Advantages and disadvantages of using an indirect sales force
Indirect selling is often cheaper than direct selling as you won't have the overheads of employing your own staff. But don't ignore some of the disadvantages
You have no relationship with customers
- You lose an element of control over your brand
You need someone to keep in regular contact with your resellers and measure their results
- They may not be available when you need to provide product training
Agree from the outset exactly what you want your sales agents, resellers or freelancers to do, how their sucess will be measured, and what the terms are to exit the arrangement. Have a written agreement or contract with your sales agents or freelancers to avoid any misunderstandings later on.
Different types of indirect sales channels
Resellers are businesses in their own right and may have a portfolio of services of their own, yours, and some from other organisations as well. The reseller will place orders with you once they make a sale and then sell the goods on to their customer under their own company name and at a higher price.
A reseller will often package the services they're reselling and add value to the customer by providing additional services, such as installation and training, or ongoing technical or customer support. They may demand an exclusive geographical territory to guard their local market. If you agree to this put specific targets in place, and a terminations clause if they don't reach the targets.
Sales agents may be other businesses or self-employed individuals who will sell your product or service in return for a sales commission. Depending on whether they sell under their own name or as a sales agent of yours will determine whether you have any contact with the end customer. The sales agent will normally have specialist knowledge in your field and can help to create a positive customer experience.
Sales agents can be effective when:
Test launching a new product or service
Testing expansion into a new market
You need to supplement your own sales force (temporarily or permanently)
You want to pay only on results
If you’re selling to the general public on a large scale, you could try and get your product stocked by retail outlets. Think about whether you need specialist or trained sales people or whether your product can be bought off the shelf. You’ll also need to consider how wide a geography your warehouse and delivery system can cope with.
You'll have to convince the buyer you've got a quality product people are going to buy, and demonstrate you’re a reliable supplier who can fulfil their order and delivery timescales.
A wholesaler will buy from you in bulk to on-sell to end customers. The wholesaler will negotiate a discounted rate with you. To agree tha rate take into account you've got a very large order and have had no marketing or sales costs.
Affiliate marketing is where other companies sell your products via their own web site. They choose to advertise and promote your products on their website, typically via banners or static or text links which link back to your website. Tracking codes identify where the sales lead came from so you can pay your affiliate the appropriate commissions.
You can run your own affiliate marketing software or use one of the established affiliate networks such as TradeDoubler or Commission Junction.