Amity Business School

Amity Business School

Evaluation of Channel Partners

Swati Bhatnagar

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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

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Factors affecting scope & frequency

of evaluations
Degree of manufacturers control over channel
members
Relative importance of channel members
Nature of the product
Number of channel members

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Degree of control depends on : Contractual agreements

Acceptance of manufacturers 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

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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 its a routine sales data
whereas for selective its a more
comprehensive performance evaluation

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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

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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

Sales performance

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Care should be taken to distinguish b/w sales of the manufacturer to the

channel member & channel members sales of manufacturers 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 manufacturers 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)

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tory 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 capabilities
Particularly 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

Attitudes of channel members

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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

Competition
Evaluate 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

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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

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Applying Performance criteria

Three approaches may be used :
Separate performance evaluation on one or
more criteria
Multiple criteria combined formally to
evaluate overall performance qualitatively.
Multiple criteria combined formally to arrive
at a quantitative index of overall performance

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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

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Multiple criteria combined formally

Criteria

Criteria
weights(A)

Criteria Scores(B)
(0-10)

Weighted
score(A*B)

Sales Performance

0.5

3.5

Inventory
maintenance

0.2

1.0

Selling capabilities

0.15

0.9

Attitude

0.1

0.4

Growth Prospects

0.05

0.15

Overall performance rating : 5.95

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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