Channel sales help businesses expand into new markets, reach buyers they couldn’t access on their own and create new revenue streams through partners, resellers and affiliates.
The challenge is that not every partner will drive results, and managing indirect sales can quickly get complicated without the right strategy.
This guide explains how channel sales works, which channel models to consider and how to build a partner program that drives measurable revenue growth.
Key takeaways from channel sales
A channel sales strategy helps you grow through partners like resellers, affiliates and distributors who sell your products or services to their own audiences.
With the right partners, you can reach new customers, enter new markets and generate more revenue without hiring a large sales team.
The biggest challenge is maintaining visibility and control, but a clear partner strategy, strong enablement and regular performance tracking help.
Pipedrive lets you manage partner relationships, track partner-sourced deals and measure channel performance in one place.
What is channel sales (definition)?
A channel sales strategy involves partnering and working with third parties to sell your products or services to a wider audience.
These partners and third parties include referral partners, affiliate partners, wholesalers, distributors, managed service providers, marketplaces or value-added resellers.
Channel sales programs are useful for business growth in three key ways:
To reach new customers who don’t buy directly from the vendor, preferring instead to buy from consultants or resellers
To sell products through third-party marketplaces and managed service providers, which may offer package deals to end-customers and appeal to buyers looking for different product options and deals
To help you find business in new geographic regions
Channel sales is a contrast to a traditional, direct sales strategy, in which your company’s sales team is solely responsible for selling products to customers.
According to Pipedrive’s former VP of Channels Sales and Partnerships:
“While direct sales relies on your reps to grow your business, adopting a channel sales strategy can give you more boots on the street, enabling you to access customers who typically would not or cannot buy directly from the vendor. This creates new revenue streams over time.”
Even if you adopt an indirect sales strategy, you should still build your direct sales team to achieve the best results.
A direct sales team helps you maintain customer relationships and gain firsthand insights into buyer needs, which can help you improve your products and sales strategy.
What types of channel models are there?
There are several types of channel models, each helping you reach customers in different ways depending on your product, market and growth stage.
Here are some of the options open to you (some may look more or less attractive depending on your company size, industry and product):
Referral partners | Affiliate partners who recommend your product and send leads your way in exchange for a commission or incentive. Why work with them: To get more leads without expanding your sales team. |
Distributors | Companies that buy, store and distribute your products to other sellers or resellers. Why work with them: You need help scaling distribution across multiple markets or channels. |
Managed service providers (MSPs) | Partners that sell, manage and support your product on behalf of customers. Why work with them: Your product needs ongoing support, management or technical expertise. |
Value-added resellers (VARs) | Online platforms where customers discover and purchase your products. Why work with them: To increase visibility and reach a wider audience quickly. |
Retailers | Businesses that sell your products directly to end customers, online or in-store. Why work with them: To expand reach through established consumer sales channels. |
Agents | Third parties who help sell your product but don’t take ownership of the inventory. Why work with them: You need local market expertise or access to specific regions. |
Dealers | Businesses that buy your products and resell them to customers. Why work with them: To scale sales through an established resale network. |
Influencers | Individuals who promote your product to their audience to drive awareness and interest. Why work with them: To build trust and reach niche audiences quickly. |
For example, Pipedrive’s partner program supports different types of channel partners, depending on how involved they are in the sales process:
Solution provider partners resell Pipedrive and often provide services like onboarding, consulting, implementation or CRM optimization.
Technology partners focus on integrations. They connect their own product or platform with Pipedrive, creating added value for customers through a shared ecosystem.
Affiliate partners drive referrals at scale. They promote the product to their audience and earn commissions for each new customer they bring in.
Each partner type helps expand Pipedrive’s reach and support customers across markets with different needs.
Note: Using affiliate marketing software like Tapfiliate helps you manage and scale affiliate relationships in one place. These affiliate systems make it easier to track performance, pay commissions accurately and grow your program.
Channel sales example
This case study from the Incentive Research Foundation shows how a computer hardware manufacturer grew revenue through its reseller network.
The company relied on Master Resellers and Value-Added Resellers (VARs) to sell products across multiple territories, but faced growing competition and a reduced budget for its incentive program.
To improve results, the company redesigned its channel program around clear performance goals, targeted incentives and partner enablement.
Here were the results after nine months:
Revenue increased by 32%, exceeding the company’s 20% growth target
Market share surpassed 30% in 9 of 12 key sales territories
Net operating income increased to 19% of revenue
30% of rewarded partners were first-time winners, showing broader partner engagement
Partner satisfaction was high, with 87.3% of participants rating the program as “excellent”
Turnover among key reseller partners fell by 2%
The program generated an ROI of $747,800 after accounting for all additional costs
The case highlights how channel sales work best when you actively support partners with the right incentives, training and performance metrics.
What are the advantages of channel sales?
Channel sales help businesses grow faster, reach new markets and customers and reduce the costs of scaling.
By partnering with third parties that already have established audiences, you can expand your reach without building everything in-house.
Here are some advantages of adopting a channel sales model in more detail.
Scale your business
Channel sales can expand your reach faster through partners with an established audience, even when your internal resources are limited.
Referral partners, in particular, can quickly put your product in front of new customers and help you generate leads without building a large sales team.
In the case of Alex Rampbell, current General Partner at Andreessen Horowitz, it meant taking a startup from zero to 10,000+ clients within two years.
Rampbell notes that channel sales helped him attract long-tail clients, or clients that had a deep need for his product or service but were difficult to find and thus sell to.
That said, not all channel programs are fast to set up. Some, such as value-added resellers, can take six months to a year to fully onboard. Most partners also need ongoing training as your product evolves.
Enter new markets and expand globally
A local partner in a new sales territory can accelerate market entry and help you win customers faster.
They know the target market better than you do, already have an audience in your preferred space and understand the business culture. Taking advantage of this knowledge is key to broadening your brand reach and acquiring new leads, prospects and customers.
Per Pipedrive’s VP of Channels Sales & Partnerships:
“Channel programs are a low-risk and low-cost approach to opening new geographic regions where a company does not have existing resources, or where they want to test or establish the market.”
Introduce your products to different customers
Partners help you reach new audiences, whether you’re expanding globally or targeting a specific customer segment.
For example, retail brands often partner with others to extend their presence beyond their own stores and reach more customers through additional sales channels.
Channel sales are also effective in B2B markets, where many buyers prefer to purchase through intermediaries such as resellers or service providers. In these cases, channel partners help you reach customers who may never engage with you directly.
Save serious money on distributing, shipping and web hosting
Channel partners cut distribution, shipping and infrastructure costs by leveraging existing partner networks rather than building everything in-house.
Dealing with distribution management is often tedious, time-consuming and expensive. Through certain channels and intermediaries, you can offload these costs onto partners that already have the existing infrastructure.
For example, retail stores like TJ Maxx, Home Goods and Marshall’s (all owned by TJX Cos. Inc) sell products and merchandise from channel partners.
The company’s entire business model rests on buying items from supplier and vendor partners and then selling them via their popular retail (and online) locations.
This is a great opportunity for suppliers or vendors that are looking to grow their customer base and expand their reach by getting their products or merchandise into big-name stores.
TJX Cos, Inc. brands not only use channel partners to source products, but also to distribute their products and merchandise to their many retail locations.
Rather than hiring, training and maintaining a distribution fleet, they use the services of partner companies that already have a fully functioning distribution chain. Using these pre-built distribution channel strategies saves TJX Cos, Inc. time, money and operational oversight.
Boost your company’s reputation and name recognition
Channel partners can boost your credibility and visibility by associating you with trusted, well-known platforms and brands.
For example, any tech company in the US that has its products featured at Best Buy or on NewEgg.com has serious credibility compared to companies trying to sell software independently.
There are also digital equivalents of trusted brands, such as Amazon Web Services and Samsung AppStack, which are marketplaces that sell software and apps from channel partners.
These digital channel partners offer many benefits, including:
Their products have a wider audience
They save on online administration costs and fees
Their own websites get backlinks from well-known companies
If you’re a growing business, partnering with established brands creates a sort of halo effect for your company, associating you with bigger names in your industry.
Empower your sales reps to focus on their strengths
Using third-party partners frees up your sales team to focus on high-value selling while also delivering the services customers need to succeed.
So much of managing a sales team is ensuring your reps can do their jobs effectively. Rather than overwhelm them with unrealistic quotas, a channel sales strategy takes some of the pressure off your in-house team and sales operations.
Using channel sales also allows your reps to spend more time talking to and building relationships with potential customers directly, nurturing them along the customer journey.
You never want to stretch your reps so thin that they sacrifice building and nurturing relationships with their prospects. In the long run, this could hurt your business’s credibility as valuable relationships decay.
Offer services for complicated products
Channel partners deliver the services complex products need while reducing the cost and burden of doing it all in-house.
Value-added services (such as consulting, customer success and professional services) are a vital part of many businesses – especially for those that produce and sell software.
However, these services are often expensive to maintain, and it can sometimes be difficult to quantify the added revenue.
That’s where the right channel partners come in. They support the customers by guiding them through setup, helping them overcome common challenges and ensuring they get the most out of your product.
Channel partners are essentially salespeople, marketers, service providers and brand advocates rolled into one.
Free templates to track sales
What are the challenges of channel sales?
Channel sales can accelerate growth but also introduce complexity, reduced control and increased dependence on external partners.
Here’s a rundown of the pros and cons of channel sales:
Pros | Cons |
Scale your business with limited resources | Have less control over your business because you’re trusting an indirect salesforce to represent your brand. |
Enter new markets and introduce your products to more customers in different demographics. | Make less profit because of third-party commissions. |
Save money on distributing and shipping by taking advantage of existing processes (especially if you’re in retail). | Miss out on critical customer feedback, making it harder to get a well-rounded critique of your products or services. |
Boost your company’s reputation and name recognition by partnering with established brands that have credibility. | Run the risk of poor sales due to unreliable or underperforming partners. |
Relieve pressure from sales reps by sharing the sales responsibility with third parties, giving them time to nurture relationships with their own prospects and customers. | Limit your flexibility in introducing new features or updated messaging as partners decide on positioning and selling strategies. |
Offer services for complex products, reducing the need for customer support teams. |
Let’s take a look at the challenges in more detail.
Less control over your business
With channel partners, you can’t fully control how your product is positioned or sold, which risks damaging your brand reputation and reducing sales rather than increasing them.
Even with training and guidelines, partners’ messaging and customer interactions may vary, which can impact your brand reputation.
You also lose some visibility over the full sales cycle, so performance isn’t entirely in your hands.
Lower margins due to revenue sharing
Revenue sharing reduces your per-sale margin, even if it lowers your overall cost to serve customers.
With channel partners, every sale is split, with partners taking anywhere from 10% to 50% or more. That means lower margins compared to direct sales.
However, this can be offset by reduced acquisition, sales and support costs, since partners take on part of the workload.
Reduced time spent directly with customers
Channel sales can reduce your direct access to customers, but it doesn’t mean losing control if it’s managed well.
From feedback to product recommendations and beyond, your existing customers are a treasure trove of insights.
Less face time with your customers and end users means less time actually talking to them and understanding their unique needs, challenges, pain points and desires. In some cases, partners may also limit direct access between vendors and end customers, thereby reducing visibility.
That said, partners can still be a valuable source of insight. They often bring feedback from the field, along with vertical expertise, competitive intelligence and real-world product usage insights.
Many companies also use Partner Advisory Boards to formalize this feedback loop. This program involves key channel partners getting together to share feedback, insights and strategic input.
The key to overcoming these challenges is how you structure the relationship. You still control who you partner with, how the relationship works and what success looks like.
4 steps to implement a channel sales strategy
A successful channel program can significantly increase your revenue, but you have to work closely with your partners to ensure they use the right plans and strategies.
Partners and reps sell differently, often requiring different messaging, marketing assets and more. For partners to sell your products effectively, you need to give them the right training, tools and assets.
You also need a process you can roll out and replicate for every partner or channel you pursue in the future.
Below are the key steps for creating and implementing a channel sales strategy:
1. Confirm you’re in the right stage for channel sales
Make sure your business is ready for channel sales before bringing in partners, so you don’t scale a process that isn’t working yet.
This process means reflecting on whether you have the bandwidth for channel sales right now.
Here are some basic requirements for companies thinking about channel sales:
You have a defined, proven sales process that you can replicate
You understand how to sell your product to your target audience, and there’s enough awareness about your product for someone else to sell it, too
You have (or can help partners build) a comprehensive marketing channel strategy and sales enablement resources that new partners can leverage to maximize reach and stay on brand
If you don’t meet these criteria, channel sales may still be an option. In fact, some partners may help you develop your sales process or find the right target audience.
Pipedrive can help you figure out where you stand with all of the above. From sales targets to proving your company’s track record, our reporting features can help confirm when it’s the right time to expand.
Here’s an example of a Pipedrive reporting dashboard:
Visualizing this key information at a glance helps you see what’s working and what’s not. As a result, you can make fast and informed decisions on where to invest more or make adjustments.
Schedule more meetings with Pipedrive
2. Make sure your partners are a perfect fit
Choosing the right partners is critical to reaching the right audience and driving consistent, high-quality sales growth.
Depending on your business, you might feel like you’re spoiled for choice in terms of potential partners. On the flip side, finding the perfect partner might require some digging.
Whatever you do, don’t settle for the first person who approaches you (and vice versa).
Develop an Ideal Partner Profile (IPP) to define what a “good” partner looks like for your business.
To do this, create a list of partner attributes that will give you the best chance for success.
At a minimum, strong partners should:
Understand your target audience well
Offer complementary expertise, services or products
Operate in markets where you want to grow
Have the ability to actively market and sell your product
What a “perfect” partner looks like varies depending on your company, location, audience and sales goals.
3. Entice and empower your partners to perform
You need to actively motivate and equip partners if you want them to consistently sell your product well.
Don’t assume someone is automatically eager to work with you. Once you find a partner (or they find you), you need to clearly show what’s in it for them and give them what they need to sell effectively.
Here’s how to do this:
Offer clear, competitive incentives. Use things like referral commissions, revenue share or discounts to make the opportunity worth their time. The better the incentive, the more seriously they’ll take promoting your product.
Invest in education and enablement. Partners can’t sell what they don’t understand. Help them get up to speed with webinars, product training, tutorials, testimonials and clear product documentation.
Use partner tiers to drive performance. Set up tiered levels, so partners know what’s expected and what they can earn as they grow. This structure also helps you manage smaller partners while rewarding high performers with better benefits and support.
Give them real sales tools. Give partners everything they need to actually sell. That includes buyer personas, call scripts, email templates, competitive insights, pricing details and customer data.
4. Consider hiring a channel sales manager
Hiring a full-time channel manager helps you scale and develop partner relationship management (PRM) without losing control or momentum.
Channel sales managers are also responsible for providing partners with resources and monitoring performance. As a result, sales reps can focus more on closing deals and less time managing channel sales performance.
Below are examples of the key responsibilities in a channel sales manager job description:
Prospect, identify and develop strong relationships with new and existing partner sales contacts
Collaborate with partners to develop partner-specific business plans which outline goals, tactics and KPIs that will be used to measure results
Consistently communicate with partner sales teams to ensure the team is hitting and exceeding quotas, and overseeing their development alongside the Head of Channels and Growth
Dynamically educate channel partners on our value proposition, including selling best practices, technology solutions, platform roadmap and operational and partner program changes
Identify and influence all levels of channel partner organizations, including sellers, operations, engineering, client support and executive leadership
Understand the positioning in the target market and how that compares to our competitors, to be able to lead thoughtful discussions on why partners should invest their selling efforts in our value proposition
Establish strong working relationships internally across direct sales and leadership teams
Provide a deal strategy, support and resources to the partner sales team to drive sales
Track and report on revenue and targets
Prepare and participate in weekly forecast calls and quarterly business reviews
A strong channel sales leader acts as the bridge between your business and your partners, keeping everyone aligned, informed and focused on driving revenue.
How to use Pipedrive to manage channel sales and increase revenue
Pipedrive is a customer relationship management (CRM) system that helps you track and manage sales in one location.
Businesses can use Pipedrive to organize partners, track partner-led deals and measure channel performance, enabling them to scale revenue without losing visibility or control.
Watch this video for a quick breakdown of how to use Pipedrive’s CRM:
Here’s how to use Pipedrive for channel sales:
Create a partner management structure. Use custom fields to define things like partner type (referral, reseller, VAR), region and tier. Store each partner as an organization or contact, with all activity tied back to them so you can always see the full relationship history.
Track partner-sourced deals. Create a dedicated channel pipeline or use a “partner-sourced” label for deals. Tag every partner lead to accurately track indirect sales performance at each pipeline stage.
Automate partner workflows. Use workflow automation to trigger follow-up tasks when a partner sends a lead, assign deals to the right owner and send notifications. You can also automate onboarding steps, such as welcome emails and training sequences, to deliver a consistent partner experience.
Use dashboards. Build reports to track revenue by partner, conversion rates of partner-sourced deals and overall channel contribution. This overview helps you quickly see which partners drive growth and which ones need more support or attention.
Centralize partner communication. Use email sync and activity tracking to log every message, call and meeting against the partner or deal. This functionality ensures anyone can pick up a conversation with full context.
Here’s an example of how to add a channel partner to Pipedrive:
Instead of managing partners in separate tools or spreadsheets, everything is in your CRM, so you can see what’s working and how it contributes to revenue growth.
Final thoughts
Channel sales works best when you choose the right partner types, give them a clear structure and enablement and actively track performance so you can scale what’s working.
Start by identifying one partner type that fits your business (referral, reseller or solution provider) and build a simple, repeatable process for onboarding and tracking their impact.
Pipedrive helps you centralize partner data, track partner-sourced deals and measure channel performance in one place.
Sign up for a free 14-day trial to get full visibility into which partners are driving revenue and where to focus your efforts next.
