Take Your Indirect Channel to Full Potential

This underappreciated element of your business can yield enormous benefits once you overcome three common hurdles.

Par Edel O'Sullivan


Almost 50% of industrial companies rely on indirect sales or distribution channels, almost exclusively (automotive) or as part of a broader go-to-market ecosystem (machinery, parts, building products, and other B2B sectors). Yet we consistently find that few commercial leaders think indirect channels are a significant source of growth, fully integrated to their strategy, and operating at full potential. That’s a serious missed opportunity, because, managed well, indirect channels can help companies gain share and grow the top line. Our deep expertise in every facet of B2B Commercial Excellence, supported by industry-leading proprietary tools including Partner Sonar and many others (see below), will enable you to fully understand your current state and map a clear path to significantly better outcomes. What’s the problem? Three, actually While working with third parties will, almost by definition, generate friction and require coordination, a lack of trust and a pervasive sense that one side is taking advantage of the other often prove crippling. Companies can get to a much better place by resolving three common pain points. 1. Lack of clarity on the role of the indirect channel Do any of these sound familiar? Accounts or regions were assigned to distributors years ago, but nobody knows how they’re currently performing; the growth of digital solutions prompts questions about whether to bypass indirect channels in favor of going direct; questions also swirl about whether the accounts and customers served by the indirect channel require a truly different sales motion; there is confusion and conflict between the e-commerce and brick-and-mortar or the direct and indirect sides of the house, with high risk of cannibalization. These situations typically arise when companies don’t fully understand the market opportunity (by geography, product, and customer), or the best channel to serve each segment (considering customer preference and the complexity of the sales process), or lack a clear model for ownership across channels. Resolving these issues through the right go-to-market structure is critical to building an optimized channel plan, which should be periodically reviewed and adjusted. 2. Inadequate support There is a general sense that the indirect model should be lower cost and lower touch. This is sometimes true, but depending on the accounts or segments it serves, too many B2B companies undermanage this channel against a clear growth goal. Lack of rigor around screening and refreshing indirect channel partners, suboptimized mapping of sales resources, failure to identify specific activities and roles required to shape the sales journey, and poor discipline when establishing account/partner plans are the most common shortcomings. 3. The wrong operating model Channels are the most vital building block for sales performance, but they are often misunderstood or devalued by many parts of the organization. Companies also struggle to determine where ownership of indirect channels should live within the broader commercial organization. Finally, companies with a functional organizational structure don’t always have a good integrated plan for managing sales and marketing across channels and all the way “down the funnel” to the end customer. All of these dynamics can lead to friction and confusion. Turning it around The first step to alleviating these issues and getting more from your indirect channels is to know where the money is and what role each channel plays in getting to it. In general, indirect channels are most useful for dispersed accounts; they are also important when the sales motion is very different (e.g., aftermarket service is critical or the regulatory/compliance landscape is complex). The key is to understand the composition of the market and where the indirect channel can play a role based on “where the money is.” To help companies do that, we developed MoneyMap®, a proprietary AI-powered tool that generates a detailed view of the market opportunity (and the segments within it) to help inform channel strategy. MoneyMap also provides the foundational insights to inform sales team mapping, targets and incentives, and pricing. Many companies think they understand their markets, customers, and cost to serve, but our experience with MoneyMap consistently shows there is significant additional opportunity available. What MoneyMap can deliver 2–3X increase in growth rate 30–40% pipeline growth 1.5–2x increase in sales ROI 10–20% decrease in sales cost Second, remember that growing a channel is much like growing a garden: It requires careful tending and pruning. The best players constantly assess the strength of their partners—refreshing where needed—and update their sales team coverage accordingly. They also think about the roles that will best serve their market. For example, they might create specialist training and marketing capability roles to provide sales support to multiple partners, so the field force can focus on conversations around sales growth. A thoughtful approach often pays out far beyond the invested resources. It’s also important to have the right KPIs, for the channel overall and for individual partners. We recommend three in particular: performance of the partner vs. their own targets and vs. the market; cost to serve “all in” vs. direct channels; and performance against critical CX metrics like on-time delivery, responsiveness, or knowledge. Establishing transparency and a high level of trust results in more engaged and loyal channel partners. Communication, clarity, accountability, and alignment are highly valued by channel partners that want to be the best and grow with you; after all, they are making a choice with their money and resources as well. Finally, don’t overlook the importance of an operating model optimized to enhance alignment and support growth. It’s not just about “lines and boxes”—almost any functional structure can work if accountabilities and processes are clear. The key is to ensure the full organization is aware of the role channels play and how best to support them. B2B companies can learn a lot from leading retailers, many of which are further along the curve in their omnichannel evolution. First, there is real value in having a single commercial owner for all channels, to avoid conflict and cannibalization. Each channel can then have a leader who works with channel-designated accounts based on their dynamics and cost to serve, which can be regularly updated. Second, product assortment should be defined across channels based on margin and customer behavior. Finally, supporting functions (marketing, training, etc.) should have goals and programs by channel to ensure optimal results. Getting to this stage may require thorny discussions, but the payoff is immense in both organizational calm and customer clarity. How can we help? B2B Commercial Excellence is at the heart of our approach to driving value in machinery, building products, automotive, and many other B2B sectors. We ensure you integrate all aspects of your go-to-market and channel optimization strategies (see Figure 1), starting with a clear definition of “where the money is” through MoneyMap. Figure 1 Channel strategy cuts across many facets of commercial excellence In addition to MoneyMap and Partner Sonar, we turbocharge your channel strategy with our Commercial Excellence X-Ray, Commercial Excellence 360 diagnostic, and Commercial Excellence Value Map, three powerful tools that define your starting point and ensure you chart the right path to full potential. Combined, these proprietary tools target the areas of highest opportunity based on relevant industry benchmarks and support a customized channel strategy tailored to your needs. On average, our clients see topline improvement of 10% to 20%. The need to find growth in multiple segments of the market, the complexity of the consumer landscape, and the often prohibitive cost to serve directly are just three of the many factors that make indirect channels a vital part of most go-to-market plays in industrial settings. We can help you see what you’re missing and craft the best way to get it. MoneyMap® is a registered trademark of Bain & Company, Inc.

Almost 50% of industrial companies rely on indirect sales or distribution channels, almost exclusively (automotive) or as part of a broader go-to-market ecosystem (machinery, parts, building products, and other B2B sectors). Yet we consistently find that few commercial leaders think indirect channels are a significant source of growth, fully integrated to their strategy, and operating at full potential. That’s a serious missed opportunity, because, managed well, indirect channels can help companies gain share and grow the top line.

Our deep expertise in every facet of B2B Commercial Excellence, supported by industry-leading proprietary tools including Partner Sonar and many others (see below), will enable you to fully understand your current state and map a clear path to significantly better outcomes.

What’s the problem? Three, actually

While working with third parties will, almost by definition, generate friction and require coordination, a lack of trust and a pervasive sense that one side is taking advantage of the other often prove crippling. Companies can get to a much better place by resolving three common pain points.

1. Lack of clarity on the role of the indirect channel

Do any of these sound familiar? Accounts or regions were assigned to distributors years ago, but nobody knows how they’re currently performing; the growth of digital solutions prompts questions about whether to bypass indirect channels in favor of going direct; questions also swirl about whether the accounts and customers served by the indirect channel require a truly different sales motion; there is confusion and conflict between the e-commerce and brick-and-mortar or the direct and indirect sides of the house, with high risk of cannibalization.

These situations typically arise when companies don’t fully understand the market opportunity (by geography, product, and customer), or the best channel to serve each segment (considering customer preference and the complexity of the sales process), or lack a clear model for ownership across channels. Resolving these issues through the right go-to-market structure is critical to building an optimized channel plan, which should be periodically reviewed and adjusted.

2. Inadequate support

There is a general sense that the indirect model should be lower cost and lower touch. This is sometimes true, but depending on the accounts or segments it serves, too many B2B companies undermanage this channel against a clear growth goal. Lack of rigor around screening and refreshing indirect channel partners, suboptimized mapping of sales resources, failure to identify specific activities and roles required to shape the sales journey, and poor discipline when establishing account/partner plans are the most common shortcomings.

3. The wrong operating model

Channels are the most vital building block for sales performance, but they are often misunderstood or devalued by many parts of the organization. Companies also struggle to determine where ownership of indirect channels should live within the broader commercial organization. Finally, companies with a functional organizational structure don’t always have a good integrated plan for managing sales and marketing across channels and all the way “down the funnel” to the end customer. All of these dynamics can lead to friction and confusion.

Turning it around

The first step to alleviating these issues and getting more from your indirect channels is to know where the money is and what role each channel plays in getting to it. In general, indirect channels are most useful for dispersed accounts; they are also important when the sales motion is very different (e.g., aftermarket service is critical or the regulatory/compliance landscape is complex).

The key is to understand the composition of the market and where the indirect channel can play a role based on “where the money is.” To help companies do that, we developed MoneyMap®, a proprietary AI-powered tool that generates a detailed view of the market opportunity (and the segments within it) to help inform channel strategy. MoneyMap also provides the foundational insights to inform sales team mapping, targets and incentives, and pricing. Many companies think they understand their markets, customers, and cost to serve, but our experience with MoneyMap consistently shows there is significant additional opportunity available.

What MoneyMap can deliver

2–3X

increase in growth rate

30–40%

pipeline growth

1.5–2x

increase in sales ROI

10–20%

decrease in sales cost

Second, remember that growing a channel is much like growing a garden: It requires careful tending and pruning. The best players constantly assess the strength of their partners—refreshing where needed—and update their sales team coverage accordingly. They also think about the roles that will best serve their market. For example, they might create specialist training and marketing capability roles to provide sales support to multiple partners, so the field force can focus on conversations around sales growth. A thoughtful approach often pays out far beyond the invested resources.

It’s also important to have the right KPIs, for the channel overall and for individual partners. We recommend three in particular:

performance of the partner vs. their own targets and vs. the market;
cost to serve “all in” vs. direct channels; and
performance against critical CX metrics like on-time delivery, responsiveness, or knowledge.

Establishing transparency and a high level of trust results in more engaged and loyal channel partners. Communication, clarity, accountability, and alignment are highly valued by channel partners that want to be the best and grow with you; after all, they are making a choice with their money and resources as well.

Finally, don’t overlook the importance of an operating model optimized to enhance alignment and support growth. It’s not just about “lines and boxes”—almost any functional structure can work if accountabilities and processes are clear. The key is to ensure the full organization is aware of the role channels play and how best to support them.

B2B companies can learn a lot from leading retailers, many of which are further along the curve in their omnichannel evolution. First, there is real value in having a single commercial owner for all channels, to avoid conflict and cannibalization. Each channel can then have a leader who works with channel-designated accounts based on their dynamics and cost to serve, which can be regularly updated. Second, product assortment should be defined across channels based on margin and customer behavior. Finally, supporting functions (marketing, training, etc.) should have goals and programs by channel to ensure optimal results. Getting to this stage may require thorny discussions, but the payoff is immense in both organizational calm and customer clarity.

How can we help?

B2B Commercial Excellence is at the heart of our approach to driving value in machinery, building products, automotive, and many other B2B sectors. We ensure you integrate all aspects of your go-to-market and channel optimization strategies (see Figure 1), starting with a clear definition of “where the money is” through MoneyMap.

Channel strategy cuts across many facets of commercial excellence

In addition to MoneyMap and Partner Sonar, we turbocharge your channel strategy with our Commercial Excellence X-Ray, Commercial Excellence 360 diagnostic, and Commercial Excellence Value Map, three powerful tools that define your starting point and ensure you chart the right path to full potential. Combined, these proprietary tools target the areas of highest opportunity based on relevant industry benchmarks and support a customized channel strategy tailored to your needs. On average, our clients see topline improvement of 10% to 20%.

The need to find growth in multiple segments of the market, the complexity of the consumer landscape, and the often prohibitive cost to serve directly are just three of the many factors that make indirect channels a vital part of most go-to-market plays in industrial settings. We can help you see what you’re missing and craft the best way to get it.

MoneyMap® is a registered trademark of Bain & Company, Inc.