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Amity Business School
Amity Business School
Evaluation of Channel Partners
Swati Bhatnagar
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Amity Business School
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
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Amity Business School
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
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Amity Business School
Channel member performanceaudit &s different from routine day to day monitoring of performance
based e$clusively on standard sales performance.
&s periodic ' comprehensive review of their performance
Consists of three phases
(. Developing criteria for measuring their performance
). *eriodically evaluating their performance against the criteria
+. ecommending corrective actions
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Amity Business School
Developing criteria for performance "any possible criteria for measuring channel member
performance can be used but the most common used by the
manufacturers are,-
• Sales performance
• &nventory maintained by channel members
• Selling capabilities of channel members
• Attitudes of channel members
• Competition faced by channel members
• %eneral growth prospects of their channel members
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Amity Business School Sales performance
Care should be taken to distinguish bw sales of the manufacturer to the
channel member ' channel members sales of manufacturer’s products to
customers
Attempt should always be taken to get the sales data from the channel
members themselves.
/he same depends on their degree of control e$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
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Amity Business School
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
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Amity Business School
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
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Amity Business School
"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
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Amity Business School
"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
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Amity Business School
#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