Indirect selling
‘Indirect selling’ or an ‘indirect sales force’ is where you effectively out-source the sales activity to another organisation that, under contract, will sell your product or service using its own staff and resources. To help you decide if a direct or an indirect sales force is best for your business, see our article on Choosing and managing your sales channels.
Advantages and disadvantages of using an indirect sales force
Indirect selling is often cheaper than direct selling as you will not be taking on the overhead of employing your own staff, who may or may not be making successful sales. However, you need to balance this with some of the disadvantages:
- you have no relationship with the end-user of your product or service
- you lose an element of control over your brand
- you will have to put resource into managing the relationship with your indirect sales force to make sure they are working within the bounds of the contract, are promoting your products in the most effective way and are promoting the correct company image.
Different types of indirect sales channels
Resellers
Resellers are businesses in their own right that may have a portfolio of services of their own, yours, and some from other organisations as well. They will often package these services and add value to the customer by providing a total solution such as installation and training, ongoing technical or customer support, and possibly some consultancy services as well. They are mostly found in engineering and IT industries.
The reseller will often be promoting competing products to your own so you will need to establish a very good working relationship with them and provide a lot of ongoing support and contact to ensure they promote your product(s) positively. The reseller will place orders with you for the required goods once they make a sale and will expect a very quick delivery. They will then sell the goods on to their customer under their own company name and at a higher price. They may demand an exclusive geographical territory.
Sales agents
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 temporarily or permanently supplement your own sales force
- you want to pay only on results
Retailers
If you’re selling to the general public on a large scale, retail outlets may be a good choice. 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.
Most retail outlets will work through a centralised buyer. You will need to sell your product to the buyer to convince them of its quality and that it’s something their customers will want to buy. You’ll also need to demonstrate that you’re a reliable supplier who can fulfil their order and delivery timescales – the last thing they want is an empty warehouse with no stock.
Wholesalers
A wholesaler will buy from you in bulk to on-sell to end customers. The wholesaler will expect buy from you at a discounted rate to take account of the large amount of stock taken and because you’ve had no marketing or sales costs to cover.
Affiliates
If you have a website you might want to consider running an affiliate scheme. Affiliate marketing is a way you can market your business via other companies’ web sites. They choose to be your affiliate and advertise and promote your products on their website, typically via banners or static or text links which link back to your website. Tracking codes enable you to identify where the original sales lead came from so you can pay your affiliate the appropriate commissions on the sales you have made as a result of the traffic from their website.
You can run your own affiliate scheme but will need to have appropriate affiliate marketing software, Affiliate Wiz and Affiliatetrail are two examples but if you’re considering this option you may find this affiliate software review useful
Or you could use one of the established affiliate networks to run your scheme for you, such as TradeDoubler, Affiliate Window, Commission Junction
Indirect selling
‘Indirect selling’ or an ‘indirect sales force’ is where you effectively out-source the sales activity to another organisation that, under contract, will sell your product or service using its own staff and resources. To help you decide if a direct or an indirect sales force is best for your business, see our article on Choosing and managing your sales channels.
Advantages and disadvantages of using an indirect sales force
Indirect selling is often cheaper than direct selling as you will not be taking on the overhead of employing your own staff, who may or may not be making successful sales. However, you need to balance this with some of the disadvantages:
- you have no relationship with the end-user of your product or service
- you lose an element of control over your brand
- you will have to put resource into managing the relationship with your indirect sales force to make sure they are working within the bounds of the contract, are promoting your products in the most effective way and are promoting the correct company image.
Different types of indirect sales channels
Resellers
Resellers are businesses in their own right that may have a portfolio of services of their own, yours, and some from other organisations as well. They will often package these services and add value to the customer by providing a total solution such as installation and training, ongoing technical or customer support, and possibly some consultancy services as well. They are mostly found in engineering and IT industries.
The reseller will often be promoting competing products to your own so you will need to establish a very good working relationship with them and provide a lot of ongoing support and contact to ensure they promote your product(s) positively. The reseller will place orders with you for the required goods once they make a sale and will expect a very quick delivery. They will then sell the goods on to their customer under their own company name and at a higher price. They may demand an exclusive geographical territory.
Sales agents
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 temporarily or permanently supplement your own sales force
- you want to pay only on results
Retailers
If you’re selling to the general public on a large scale, retail outlets may be a good choice. 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.
Most retail outlets will work through a centralised buyer. You will need to sell your product to the buyer to convince them of its quality and that it’s something their customers will want to buy. You’ll also need to demonstrate that you’re a reliable supplier who can fulfil their order and delivery timescales – the last thing they want is an empty warehouse with no stock.
Wholesalers
A wholesaler will buy from you in bulk to on-sell to end customers. The wholesaler will expect buy from you at a discounted rate to take account of the large amount of stock taken and because you’ve had no marketing or sales costs to cover.
Affiliates
If you have a website you might want to consider running an affiliate scheme. Affiliate marketing is a way you can market your business via other companies’ web sites. They choose to be your affiliate and advertise and promote your products on their website, typically via banners or static or text links which link back to your website. Tracking codes enable you to identify where the original sales lead came from so you can pay your affiliate the appropriate commissions on the sales you have made as a result of the traffic from their website.
You can run your own affiliate scheme but will need to have appropriate affiliate marketing software, Affiliate Wiz and Affiliatetrail are two examples but if you’re considering this option you may find this affiliate software review useful
Or you could use one of the established affiliate networks to run your scheme for you, such as TradeDoubler, Affiliate Window, Commission Junction