Unlocking the Power of the Indirect Channel: A Comprehensive Guide
In today's fast-paced and technologically advanced world, businesses are increasingly turning to the indirect channel to navigate their purchasing decisions. But what exactly is the indirect channel, and how does it function? Let's dive into the intricacies of this vital network and uncover the benefits it offers to suppliers, trusted advisors, and end customers.
Understanding the Indirect Channel
The indirect channel refers to a network of intermediaries, including trusted advisors/agents, and technology solutions distributors (TSDs), who facilitate the sale of products and services from suppliers to end customers. This model contrasts with direct sales, where the supplier sells directly to the customer.
Evolution and Market Opportunity
Historically, only a small percentage of businesses bought through the indirect channel. However, this has shifted dramatically, with over 73% of businesses now purchasing from a trusted advisor or consultant. This transformation is driven by the complexity and rapid evolution of technology, making it difficult for businesses to navigate their options independently.
The Role of Trusted Advisors
Trusted advisors are the cornerstone of the indirect channel. They act as unbiased consultants who help businesses select the best solutions from a broad portfolio of suppliers. Their services are typically offered at no cost to the end customer, as they are compensated through commissions paid by the suppliers. This ensures that trusted advisors remain impartial and focused on providing the best possible solutions for their clients.
Building Strong Supplier and TSD Relationships
Suppliers partner with TSDs to gain access to a vast network of trusted advisors. These TSDs manage relationships with hundreds of suppliers, providing trusted advisors with a wide array of solutions to offer their clients. This model helps suppliers scale their reach without maintaining a large direct sales force.
The Benefits of the Indirect Channel
For Suppliers:
Access to a large, distributed sales force without the overhead of managing a large direct sales team.
Ability to scale quickly and reach new markets and new logo generation through established relationships.
For Trusted Advisors:
Provides a diverse portfolio of solutions to meet varied client needs.
Offers ongoing revenue through residual commissions, incentivizing long-term client relationships.
For End Customers:
Receives expert, unbiased advice tailored to their specific needs.
Gains access to a wide range of solutions without having to negotiate directly with multiple suppliers.
How the Indirect Channel Works
Engagement Process:
Suppliers seeking to enter the indirect channel start by partnering with TSDs, who introduce their products to a network of trusted advisors. These advisors learn about the supplier's offerings and recommend them to clients based on specific needs.
Sales Motion:
Trusted advisors conduct needs assessments and present clients with the best options from their portfolio. They facilitate the purchase and implementation, leveraging support from TSDs and suppliers as needed.
Compensation and Incentives:
Trusted advisors are compensated through residual commissions managed and distributed by TSDs, incentivizing long-term client relationships and ongoing support.
Challenges and Best Practices:
Establishing and maintaining relationships within the TSD and trusted advisor communities can take 12 to 18 months before generating significant revenue. Effective engagement involves regular communication, training, and support to ensure trusted advisors are well-equipped to sell and support the supplier's solutions.
The Technology
Although the trusted advisor's role is to help clients solve business problems using technology, the channel is currently providing service that cover the following technologies/verticals.
Network Connectivity
Unified Communications and Contact Center (Commonly referred to as CX or Customer Experience)
Cybersecurity
Cloud Services
Mobility & IoT
Emerging Technology
As the technology continues to evolve, end user customers are relying on the trusted advisor to help solve business problems. With these requests, additional technology and product verticals are emerging in the channel.
Artificial Intelligence
Mostly found embedded within the CX category of Unified Communications and Contact Center, AI doesn't necessarily qualify as its own technology or product vertical but an important advancement in all technology. We are also starting to see more and more cloud and security applications embedding some sort of AI component, making conversations around the need for AI a driving factor of channel engagement.
Managed Service Providers (MSPs)
We originally expected the MSP community to compete with the Trusted Advisors after ScanSource acquired Intelisys in 2016. With very little movement between the two communities up to this point, we are now starting to see more and more national MSPs come into the Telco Channel as suppliers as they recognize the benefits of new logo generation from this community.
Conclusion
The indirect channel is a dynamic and evolving ecosystem that provides significant benefits to suppliers, trusted advisors, and end customers. By leveraging the expertise and relationships within this network, businesses can navigate the complexities of modern technology procurement with confidence, ensuring they implement the best solutions for their needs.
Getting into the channel as a supplier can be a daunting task. The complexities of the ecosystem can make this strategic direction a costly endeavor with diminished gains unless correctly establishing the right relationship, focusing on the right KPIs and putting together proven processes for success.
The Channel Advisors can help you reduce the time to profitability by providing your organization, and your channel's strategic vision, with the proven structure, tools & resources and connection. Reach out today for your details business plan to success.