Channel sales, the method of selling through third-party vendors rather than direct channels, has become increasingly vital in today's competitive market. Embracing channel sales enables businesses to tap into a diverse network of affiliate sellers, wholesalers, distributors, value-added resellers (VARs), and managed service providers to effectively promote and distribute their products or services.
Let’s delve into how to create a channel sales strategy in Europe and explore how to implement the right channel strategy for your business's growth and success on the continent. Discover how harnessing the power of channel sales can open doors to new opportunities and elevate your market presence in the European market.
Why you should opt for a channel sales strategy in Europe
Creating a channel sales strategy is vital, particularly in the European market, encompassing sectors like telecommunications, cybersecurity, marketing tech, and notably, retail. The rapid growth of channel sales is now essential to maintain competitiveness in Europe and navigate the fast-changing technological landscape, where the lines between traditional retail and e-commerce platforms are increasingly blurred. With changing buying dynamics, channel sales offer you a reliable means to diversify and expand market reach, ensuring sustainable growth amidst technological advancements.
It’s important to note that expanding your product into a foreign market can pose challenges in direct selling, due to a lack of local integration teams. Embracing a channel sales strategy, as highlighted by our CEO, Rick Pezzoli, becomes essential: “It is best to have indirect sales and find the top 5, 10, or even 20 security integrators in that home market”.
How to set up a channel sales strategy
To kickstart your channel sales strategy in Europe, identify key players and present a compelling case for collaboration. Thorough research is essential to ensure partners meet expectations and also enhance your brand image. Let's explore the following steps to launch your channel sales plan successfully:
- Define your objectives - Launching a sales strategy in Europe involves setting clear objectives, such as market expansion, product visibility, increased market share, and revenue growth. To achieve these goals, conduct market research to understand consumer behavior and identify potential customer segments. You might decide to sell online through your e-commerce website in Spain and partner with a large department store in France and Germany, to maximize your reach and effectiveness in the European market. Tailoring your marketing content to suit each European market will also go hand in hand with your market entry evaluation.
- Channel type and channel partner selection - Selecting the right sales channel and European channel partner is crucial for your sales strategy but maintaining long-term partnerships is equally vital. You’ll need to offer an attractive value proposition to entice partners, including profitability, support like product knowledge, training, and sales/marketing materials. Communicate why partnering with your company is advantageous and be receptive to partner feedback during onboarding to foster successful collaborations. Some incentives to motivate them might include sales bonuses, volume discounts and other rewards for meeting targets.
- Diversify Your Channels: Avoid relying too heavily on a single provider to minimize risks and optimize performance. By reducing dependence, you can mitigate delivery pressures, especially in case of partner disruptions. Remember that they are not your sales/marketing team, so effective communication is vital to ensure alignment and success.
- Consider competitors - Before finalizing your sales strategy, conduct thorough research on your competitors. Analyze their strengths, advantages, and the strategies they are employing. Take inspiration from their successful approaches, and also identify areas where you can outperform them. If your competitors are primarily online-based, explore how incorporating a brick-and-mortar store could give you a competitive edge. Additionally, carefully evaluate the financial implications of your choices, including rental costs for a physical store and commissions associated with online platforms. Understanding the competitive landscape and the financial aspects will help you make informed decisions to position your business for success.
- Performance indicators - Key Performance Indicators (KPIs) play a crucial role in assessing the effectiveness of your channel sales in Europe. Monitoring KPIs allows you to gauge the success of your sales channels. Important KPIs to track include sales growth, sales per partner, lead to shipped orders, and canceled orders. Continuously monitoring and analyzing your channel sales strategy is vital for sustaining company success and evaluating the performance of your channel sales partners in Europe.
- Convert Data into Actionable Insights - Forrester explains how transforming data into actionable insights is vital for a successful channel sales strategy in Europe. Rather than overwhelming ourselves with numerous metrics, focusing on relevant data that drives decision-making is key. Metrics such as the number of active partners, onboarding completion rate, and total partner revenue are essential for understanding partner engagement and accelerating deal completion. By leveraging relevant insights, you can enhance partner collaboration and maximize sales impact effectively.
How to choose the right sales channel
When choosing the right channel sales strategy in Europe, it's crucial to consider the key differences between brick and mortar retail and e-commerce. Brick and mortar stores offer tangible products, personalized customer service, and the instant satisfaction of shopping in-person. On the other hand, e-commerce provides the convenience of online navigation and purchasing from anywhere at any time. Understanding these distinctions will help you make informed decisions for your sales approach in the European market.
Brick and mortar Stores
In the post-COVID-19 era, brick and mortar channel sales have experienced a surge in popularity in Europe as consumers seek in-person experiences. This trend creates a valuable opportunity for your products to be directly tried and tested by customers in physical stores. The various forms of opportunities for channel sales in brick and mortar stores include:
- Independent Retailers: Collaborate with standalone stores operated by independent business owners. These retailers are ideal for personalizing your approach to the local European market you're targeting.
- Chain Stores: Partner with outlets that are part of larger retail organizations operating under well-known brand names. For example, the Schwarz Group in Germany, which operates Lidl internationally, was Europe's leading retailer in 2021.
- Franchise Stores: Form partnerships with independently owned outlets that operate under a larger business model, enabling the franchisor to expand without direct management of each location. A leading example is SPAR, a prominent retail franchise store in Europe.
- Department Stores: Consider partnering with multi-level retail spaces that offer a diverse selection of products from different companies. Harrods in London, one of Europe's leading department stores, could be an excellent choice for stylish partnerships.
- Showrooms: Collaborate with showrooms that allow customers to experience a "try before you buy" approach, particularly in industries like furniture, appliances, and electronics.
- Outlet Stores: Partner with outlet stores that promote discounted products from specific brands. Well-known examples include Bicester Village in the UK, Metzingen Outlet City in Germany, and La Vallée Village in France – some of the largest outlet centers across Europe.
Ecommerce sales channels
Using an ecommerce sales channel in Europe offers numerous advantages, considering the significant growth of e-commerce in the region and the world over the last few years. The surge in online transactions was especially pronounced during the pandemic, and countries like France and the Netherlands emerged as prominent e-commerce hubs. The number of ecommerce users has increased almost 20% in Europe since 2019 and the rise is expected to continue, with Western Europe dominating the European ecommerce industry.
This trend presents a compelling opportunity for you to expand their reach and tap into the European market. By embracing an e-commerce sales channel, you can leverage the growing online consumer base and capitalize on the convenience, accessibility, and flexibility that e-commerce offers. Additionally, it allows you to establish a presence in key European countries where e-commerce has thrived, enhancing your brand visibility and potential for sales.
Plytix presents a range of ecommerce platforms for your channel sales strategy.
- Ecommerce - Ecommerce platforms such as Magento and WooCommerce are leading software solutions in Europe that will allow you to create and manage your business online. Capitalizing on these exponentially growing platforms will provide you with a user-friendly interface, ready-made infrastructure and cost-effective solutions to boost your sales. In particular, PrestaShop is Spain's most popular choice, Gambio in Germany, and ZenCart in the UK.
- Marketplaces - Marketplaces serve as a valuable intermediary, providing you with an opportunity to connect with a vast customer base. In Europe, Amazon and Amazon Business stand out as popular choices, catering to both B2C and B2B customers. These platforms offer efficient distribution channels, enabling you to reach a broad audience. However, it's essential to be prepared for competition from other companies and to consider the potential impact of high commission charges.
- Social commerce - Social commerce involves capitalizing on social media platforms as a direct selling channel to engage with clients. By seamlessly integrating e-commerce functionalities into popular social media environments like Facebook, Instagram, and TikTok, businesses can access a vast consumer base. However, it's essential to acknowledge that this channel sales strategy may require more time and effort to establish brand awareness and stay updated with the ever-changing social media trends. With dedication and proactive engagement, you can effectively leverage social commerce to drive sales and foster meaningful connections with European customers.
- Comparison shopping sites - Comparison sites serve as a unique and influential sales channel for businesses, particularly in the digital era. These platforms aggregate and compare products or services from different brands and provide consumers with detailed information, reviews, and pricing options. Google Shopping and Price Grabber are a good place to start to gain greater visibility and market insights on your European competitors.
A well-crafted channel sales strategy is essential for businesses looking to expand in the competitive European market. Embracing channel sales allows companies to tap into a diverse network of partners, facilitating effective product promotion and distribution. The significance of creating a multi-channel approach is underscored by the evolving technological landscape, where the lines between traditional retail and e-commerce platforms are becoming blurred, so expanding your business across Europe can be significantly enhanced by adopting a multi-channel sales strategy. Keeping in mind clear objectives, selecting the right channel partners and conducting thorough market research will be the key to launching your channel sales strategy in Europe successfully.