1bd1eevaluation of channel members

Amity Business School

Amity Business SchoolMBA (M&S) ,Class of 2013, Semester II

Evaluation of Channel Partners

Swati Bhatnagar


Channel member performance

Channel member performance evaluation is as important as evaluation of employees working with the firm

Difference lies in dealing with independent business firms than employees.

Setting of the evaluation process is interorganizational rather than intraorganizational


Factors affecting scope & frequency of evaluations

• Degree of manufacturer’s control over channel members

• Relative importance of channel members• Nature of the product• Number of channel members


Degree of control depends on :-

• Contractual agreements

• Acceptance of manufacturer’s product

• Market position of the manufacturer

Importance of channel members depends whether the manufacturer sells all its outputs through intermediaries or relies less on intermediaries


Nature of product

Whether reseller sells a high volume product of low unit value or products of high unit value which is more complex

Number of channel members

Generally for intensive it’s a routine sales data whereas for selective it’s a more comprehensive performance evaluation


Channel member performance audit Is different from routine day to day monitoring of performance

based exclusively on standard sales performance. Is periodic & comprehensive review of their performance Consists of three phases

1. Developing criteria for measuring their performance

2. Periodically evaluating their performance against the criteria

3. Recommending corrective actions


Developing criteria for performance

Many possible criteria for measuring channel member performance can be used but the most common used by the manufacturers are:-

• Sales performance

• Inventory maintained by channel members

• Selling capabilities of channel members

• Attitudes of channel members

• Competition faced by channel members

• General growth prospects of their channel members

Amity Business SchoolSales performance

Care should be taken to distinguish b/w 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.

The same depends on their degree of control exerted over the channel members

However in a traditionally loosely aligned channel, the manufacturer’s ability to get the sales data is quite limited.

The 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 quota( if given)


Inventory maintenance• Generally difficult for less dominant manufacturer to make the

channel member adhere to this requirement strictly as they lack the power to influence.

• Check of inventory levels can often be done by the field sales force

Selling capabilitiesParticularly important at the wholesale level.

The manufacturer should pay particular attention to:-

No. of salespeople channel members deploy to various product lines

Technical knowledge & competence of his sales people

Salesperson interest in the manufacturers products

Amity Business SchoolAttitudes of channel members

• The attitude is generally not evaluated unless the sales performance is unsatisfactory

• However in order to identify a negative channel partner attitude should be evaluated independent of the sales data

• Can use informal feedback and news from grapevine to assess& track his attitude

CompetitionEvaluate him in terms of :-

Competition from other intermediaries &

competition from other product lines

The comparative data is very useful when the manufacturer decides to expand his coverage or plans to replace existing channel members


General growth prospects

• Channel members organization expanding, showing signs of improvement , channel members personnel qualified, age , health, succession management , overall capacity to meet market expansion

Other criteria Financial status, character, reputation, quality of service


Applying Performance criteriaThree approaches may be used :Separate performance evaluation on one or

more criteriaMultiple criteria combined formally to

evaluate overall performance qualitatively.Multiple criteria combined formally to arrive

at a quantitative index of overall performance


Multiple criteria combined informally

Various operational performance measures on relevant criteria obtained

Managerial judgment used to combine performance measures

Qualitative judgment made about overall channel member performance


Multiple criteria combined formally

Criteria Criteria weights(A)

Criteria Scores(B) (0-10)

Weighted score(A*B)

Sales Performance 0.5 7 3.5

Inventory maintenance

0.2 5 1.0

Selling capabilities 0.15 6 0.9

Attitude 0.1 4 0.4

Growth Prospects 0.05 3 0.15

Overall performance rating : 5.95


Recommending corrective actions

• Meant 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 network, conducting marketing channel audits, forming distributor advisory councils, utilize research conducted by outside parties

1bd1eevaluation of channel members

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