Channel sales
CHAN-ul saylz
Selling products through third-party partners like resellers, distributors, or value-added resellers instead of directly to end customers.
Channel sales means selling your product through partners instead of (or in addition to) selling directly. Resellers, distributors, value-added resellers (VARs), managed service providers (MSPs), and system integrators all represent channel sales.
The advantage is reach. A channel partner already has relationships with customers you would need years to build. A reseller with 500 existing clients can introduce your product to all 500. A system integrator who implements ERP systems for healthcare companies can bundle your product into their implementations.
The trade-off is margin and control. Channel partners take a cut (typically 20-40% of the deal). You also lose direct relationships with end customers, which means less control over the customer experience and less direct feedback.
Examples
A security company sells through VARs.
The company sells its endpoint security product through 50 value-added resellers. Each VAR bundles it with other security tools and sells to their existing customer base. Channel revenue represents 40% of total revenue.
A SaaS company partners with system integrators.
When Accenture implements Salesforce for a large enterprise, they recommend the company's data integration product as part of the solution. The system integrator does the selling; the SaaS company provides the technology.
A startup considers adding channel sales.
At $20M ARR with a direct sales team, the company explores channel partners to expand into regions and verticals they cannot cover directly. They recruit three resellers in Europe and two MSPs focused on healthcare.
In practice
Read more on the blog
Frequently asked questions
What is the difference between channel sales and direct sales?
Direct sales means your own sales team sells to end customers. Channel sales means third-party partners sell on your behalf. Most companies use both: direct sales for strategic accounts and channel sales for broader market coverage.
How much margin do channel partners take?
Typically 20-40% of the deal value. Resellers are on the lower end (20-30%). System integrators and VARs who add significant services may take 30-40%. The margin depends on how much value the partner adds to the sale.
Related terms
Selling products directly from the company to end customers without intermediary partners or resellers.
A third-party company that purchases a product and sells it to end customers, often adding services or bundling it with other products.
A go-to-market strategy where partnerships with other companies drive customer acquisition and revenue through co-selling and integrations.
A sales collaboration where two companies work together to close a deal, leveraging each other's relationships and expertise.
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