What Is Channel Management and How Do You Create a Strategy?

Reaching customers through a single sales channel is no longer enough for a sound business strategy. Businesses must be able to connect with customers through multiple touchpoints and at the same time drive revenue and brand consistency. A recent study in the Journal of Marketing Channels found that most customers use more than one channel during their shopping journey. As such, strategic channel management is key to success.

In this guide, we’ll cover everything you need to know about channel management — from the basics to strategies you can put in place to help grow your business.

What is Channel Management?

Channel management is the practice of establishing, maintaining, and enhancing the various avenues through which your business sells its goods or services to customers. Rather than a direct-to-consumer transaction that gives you complete control of the sales process, channel management works with different sales channels that may include outside parties, distributors, third-party online marketplaces, and more. Studies show that multichannel campaigns generate an ROI almost 5 times greater than single-channel approaches, making this coordination effort financially worthwhile.

Channel management contrasts traditional direct sales models in that it involves managing third-party relationships, maintaining brand consistency across channels, and creating tracking systems for performance. According to ScienceDirect, the rise of digital platforms and advanced multichannel marketing strategies has led to more complex and dynamic channel management needs.

Types of Sales Channels for SMBs

By understanding the types of sales channels available, you can better identify which channels are the most effective in reaching your target customers.

Direct Channels

Direct channels allow you to have complete control over the customer experience and often provide higher profit margins as there are no intermediaries involved.

Examples of direct channels include:

• Your company website and e-commerce platform
• Physical storefront or showroom
• Direct sales team

These are most effective when you have the resources to handle customer service, fulfillment, and marketing activities in-house.

Indirect Channels

Indirect channels rely on the existing network and expertise of third-party partners to reach customers that you may not be able to access on your own.

Examples of indirect channels include:

• Retail partners and distributors
• Online marketplaces like Amazon and eBay
• Affiliate and partner programs
• Value-added resellers (VARs).

Research from Harvard Business Review found that multi-channel customers spend significantly more money than single-channel customers.

Hybrid Approach

Most successful SMBs eventually shift to a hybrid channel strategy that strategically leverages a combination of direct and indirect channels. This lets you maintain control over key customer relationships while also using partners to extend your reach and capabilities.

Benefits of Channel Management for Growing Businesses

The first and most obvious is a wider market reach without the need to expand overhead. Channel partners can offer access to their established customer bases and infrastructure, rather than you having to employ more salespeople or open more outlets. It also means your cost per sale or cost per marketing customer acquired will go down, as partners typically take on at least a portion of your sales and marketing spend.

Established customer bases are another major benefit. Retail partners and distributors have years or even decades of customers and market expertise that would otherwise require significant time and investment to build.

Diversifying your channels creates multiple revenue streams, which can insulate your business if one channel underperforms due to market changes or other factors.

Step 1: Define Your Goals

Before you can decide what channels to pursue, you need to have clearly defined, measurable goals for your channel expansion. Setting up objectives to guide your decisions and measure your performance helps avoid scope creep and ensures you remain aligned with your overall business strategy.

Consider:

• Revenue targets by channel, considering profit margins and investment needed for each.
• Market expansion goals, such as geography, customer segments, product lines, etc.
• Customer acquisition goals, which state quantity and quality objectives for new customers.

These goals form the basis for measuring your channel’s performance and making adjustments over time. Successful companies revisit their objectives on a quarterly basis to adapt to changing market conditions and opportunities.

Step 2: Identify the Right Channels

Selecting the best channels requires an understanding of your target customers’ preferences and behaviors as well as an honest assessment of your own capabilities and resources. Promega research shows that customers choose channels based on perceived channel characteristics, their needs and requirements, and the situational influences present at the time of purchase.

• Research where your target customers are currently shopping and researching, as well as the factors driving their purchasing decisions.
• Evaluate the reach, reputation, market position, and brand fit of potential partners or channels.
• Calculate total cost, expected margin, and growth potential for each channel to assess profitability and scalability.

Prioritize the channels that provide the best combination of access to target customers, profitability, and strategic fit for your business. The most attractive channels may also be the most competitive, requiring a differentiated value proposition.

Step 3: Set Policies

Establishing clear channel policies helps avoid channel conflict and ensures consistent customer experiences across touchpoints. These policies act as a rulebook for how each channel interacts with other channels and with end customers.

• Pricing: Create pricing structures across channels that are competitive yet profitable for partners while protecting your brand positioning.
• Territory: Define territory and customer allocation rules that specify which partners cover specific geographic areas or customer segments.
• Performance: Establish performance expectations and metrics that set clear standards for volume targets, customer service levels, and brand representation.

Formally document channel policies and communicate them to channel partners during the onboarding process. Review and update policies regularly to ensure they remain relevant as your business and market conditions evolve.

Step 4: Create Support Systems

Channel partners are more likely to be successful if they have the support, tools, and resources needed to effectively represent your brand and products. Building support systems for channel partners shows your commitment to their success and helps overcome common partnership challenges.

• Training programs cover product knowledge, sales techniques, brand messaging, and customer service standards.
• Marketing materials and resources such as brochures, digital assets, promotional content, and co-marketing opportunities.
• Communication protocols include regular check-ins, performance reporting requirements, and escalation processes.

Investment in strong support systems pays dividends over time and leads to deeper partnerships that drive mutual growth. Partners who feel supported by you will prioritize your products and strive to maintain high performance standards consistently.

Managing Channel Relationships

A solid channel strategy is built on the backbone of strong channel relationships. As such, success depends on understanding the implications of selling through channels as well as the downstream effects on internal operations, marketing, and support functions.

Partner Selection Criteria

Selecting the right partners early on can avert many of the typical pitfalls of channel management. The alignment of market reach and target customer bases ensures partners can effectively reach your ideal customers. The financial stability and reputation of a partner safeguard your brand and ensure their capability to deliver on promises.

Ongoing Relationship Management

Ongoing relationship management averts minor issues from escalating into bigger problems and, more importantly, facilitates the identification of opportunities for shared growth. Regular communication and feedback, performance tracking and optimization, incentives and rewards, and conflict resolution mechanisms are all part of this process.

Supporting Your Partners

Partner success is inextricably linked with your own success. The investments in partner support should be viewed as mandatory expenses that are not negotiable. Sales training and product education, as well as the provision of marketing materials and access to campaigns, are all ways of empowering your partners and, by extension, your business.

Channel Management Tools and Technology

The two biggest challenges to measuring multi-channel marketing effectiveness, including with partners, are understanding return on channel investment and isolating individual channel impact, according to research from the Journal of Database Marketing. Fortunately, a variety of tools to coordinate activities and measure performance are available and are needed to manage and engage partners as well as to facilitate communication with and across multiple platforms.

Essential Software Features for SMBs

Channel management technology should streamline complex partner programs without sacrificing visibility. PRM (partner relationship management) software provides a repository of partner information and past interactions, where you can track all communications, agreements and performance measures in one place. As your partner network expands, automation of manual, routine tasks within this system will help to ensure that nothing slips through the cracks.

Tools that can assist in distributing and tracking leads to the right partner as quickly as possible will increase your conversion rates. You’ll want a lead routing mechanism in place to prevent channel conflict and give your partners the best chance of converting a qualified prospect. Performance analytics and reporting are key to keeping an eye on channel performance so you can spot at a glance which partnerships are effective and which require additional attention. CRM integration can help you maintain a single view of a customer across all systems to avoid duplicate efforts and ensure the customer has a consistent experience.

Recommended Tools and Resources

Consider these specific platforms and resources to support your channel management efforts:

• HubSpot CRM: Free CRM with partner tracking capabilities and lead distribution features.
• Salesforce Partner Community: Comprehensive partner relationship management platform with scalable pricing.
• Channeltivity: Dedicated partner portal and relationship management solution designed for SMBs.
• Google Analytics: Free analytics platform for tracking multi-channel performance and attribution.
• Zapier: Automation platform that connects different tools and streamlines channel management workflows.
• Slack: Communication platform for maintaining regular contact with channel partners.
• Asana or Monday.com: Project management tools for coordinating channel initiatives and tracking partner activities.

Common Challenges and Solutions

Every business encounters obstacles when implementing channel management programs. Understanding these frequently encountered problems and their proven solutions helps businesses navigate difficulties more effectively and build stronger channel partnerships. The key is recognizing potential issues early and having structured approaches ready to address them before they impact performance or damage relationships.

Channel conflict management

These issues arise when different sales channels compete for the same customers or undermine pricing strategies.

Solution: Prevention through careful planning works better than resolution after conflicts develop:

• Implement clear pricing policies defining wholesale versus retail pricing structures
• Develop territory management strategies, assigning specific geographic areas to individual partners
• Communicate roles and boundaries clearly from the start
• Give each channel exclusive opportunities to prevent direct competition

Performance Issues

Not all channel partners will meet expectations, and underperforming partners can drag down overall channel success.

Solution: Take a structured approach to partner performance management:

• Set realistic expectations based on market conditions and partner capabilities
• Have performance improvement plans with measurable goals and specific timelines
• Provide additional training and support resources when partners struggle
• Maintain clear criteria and processes for terminating relationships when necessary

Brand Consistency

Maintaining uniform brand representation requires ongoing vigilance, and inconsistencies can confuse customers and weaken brand equity.

Solution: Create systematic approaches to maintain brand consistency:

• Standardize messaging across all channels for consistent customer information
• Implement quality control measures, including regular monitoring and feedback
• Conduct regular brand audits to identify trends and systemic issues
• Provide comprehensive brand guidelines that partners can reference easily