package can help close deals faster. Distributors often handle bulk purchases and logistical challenges, while resellers enhance the overall value proposition through these additional services. Consequently, this channel can be especially useful for businesses looking to penetrate new markets or regions where they lack a direct presence.

Affiliate marketing and referral programs

Affiliate marketing is when individuals or other companies promote a company's products in exchange for a commission on sales. Referral programs incentivize existing customers or partners to recommend the company's products to others, expanding the customer base through trusted recommendations. These strategies are cost-effective ways to tap into new customer segments and enhance brand credibility.

Strategic partnerships and alliances

Strategic partnerships involve formal agreements between companies to market and sell each other's products. These alliances can significantly enhance market reach and credibility, particularly when partners have complementary offerings. For example, a tech company might partner with a hardware manufacturer to bundle products and offer a more comprehensive solution to customers.

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Advantages of indirect sales

Indirect sales is an attractive strategy for many businesses. Here are some of its most common advantages:

• Expanded reach: One of the primary benefits is its ability to reach a broader audience. Partners often have established relationships with customers the company might not be able to access directly. This facilitates entry into new or untapped markets. As a result, the expanded reach can drive significant growth and help businesses scale quickly.
• Reduced costs and overhead: Indirect sales can lead to cost savings by reducing the need for a large in-house sales team. Instead, companies can work with the infrastructure and sales force of their partners, potentially lowering certain overhead costs. This model allows businesses to allocate resources more efficiently and focus on core competencies while their partners handle sales and distribution.
• Partner expertise and resources: Partners often bring specialized knowledge, relationships, and resources that can enhance your company's sales efforts. VARs, for example, not only sell your product or service but provide valuable services such as training and support. Furthermore, this expertise can be particularly valuable in complex or highly regulated industries. By using the skills and networks of your partners, you can achieve better market penetration and customer engagement.

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Indirect sales tips and best practices

Implementing an indirect sales strategy requires careful planning and execution. Consider these best practices:

• Build strong relationships: Success in indirect sales hinges on strong, mutually beneficial relationships with partners. Invest in building trust and collaboration, especially early in the partnership.
• Provide training and support: I've always emphasized the importance of training and supporting your partners. Giving them the right tools and information with regular updates ensures they can effectively represent your products and services. This is something I've seen make a significant difference in the success of indirect sales channels.
• Choose a robust CRM system: Strong customer relationship management (CRM) software is crucial for tracking sales activities, managing customer data, and ensuring seamless communication between you and your partners.
• Invest in AI tools: AI is making it easier than ever to work more efficiently. The right tools can help you accelerate the sales process with automated workflows, AI-driven insights, next-step suggestions, and more.
• Monitor and optimize performance using data: Regularly assess the performance of your partners and overall indirect sales strategy by regularly reviewing data and analytics. Then, make adjustments to maximize efficiency and effectiveness.
• Manage your expectations: To build an effective and profitable indirect sales model it typically takes two years. In my experience, it's rare for an organization to can build an effective indirect sales model quickly.

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Indirect sales tools: What to look for

Effective partner relationship management (PRM) is crucial in indirect sales, and PRM software helps streamline the process. With AI-powered tools built into this software, you can optimize your indirect sales efforts and ensure your partners have everything they need to be successful.

The right software and tools are essential for managing indirect sales channels efficiently. Here are some key features to look for in a partner relationship management solution:

• AI-driven deal insights: With personalized deal insights and suggestions for the next-best action to take, ensure your partners stay on track and achieve more wins.
• Pipeline inspection: Improve your sales process efficiency by prioritizing leads and streamlining workflows with AI. This ensures partners focus on high-potential opportunities, leading to faster deal closures and increased sales.
• Automated partner sales workflows: Reduce the friction of partner selling with lead routing. Tools like Einstein Lead and Opportunity Scoring ensure the right leads are routed to your partners so they can start selling immediately.
• AI-powered analytics: Offer personalized dashboards, reports, and access to AI-generated insights. Consequently, your partners will get a full picture of revenue potential and guidance about what steps to take to close more deals.
• Best-in-class partnership programs: Generally speaking, you have a team who handles many partners. With the help of Sales Cloud, your rep can now better support your channel partners, making them want to position your product or service alongside theirs.

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Maximize your market reach with indirect sales

Indirect sales can be an exciting strategy for expanding market reach, reducing costs, and accessing powerful partner expertise and resources. By understanding various indirect sales strategies, implementing best practices, and using the right tools, you can unlock significant growth opportunities for your business.

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Richard has more than 20 years of SaaS experience and teaches revenue teams how to earn the right to ask questions, which questions to ask, and when to do it. Richard's clients include Zoom, Salesforce, Google Cloud, PagerDuty, DoorDash, Salesloft, and Gainsight. He's also the co-founder of Surf... Read More & Sales. Learn more at theharrisconsultinggroup.com.