How do you manage a sales funnel when a portion of your business goes through distributors?
For the purpose of this blog I’ll refer to all intermediaries between a manufacturer and end user as channel partners. I don’t mean to deny any specific dynamics that must be addressed; rather, I’m choosing to comment on what’s fundamental about managing the funnel through this relationship.
Managing the funnel is every bit as important when working through channel partners. Manufacturers need to know where deals are in the buying process. This helps them influence the buying process – create funnel movement. It also helps them forecast.
The channel complexity I’ve seen with my clients the past 20 years makes managing the funnel a challenge. One challenge is when the channel partner won’t reveal much about the deal they are working on. They keep information close to the vest. It’s hard to ‘stage’ these deals. Another challenge is when the channel partner doesn’t invite you to strategize with them to move the deal through the process. This is particularly frustrating when the channel’s sales competency is low. You feel defenseless.
Do you ‘stage’ deals based on where the manufacturer is in selling to the channel partner, or based on where the channel partner is in selling to the end user?
The answer could be yes!
One thing to keep in mind is that the funnel is based on ‘opportunities’. It’s not a funnel of accounts. An opportunity has a dollar value and a purchase date, and likely a purchase order or contract that creates obligation.
If a channel partner can buy $200,000 of your stuff why not make that a funnel opportunity? A PFA has to bless the purchase, a buying process is present. Loading distributors has its pros and cons so beware.
You can also base your funnel on the end user purchases from the channel partner. This is what pulls your product through and sustains revenue growth. I’ve had clients that needed to pivot the sales team to be more focused on selling to the end user. They used The Funnel Principle to do this.
Last, for now anyway, you can’t avoid channel conflict in most situations where a distributor is involved. Here’s another reason to get good at your funnel management within this environment. The funnel gives you the necessary focus and allocation of selling time to what’s important. Giving more than just visibility, the funnel gives insight that directs the team to the right selling activities.
Author, The Funnel Principle and soon to be released coaching book Blindspots: The Hidden Killer of Sales Coaching