0545fevaluation of channel members

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Amity Business School


Evaluation of Channel Partners

Swati Bhatnagar




Degree of control depends on :-

• Contractual agreements

•Acceptance of manufacturer’s product

• "arket position of the manufacturer

Importance of channel members depends

whether the manufacturer sells all its outputsthrough intermediaries or relies less on

intermediaries




Nature of product

#hether reseller sells a high volume product of

low unit value or products of high unit value

which is more comple$

Number of channel members

%enerally for intensive it’s a routine sales data

whereas for selective it’s a more

comprehensive performance evaluation




Channel member performanceaudit &s different from routine day to day monitoring of performance

based e$clusively on standard sales performance.

&s periodic ' comprehensive review of their performance

Consists of three phases

(. Developing criteria for measuring their performance

). *eriodically evaluating their performance against the criteria

+. ecommending corrective actions




Developing criteria for performance "any possible criteria for measuring channel member

performance can be used but the most common used by the

manufacturers are,-

• Sales performance

• &nventory maintained by channel members

• Selling capabilities of channel members

• Attitudes of channel members

• Competition faced by channel members

• %eneral growth prospects of their channel members



Amity Business School Sales performance

Care should be taken to distinguish bw sales of the manufacturer to the

channel member ' channel members sales of manufacturer’s products to

customers

Attempt should always be taken to get the sales data from the channel

members themselves.

/he same depends on their degree of control e$erted over the channel

members

0owever in a traditionally loosely aligned channel1 the manufacturer’s ability

to get the sales data is 2uite limited.

/he sales data should be evaluated in terms of the following,-

Comparison of channel members’ current sales to historic sales

Cross comparison of a members sales with those of other channel members

Comparison of channel members sales with pre determined 2uota3 if given4




General growth prospects

• Channel members organization e$panding1 showing signs of

improvement 1 channel members personnel 2ualified1 age 1

health1 succession management 1 overall capacity to meetmarket e$pansion

ther criteria

6inancial status1 character1 reputation1 2uality of service




Applying !erformance criteria/hree approaches may be used ,

Separate performance evaluation on one or

more criteria

"ultiple criteria combined formally to

evaluate overall performance 2ualitatively.

"ultiple criteria combined formally to arrive

at a 2uantitative inde$ of overall performance




"ultiple criteria combined informally

Various operational performance measures

on relevant criteria obtained

Managerial udgment used to combine

performance measures

!ualitative udgment made about overall channel

member performance




"ultiple criteria combined formally

Criteria Criteriaweights(A)

Criteria Scores(B) (0-10)

Weightedscore(A*B)

Sales Performance 0.5 7 3.5

Inventorymaintenance

0.2 5 1.0

Selling capabilities 0.15 6 0.9

Attit!e 0.1 " 0."

#ro$t% Prospects 0.05 3 0.15

Overall performance rating : 5.95




#ecommending corrective actions

• "eant to improve channel member performance who are not

meeting minimum performance standards

• Carefully analyze channel members’ needs ' problems

• Develop concrete ' practical approaches aimed at actively

seeking information on channel members needs and problems

• Approaches such as building a formal channel communication

network1 conducting marketing channel audits1 forming

distributor advisory councils1 utilize research conducted byoutside parties

0545fevaluation of channel members

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