One of the biggest benefits is the lower upfront costs associated with indirect sales.
Rather than having to purchase email lists, build a following, spend an arm and a leg for advertisement, and the timing issues derived from direct sales, indirect sales allows you to get right into the game using other people’s networks.
- 1. What Are Indirect Sales?
- 1.1. 3 Types of Indirect Sales Strategies
- 1.1.1. Reseller Partners
- 1.1.2. Affiliate Partners
- 1.1.3. Referral Partners
- 1.2. How Do Indirect Sales Work?
- 2. What Are Direct Sales?
- 3. What Are The Differences Between Indirect VS Direct Sales?
- 4. How Your Company Can Benefit From Both at the Same Time
- 5. How The Combination of Both Can Grow Your Firm
Table of contents
Indirect sales encompasses a wide variety of sales techniques; it’s essentially the utilization of third-party sellers to market and sell your product/service.
One good example of indirect sales would be that of a reseller like Dell Technologies. You can apply to join the Dell Technologies Partner Program ecosystem and resell products to the market, adding a unique service or building a cloud service platform powered as-a-service with them.
There are 3 main types of indirect sales strategies that businesses can use to increase sales.
As suggested above, resellers can be retailers, online stores, or just about anyone that can take your product and sell it to others.
There are several different agreements that resellers use when considering selling your product:
Purchase your product at a discount, then mark it up to make a profit
Request a contract in which they pay nothing up front, and then pay for products as they are sold on their end
There are a number of other possibilities when it comes to resellers, but profiting from resellers can be difficult as they control a lot of the bargaining power.
Using affiliate partners is another way to help facilitate indirect sales. Affiliate partners work alongside your company to market and sell your products/services. Once they make a sale, they are credited with a commission based upon your agreement with them.
Affiliate partners tend to have their own network and audience that they sell to, which means finding affiliate partners within your customer base is key to success.
Affiliate partnership can be beneficial because they don´t require any upfront costs. All payments are based on actions that your visitors take; such as clicking through, purchasing, or signing up. That means that you are guaranteed to get something in return before you have to payout.
Referral partners are similar to affiliate partners, but they tend to be on a more personal level than affiliates. That’s because referrers are typically your customers who want to share their experiences with others.
Affiliates, on the other hand, can be just about anyone with a blog, social media account, or existing audience.
Indirect sales can work in a number of ways depending on which program/partnership you choose.
Resellers will typically require a discount before doing business, otherwise they make no money. Affiliates and referrals are performance based, so partners are rewarded based on how well they can sell your product or service.
Direct sales are the process of selling directly to the consumer. This is typically a straightforward process where you interact with the customer directly, whether that’s through an online store, direct marketing campaign, brick-and-mortar shop, or any combination of the three.
Direct sales take a lot of upfront work in the form of an online store, marketing campaigns, and internal infrastructure (sales team, marketing team, etc).
Direct sales take place between the company and the consumer. This most often occurs via an online store, sales team, or direct marketing. There are upfront costs associated with direct sales as you will need a platform to sell from, and a network and audience to sell to.
Indirect sales use the platform and network of someone else to do the legwork. Instead of selling directly to the customer, a middleman is used to facilitate the sale and the partner is rewarded based on the sales procured.
Companies can take advantage of the benefits of both systems quite easily. For direct sales, businesses should ensure there is a quick and easy way to purchase products or services directly. This can be through an online store, direct marketplace like Fiverr, or an outbound sales team with some big fees.
Indirect sales do require a little more work before they will start generating leads and sales. Partnership programs should be designed and laid out and then can be pitched to potential partners.
The process can take a few months, but PRM (Partner Relationship Management) software like Kiflo can make the task much easier and more straightforward.
When it comes to the direct-vs-indirect-sales argument, the answer is usually a combination of the two. Companies that can effectively utilize both techniques will often see great success without limiting their profit margins.
Having multiple sales channels helps to canvas the marketplace and ensure you are throwing your net as wide as possible. A wider net = more potential customers reached, and more sales made.
Direct and indirect sales both have their place in the sales process. Each one offers a unique advantage over the other, but in the end, it can be very effective to have both in place.
Establishing a direct sales process can be as simple as opening up an online store, while indirect sales partnerships can take time and effort to set up. Building an effective partnership program is key to running a successful indirect sales program.
Using a PRM software like Kiflo can help ensure your partnership program is run efficiently and well organized. It provides an all-in-one solution for tracking, managing, and onboarding your partners so all of their focus can be on selling your product.
Frequently Asked Questions (FAQ)
What is direct and indirect sales?
Direct and indirect sales are two different techniques used to sell products and services. Direct sales deals with selling directly to the consumer, while indirect sales use intermediaries like affiliate marketers and resellers.
What is an example of direct selling?
A common example of direct selling is having an online store that consumers can buy from directly.
What is the meaning of direct selling?
Direct selling means that a business is selling directly to a customer, rather than going through a reseller or referral partner.