Success Strategies in Channel Management

1. Success Strategies in Channel Management Performance Measurement Performance Measurement

2. Performance Measurement Channel Member Evaluation A Framework for Developing Measures of Channel Member Performance Direct and Indirect Measures Financial Measures Performance Measurement

3. Channel Member Evaluation • To evaluate your channel, conduct face-to-face quarterly audits with your most important distributors. • The audit provides a structure in which you and your distributor can pinpoint strong areas, flush out problems that the distributor may be reluctant to discuss, or reveal profitable new value offer and new market ideas. • Schedule channel audit meetings only with the top 20 percent of your distributors. Evaluate less important relationships with mail surveys. Performance Measurement

4. Cover These Topics During the Channel Audit: • Overall policies and procedures • Sales force performance • New value offer performance • Existing value offer performance • Senior management contract/relationship • Competitive activity • New emerging markets • Other miscellaneous complaints and compliments • With that information in hand, you can more accurately evaluate that distributor's performance. To do so, you need to develop a set of evaluation criteria that you apply to each of your distributors to judge performance. Performance Measurement

5. The performance of channel members should be periodically monitored—a channel member may have looked attractive earlier but may not, in practice be able to live up to promises. A Framework for Developing Measures of Channel Member Performance Describe the General Nature of Performance Specify the Focal Domain Being Evaluated Identify the Performance Assessment Perspective Establish the Type of Data Required Generate Items for the Performance Scale Performance Measurement Performance Measurement

6. Describe the General Nature of Performance. • The first step is to establish a general description of performance that is appropriate for the research context. Emphasis during this initial step is on considering a wide range of facets and influential factors : Performance Measurement

7. This step begins to refine and focus the scope of performance in order to complete the domain by identifying any additional, subtle facets that should be incorporated into the corresponding measures Possible strategies to complete the domain include literature searches, interviews with the various research constituencies (e.g., respondents, users), or other exploratory techniques to uncover additional pieces of the performance domain. In some research settings, it may even be advisable to start with more observable performance terms such as specific outcomes; e.g., sales or employee turnover, and work back to a more conceptual definition, particularly when the researcher or respondents have difficulty articulating a definition but are familiar with the observable indicators of performance. Specify the What Exactly is Being Evaluated. Performance Measurement

8. This step identifies the perspective from which performance is being assessed, and at least three perspectives exist. Performance can be assessed from an internal perspective, such as a channel member doing a self-assessment of their own performance in order to compare performance to their own goals and objectives. A more external perspective is when a channel member's performance is assessed by their current (or potential) channel partner. Finally, a third party, outside the channel, could assess the performance of channel members, such as a regulatory agency investigating charges of discriminatory pricing or restrictive selling practices. Explicit recognition of the performance assessment perspective is an important step because it is the primary determinant of the performance criteria (e.g., own goals vs_ goals set by others). Identify the Performance Assessment Perspective. Performance Measurement

9. Establish the Type of Data Required. • The previous steps have defined the domain of performance and set the parameters for assessing performance, and this step marks the transition from issues of definition to measurement issues. The specific types of measures (e.g., financial vs. nonmonetary, perceptual vs. objective, raw vs. standardized) and the appropriate method (e.g., survey, internal audit, secondary data) for gathering the data are selected in this step. The form and type of data chosen is based largely on the focus and nature of the performance assessment exercise, i.e., the data should be relevant to the research question being asked. Other considerations such as data availability and statistical analysis procedures can also influence the type of data gathered. Performance Measurement

10. At this point, the specific items for the performance scale are formed. If the development process has emphasized concrete, observable indicators throughout, the specific scale items can be formed from those indicators. If the process focused on more abstract concepts or definitional profiles, these concepts and profiles can be used to create the specific items via focus group discussions, critical incident studies, or similar techniques. Profit, Total Dealership Profit, By Supplier Profit by Product Type Sales Margins Inventory Turnover Sales Expenses Return on Investment Inventory Expense Buildings/Facilities Service Department Office Systems Generate Items for the Performance Scale Performance Measurement

11. Employee Incentive Plans Advtg/Promo Programs Buyer Credit Management Dealership Financial Plan Sales Forecasts - Accuracy Dealership Business Plan Volume ($), Total Dealership Volume ($) to Quota Volume ($) by Product Type Volume (units) by Prod. Type Volume ($) per Salesperson Market Share Product Knowledge/Salesmen Coverage of Trade Area Warranty Claims Processing Customer Satisfaction Selling Skills/Salespeople Overall Customer Service Level # of Customer Complaints Sales Calls-Total # Calls-Current Customers Number of Product Demos Generate Items for the Performance Scale Performance Measurement

12. % Variation Explained Scales - Performance Item Outcome-Sales Outcome-Profit Behavior-Sales Effort Customer Service Marketing Support Measures of performance, of both a financial and a non-financial nature, can be applied: directly and indirectly. Direct measures are those which require absolute figures, percentages or ratios. Indirect measures require less exacting information than direct measures; usually the respondent has to indicate an opinion of performance on some dimension, either on an opinion scale or by answering an 'either/or' type question. Both the direct and indirect measures of performance can be relative. In deciding to apply a relative measure of performance, the researcher has to define the comparison point: industry, competition or internal to the company. Generate Items for the Performance Scale Performance Measurement

13. The internal standards of performance are important in that they allow the measures to reflect the objectives and expectations for the new-product development. Including external standards provides a wider view on performance, allowing success to be defined in terms of the competitive situation, forcing the respondents to consider their activities in the light of competitive pressures. Whichever criteria are applied, they allow success to be defined more clearly, by relating performance to some standard. Furthermore, making criteria explicit allows respondents to evaluate performance in the light of known and defined comparison points and provides researchers with a richer evaluation of performance. Direct and Indirect Measures Performance Measurement

14. types of financial measures can be grouped under a number of headings, which refer to the base of the measure, i.e. · Profit · Assets · Sales · Capital · Equity Profit Based Profitability is the most popular type of financial measure, presumably because profitability is the 'bottom line' in any commercial activity. Asset based Asset growth Sales based Turnover growth Export sales Percentage sales growth Meeting sales objectives Financial Measures Performance Measurement

15. Financial Measures • Ratio of cumulative sales in the first 3 years on the market to the investment in R&D for the project • Domestic market share, percentage share of domestic market 3 years after launch Foreign market share, percentage share of foreign markets 3 years after launch Diffusion coefficient, fitting installation data to classify diffusion equation • Market share in terms of the number of units sold and the average sales price per unit Importance of program in generating sales for the company • Sales Based • The sales-based measures are almost as popular as the profit-based measures. Performance Measurement