1. Amity Business School
Amity Business School
MBA (M&S) ,Class of 2013, Semester II
Evaluation of Channel Partners
Swati Bhatnagar

2. Amity Business School
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 manufacturer’s 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 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

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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 it’s a routine sales data
whereas for selective it’s 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

8. Sales performance Amity Business School
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)

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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 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

10. Attitudes of channel membersAmity Business School
• 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 Criteria Scores(B) Weighted
weights(A) (0-10) score(A*B)
Sales Performance 0.5 7 3.5
Inventory 0.2 5 1.0
maintenance
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

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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