In this article
The comparison: margin, control, reach, speed, capability
Margin: direct keeps it all, minus the cost of your own sales force, which is larger than most owners count; channel gives away a tier or two of margin and removes most of that cost. Control: direct decides price, message, service and who is a customer; channel delegates price to a floor, message to training, service to the partner, and hears about customers second-hand. Reach: direct reaches the customers your people can visit and the enquiries that come in; channel reaches every outlet and town the partner already serves, from the first month. Speed: direct scales as fast as you can hire and train; channel scales as fast as you can recruit and onboard partners, which is faster but less predictable. Capability: direct requires you to build selling, logistics, credit and service everywhere; channel borrows capabilities partners already have — a godown in every district, a relationship with every retailer.
Costs: direct is fixed cost ahead of revenue; channel is margin given away with revenue. Risks: direct risks over-hiring for a market that does not arrive; channel risks partners who stock and do not sell, and losing the customer relationship. Measures: for both, cost per customer, contribution after all selling costs, and the share of the addressable market actually served.
Product complexity, market density and service needs
Product complexity decides how much selling the sale needs. A product that requires technical discovery, specification, demonstration and a negotiated proposal — machinery, systems, professional services — is sold direct or through a specialist reseller who can do that work; a general distributor cannot. A product that sells on availability, price and a known brand — consumables, hardware, standard components — is sold through channels, because the selling is in being on the shelf.
Market density decides whether your own people can cover it. Fifty large customers in three cities: direct. Five thousand small customers across two hundred towns: channel, because the cost of a direct visit exceeds the order. Service needs decide who must be near the customer after the sale: a product needing installation, spares and repair needs a partner with a technician in the district, or your own service network; a product needing nothing after delivery can travel through any channel. Score your product on the three, honestly, and the model usually announces itself.
Design a direct, channel or hybrid route to market
The hybrid is the usual answer and the design is by customer segment: large, complex or strategic accounts direct — named, listed in the programme, with the partner in whose territory they sit told; the long tail of smaller customers through partners; and perhaps a third route — online, or a distributor — for the standard products that need no selling at all. Each route gets its own economics, its own measures and its own rules for where the boundaries lie, because the boundaries are where the conflict starts.
Sequence matters. A business with fifty direct customers moving to channel does it territory by territory, recruiting and onboarding properly, handing over accounts with written terms; one going from channel to direct in a segment does it with notice and compensation, or loses the partners in every other segment. And the route to market is revisited when the product, the market or the service model changes — a new product line may need a different route from the existing one.
Doing the sums for your business
For direct: the fully loaded cost of a salesperson — salary, incentive, travel, phone, CRM, management, ramp months — divided by the customers and contribution they produce in a year, by segment; plus the logistics, credit and service you must provide. For channel: the margin given away per unit through each tier, plus the programme cost — schemes, training, support, a channel manager — divided by the customers and contribution the channel produces; plus what you lose in price control and customer knowledge, which is hard to count and real.
Compare contribution after all selling costs per customer, by segment, under each route. In most trades the answer is direct for the top of the customer list and channel for the rest, with the crossover point visible in the arithmetic. Run the sums before the emotion — owners who love the customer relationship overspend on direct; owners who dislike managing salespeople give away margin they did not need to.
Decision table · use it here or print it
Route-to-market decision matrix
Direct, channel or both, decided by the product, the market and what you can build. Read the rows, then pick your case.
| Factor | Favours direct | Favours channel | Favours hybrid |
|---|---|---|---|
| Margin per sale | High enough to fund a salesperson’s visit | Thin; a partner’s margin is cheaper than your cost of selling | High for large accounts, thin for small ones |
| Control of the customer | Essential: pricing, message, data, relationship | Acceptable to share for reach | Keep the top accounts; share the rest |
| Reach needed | A few hundred accounts you can name | Thousands of buyers across a territory | Both kinds of buyer |
| Speed to cover a market | Slow: each territory needs a hire | Fast: a partner brings a base | Fast where partners exist, direct where they do not |
| Product complexity | Needs demonstration, configuration, consultative selling | Standard, understood, sold from a catalogue | Complex for large buyers; standard for the rest |
| Service needs | Installation and support you must control | Local availability and quick replacement | You service the large accounts; partners the rest |
| Capability you have | A sales team and a CRM | A partner manager, a programme, terms and logistics | Both, with a conflict policy |
| Data you need | Every customer in your CRM | Sell-out and stock from partners, negotiated | Direct data plus partner reporting |
Free to print and share with your team.
Mistakes, and the decision
The mistakes: choosing the model by preference; selling a complex product through general distributors and blaming the distributors; building a direct force for a market too spread to cover; running direct and channel in the same segment without rules; switching models without notice or compensation; and never revisiting the route when a new product arrives. A safeguard: for each segment, write who sells, who delivers, who gives credit and who services, and check every line has one answer.
The decision: score the product on complexity, the market on density and the customer on service need; do the contribution sums by segment; design the hybrid with written boundaries; and sequence the change. This is the route-to-market work we do with manufacturers and brands — the scoring, the sums, the segment design, the channel structure, and the transition plan — and the free audit starts with your customer list sorted by who sells to them today and what it costs.
Questions owners ask
Is direct always more profitable?
Per unit, yes; per customer, only if your own people can reach the customer at a cost below the margin you would give a partner. For a dense market of small customers, channel is usually the more profitable route once the sales force is costed fully.
Can we run direct and channel in the same market?
In different segments, with the boundaries written — named direct accounts, protected territories, a lead policy — and applied to your own team. In the same segment without rules, the partners stop pushing within a quarter.
How do we move from direct to channel without losing customers?
Territory by territory: recruit and onboard the partner properly, hand over accounts with written terms and a joint visit, keep service standards, and stay reachable for the customer during the transition.
What if our product needs technical selling but the market is spread out?
Specialist resellers or system integrators who can do the technical work, supported by your engineers for the hardest cases, with stockists for supply. General distributors will not sell it.
How often should the route to market be revisited?
Whenever the product range, the market or the service model changes, and otherwise every two or three years. A new product line may need a route the existing one does not.
What does GullySales do?
The complexity, density and service scoring, the contribution sums by segment, the hybrid design with written boundaries, the channel structure and partner programme where a channel is the answer, and the transition plan. Scoped in the free audit and priced in writing.