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Direct or Indirect Sales: what is right for your business?

Updated: Jul 18

We've put together the advantages and disadvantages of each sales approach. Read more and check which one suits your business the best.



In the world of sales, you have two distinct approaches to the market - the direct approach and the indirect approach.


None of them is right or wrong, they are simply different with advantages and disadvantages depending on the region you're targeting, your audience, and your solution and business model.


For example, in the US a direct sales approach is generally preferred, whereas in Europe vendors tend to work more indirectly.


But what is a direct or indirect sales approach? And what are the pros and cons of each way of working?


Direct sales approach


A direct sales approach, as the name implies, consists of targeting and selling to the end customer directly - meaning, businesses will employ sales teams and create marketing materials that speak directly to their clients, be it B2B or B2C.


What are the advantages of a direct sales approach?

  • Quicker to reach the end client. The closing of the sale can also be a quicker process since you have fewer people involved.

  • Your message is delivered more accurately and effectively since you are communicating directly to the source and avoiding intermediaries.

  • You have greater control over the sales cycle and the deal since you are negotiating directly with the decision-maker.

  • The sales margin is entirely for you, the vendor. You don't need to share it with other parties.

What are the disadvantages of a direct sales approach?

  • You need to invest a lot more of your resources - from your sales teams, marketing, and technical people since you have no other parties to rely on.

  • It requires a bigger financial investment to support the greater resources employed in the deal.

  • You may fail to win the deal since you may lack a specific requirement or the needed integration capabilities, as you're on your own.

  • You may lack the lobby required to reach the right people in the end client and actually close the sale.


Indirect sales approach


Contrary to the option above, in an indirect sales approach, the business uses partners (resellers and distributors) to reach the end client. In this business model, partnerships are crucial and the partners may be involved from the generation of the opportunity all the way to the closing of the sale.


What are the advantages of an indirect sales approach?

  • You're able to reach more people using your network of partners and generate a "multiplier effect", which will allow you to do more with less.

  • Lower direct costs and need to invest fewer resources in manpower since you're using your partner's sales teams and budgets to generate leads and close deals.

  • You can benefit from the seamless integration and solid relationship the partner has with their clients. This will not only accelerate the deal but also increase your chances of winning said deal.

  • Through partners, you're able to generate more opportunities in less time, since you have more people invested in the success of your business, and not just your internal sales team.

  • You're also able to reach a much bigger geographical territory, as you can have partners distributed worldwide to support your business expansion.

  • You can cover a greater diversity of business verticals, taking advantage of your different partners' expertise and experience.

  • Possibility to delegate technical services to your network of partners, also helping you save costs and resources on this front.

  • Greater risk-sharing, financially and administratively with your network of partners.


What are the disadvantages of an indirect sales approach?

  • In order to obtain results, you'll first need to recruit, train, develop and motivate partners to work with you, which takes time and effort.

  • In order to retain the partners and ensure consistent results, you'll need to develop an attractive partner program with appropriate rewards.

  • Setting up and managing an active network of partners is time-consuming and requires many hours spent in the research, identification, and conversion of these people

  • Your sales margin is shared with the partners involved in the deal.

  • To ensure your message is not lost or misrepresented you need to be constantly training and monitoring your partners.

  • It may be difficult to differentiate the good partners since you're constantly interacting with different stakeholders, some of whom may just be wasting your time. Note the 20%/80% rule, where 20% of your partners will bring 80% of your business.



As we've mentioned earlier in this blog post, there is really no right or wrong answer, since both approaches have benefits and drawbacks. As you review the pros and cons of these two approaches, consider what's the most important for your company and the future plans for your business.


It is also advisable to consider local preferences, as different regions in the world will operate differently and have unique preferences that can shape your business model.


We wrap up this post with some wisdom from the one and only Walt Disney.


"the way to get started is to quit talking and start doing" – Walt Disney

If you're considering expanding your business internationally and are not sure what approach is the right one for you? We can help.

Send us an email to sales@unitedchannels.net and book a FREE 30-min consultation.



 

About the author


João Beato Esteves is the CEO of United Channels Consulting. He founded the company in 2017 after 20+ years of working in the IT and cybersecurity industries developing channels for prominent companies such as Symantec and disruptive start-ups like Watchful Software.




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