Tl;dr - For years, industrial sales occurred largely through sales channel. That's gradually changing as the internet enables direct relationships between buyers and sellers. At the same time, cloud software vendors are relying more on channel. Why? What lessons can manufacturers learn and apply? How can manufacturers create more value and strengthen indirect sales channel?
Partnership Marketing and Sales
For decades industrial sales have naturally followed a channel model.
Distribution logistics (think lumber yards, plumbing and electric supply) have dictated a hub & spoke model. Local representation with relationships, technical service, and spare parts availability have added value for manufacturers and customers.
But over the last 20 years that has gradually eroded.
As buyers began to use the internet and manufacturers responded, many procurement relationships were established directly. Manufacturers no longer had to rely on channel partners to take their products to the market. Buyers came to them...if they successfully leveraged digital tools.
And reps spraying and praying vapid line cards diminished in value.
Remote diagnostic tools and ubiquitous overnight shipment reduced the dependence on physical proximity - as 3D printing may do even more so. Many distributors and reps failed to update their models to create more value, so previously important relationships languished as buyers had alternatives and sellers clung to outdated assumptions.
Interestingly, the tech industry has moved recently in the opposite direction. While software was originally sold directly, it's now almost exclusively sold through channel. Software's distributors are "solutions partners," having been renamed from the original VARs (value added resellers.) Agents/reps are known as affiliates or referral partners.
These programs are growing quickly.
95% of Microsoft's commercial revenue flows through solutions partners like your managed service provider. Salesforce's partner ecosystem will create 9.3MM jobs by 2026. These are large examples but representative of the trend. (More on how industrial manufacturers can leverage technology partner ecosystem lessons learned in this article.)
So clearly, the market isn't insisting on "cutting out the middle man," as many of us predicted. But it does expect value beyond simply paper pushing.
So, what can industrial manufacturers do to boost customer value via their channel?
Indirect Channel Sales in Industrial Manufacturing
Obviously there are lots of operational opportunities to improve the customer experience over the entire relationship. Examples are the availability of self-service information, automatic shipment of wear items, remote diagnostic tools, and a constant flow of recommendations to preclude the common, gradual deterioration of performance.
Manufacturers or partners can create these programs independently, but the customer has the best experience (and manufacturers and partners thrive) when it's a collective effort. Technology offers enormous opportunities. A CDP (customer data platform) can help to synchronize information, a knowledge base provides self-service info, and custom objects in the sales tech stack can simplify providing customers with a portal and specific information.
But before a prospect becomes a customer, there are many opportunities for partner programs to create value by selling better.
This isn't just about selling more. That doesn't create value for buyers beyond possibly helping manufacturers and channel thrive, which is inherently valuable for customers over the long term.
This is about selling consistently to help buyers better understand their problems and properly apply a manufacturer's solutions (or even a combination of several manufacturers' technology and particular integration and application expertise of a channel partner) to drive significant value for buyers.
Training and Tools for the Sales Channel
Manufacturers have long offered technical training for channel partners. This focuses deeply on the features and benefits of machinery and products that can inform sales discussions, but are secondary to strong sales.
This feels natural for manufacturers who view their world through the lens of their machinery and products. That's where they focus their internal training and coaching. (more here on sales coaching vs. product training)
Certainly that training is important. Application familiarity is even more so, as are basics of sales from strategy to tactics and even to questions to ask and how to use sales enablement content. Let's look at some examples.
Sales Process & Sales Methodology
Any industrial sales effort that isn't built on an appropriate sales methodology or follows a consistent and appropriate sales process will stumble. Yet many aren't.
Manufacturers should develop and refine them internally and then share best practices with channel partners. Common approaches and vocabulary will improve performance, particularly since many channel partners overlook these building blocks (and may not even understand the difference between process and methodology.)
Integrated CRM, marketing automation, and pipeline management will facilitate this.
Lead Management
One of the biggest rubs in channel sales is lead management. Whether exclusive or not, channel should keep the manufacturer informed on leads and updated on status. Manufacturers who generate and share leads expect appropriate follow-up and updates in return.
This often breaks down.
Manufacturers and channel partners must set mutual expectations for lead generation, lead management, and information exchange.
Territory and Account Management
Who defines the ICP? Who identifies target accounts? Who ensures that a territory is fully and consistently covered?
Channel partners often juggle various manufacturers' interests but do so in an ad hoc way.
A strong indirect sales channel partnership will ensure these topics are proactively addressed and managed.
Pipeline Management and Opportunity Qualification
Manufacturers and industrial channel sales have a wonderful team selling opportunity. But where should it focus?
What deals merit coordination? Which ones are at a stage where specific coordinated efforts are likely to yield results?
What deals can be comfortably included in the sales forecast at the manufacturer's level?
Without common and rigorous opportunity qualification, it's all just creative thinking. Mutual success requires aligned pipeline management.
Sales Force Optimization
By definition, most salespeople are average. Years of carrying business cards with the same logo, and deep technical familiarity don't make better sales reps.
There are innate competencies and others that are trainable and coachable. 2nd, 3rd & 4th standard deviation sales talent is carefully selected and cultivated. You need a system like Billy Bean's Moneyball that understands the important attributes and skills, selects for them, cultivates them, and builds a culture.
How many companies do that with their capital equipment sales staff? Precious few. Some may think they do, but they rely on resumes and interviews, which are each only 18% predictive of sales success.
So manufacturers themselves should be upping their game in evaluation of their sales force to improve the fit of people to their roles and to focus training and coaching. They should also use candidate assessments to streamline their recruiting process and improve their hiring success with reps who will ramp up quickly and consistently perform.
AND they should also create a framework to help their channel partners do the same!
A manufacturer can take the following steps economically:
- facilitate subsidized sales team evaluations
- provide subsidized sales training around common a proven sales process & methodology
- model proper coaching with channel partners
- advise on an effective recruiting process - perhaps even run it for channel partners - using sales candidate assessments
There's a small cost to manufacturers, a huge benefit for channel partners, and likely collaborative success.
Change Management and Resistant Channel Partners
Will some channel partners resist?
Of course.
That means two things.
First, manufacturers should consider communications and change management techniques to get channel partners on board. It's also reasonable to have some flexibility in implementing programs.
Second, recognize intransigence as an important signal. If a channel partner actively thwarts efforts, they're not a good fit. Ideal channel partners will see these programs as hugely valuable. Those who see them as intrusive will likely never align properly.
So not only will these value-creating steps benefit buyers and your mutual growth with channel partners, but they also become great qualification criteria for new and existing partners.
