What is the channel?
In the world of indirect sales, a channel refers to the path that a product or service follows from the producer to the end consumer. Channel partners, such as distributors, resellers, and influencers/affiliates, play a critical role in this journey, helping businesses extend their reach, penetrate new markets, and boost sales. However, the term “channel” is becoming less popular in favor of “partnerships,” which better reflects the modern partner ecosystem landscape.
To illustrate what the channel is, suppose you’re a company that develops employee training software. Instead of selling directly to customers, you might partner with learning consulting firms (your channel partner) that recommend your tool to their business clients. You may also work with value-added resellers (another type of channel partner) that handles the sale directly, implements your solution for the customer, and provides ongoing support. You may have ten partners, or you may have a thousand, depending on your company’s needs.
Channels are important to indirect sales, serving as an extension of your in-house sales team. In addition to more sales, a diverse ecosystem of channel partners offers the following benefits.
- By leveraging the networks and market knowledge of your channel partners, you can reach more customers and new markets
- Since channel partners can handle different aspects of sales, marketing, and customer service, your business can focus on its core competencies
- Local channel partners can provide personalized service, local language support, and faster response times, improving your overall customer experience
The shift towards cooperative channel partner ecosystems is here to stay. A McKinsey article forecasts that: “By 2030, ecosystems will play a major role in almost every aspect of global economy, driving around $80 trillion in annual revenue—a third of total global revenue.”
When we talk about the channel in indirect sales, we’re referring to this crucial ecosystem of partners that help bring products or services to market. It’s a powerful model that can drive significant growth for your business.