We have found the indirect channel can be a valuable asset if managed appropriately.  It can enable firms to scale quickly and gain access to markets that might otherwise be costly and challenging to enter into.

How do you influence sales people when you don’t directly impact their compensation?  This is an age-old struggle many firms have had with the indirect channel…

 

The key we have found is to understand two key factors important to indirect sales reps:

 

  1. What are the Key Performance Indicators that reps are being measured around and address appropriately?

     

  2. How are reps packing your product with others and how can you provide the pricing flexibility to support bundling?

     

Download the Indirect Sales Best Practices Tool to utilize a list of indirect sales best practices, find out what each best practice might incent, and find out how each best practice can “Create a win.”

 

Full Control is Possible – But Few Have Conquered

 

There have been premier brands like Sonos or Bose that have been successful in eliminating all discounts through strict resale agreements.  Those firms have a first-mover and patent advantage whereby customers are less price sensitive and are willing to pay a premiums for their goods.  They put in place and enforce strict pricing guidelines thereby controlling the pricing across channels – direct sales, indirect through brick and mortar stores, indirect through websites like Amazon, etc.  As a result, indirect sales reps eliminate the possibility of discounting these in-demand products and end up discounting other products to add value-pricing to clients.  If you have products that command those restrictions, congratulations to having that control.  For the vast majority of products, we must explore more creative approaches to incent the most appropriate indirect channel behaviors.

 

So What Should Consider if You Don’t Have Full Control

 

First, acknowledge that we have various levers that motivate actions and behaviors.  When you have direct management over your sales staff, you can fully control the actions and behaviors of your sales staff – setting the key metrics and how they will be compensated.  You monitor behaviors and adjust as necessary to maximize your revenue and income.

 

There are many benefits to the indirect channel (scale, etc.), but a common challenge is out do you control pricing and discounting so as to maximize your sales across direct and various indirect channels.

 

Firms selling your goods through an indirect channel might focus on different metrics based on what their management is measuring and compensating around:

 

  • # of transactions
  • # of clients
  • # of repeat clients
  • Total sales
  • Total margin
  • Contribution margin %

     

Based on what is being stressed, there could be an array of discounting techniques that they could drive, particularly at the end of a measurement period.  As the old GI Joe cartoon used to say, “Knowing is Half the Battle”.  It’s important that you understand what could be your weak link – how your indirect channel is being incented so you can address.

 

We have broken down considerations as you look at addressing you indirect channel and the metrics they might be measured around.  Again, addressing potential price disconnects and potentially damaging discounting practices.  Visit one of our many tools, the Indirectly Influencing Indirect Sales best practices that further breaks down considerations based on which metrics are of focus for the reps.

 

Supporting the Indirect Value-Add Components…Packaging Your Products with Others

 

If you find your products frequently being sold with other products not produced or sold through your company, the value of an indirect channel that has the flexibility to consolidate is high.  Supporting this channel with the appropriate price flexibility is necessary to support indirect reps successes and eventually yours.  That being said, don’t let your product the dumping ground for where all discounts end up.  Choosing the partners that will represent your brand, identifying complimentary products and other value-add perspectives reps can provide and setting the right floors for which your product is sold is important.  Interviewing reps and managers across your partners will lead to insights into the key pricing levels you need to be at in order to be competitive.

 

Learn about the value-add pairings that reps do.  Identify how you and complimentary products can work together to “give-to-get” more through volume and shared cross sell.  Turning what could be a weak pricing strategy that leads to varying and frequent discounts to more consistent collaboration and less individual discounts – thereby stabilizing your control over your pricing strategy.

 

So You Want to Influence…. Now How…

 

We have developed our proprietary Revenue Growth Model (RGM) and Go To Market (GTM) Strategy to help firms like yours approach these and many other sales opportunities and challenges.  We have found the indirect channel can be a valuable asset if managed appropriately.  Enabling firms to scale quickly and gain access to markets that might otherwise be costly and challenging to enter into.

 

Download the Indirect Sales Best Practices Tool to utilize a list of indirect sales best practices, find out what each best practice might incent, and find out how each best practice can “Create a win.”

 


 

Additional Resources

 

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ABOUT THE AUTHOR

Doug Bartels

Securing the business to scale and grow in the most effective manner

Serve as SBI’s head of finance to enable the partners to invest more time helping our clients make your number.  My role is to support the rapid growth of SBI to maintain the quality of delivery expected of our clients by maintaining healthy bottom line while supporting our continued growth.

 

In the past, Doug functioned as a management consultant in the financial services industry serving top tier wealth management, asset management and brokerage institutions in the areas of strategy development, project management, process improvement, systems integration and risk management.

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