Channel sales

What is channel sales?

Channel sales is selling through partners such as resellers, distributors or referral firms. Gartner describes it as the indirect sales channel a B2B organization uses to go to market, with partners playing roles such as aggregating, delivering or administering the solution. In commercial services, the channel often looks like general contractors, property management firms, equipment manufacturers and insurers who bring work to the company.

Why it matters to a revenue leader

Partners reach buyers a direct team cannot, often at a lower cost per deal. The trade-off is control: the partner owns part of the relationship, and pricing, quality and customer data become harder to manage. In services, a single general contractor or manufacturer can be the largest source of work in a branch, so that relationship deserves the same planning and review as a key account. Partners also follow their own economics: in software, Martin Casado of Andreessen Horowitz has observed that service revenue is often more attractive to channel partners than license revenue.

A mechanical services company finds that 35% of its new project work in one region comes from two general contractors. When one of them loses a large bid program, the branch's pipeline drops by a fifth in a single quarter. The CRO had been reviewing the branch's direct pipeline every week and its partner pipeline almost never.