How to measure dealer and distributor performance

Secondary sales: what the partner sold to their customers, by product, monthly, against the plan and against the same month last year. This is the measure; primary sales — what they bought from you — is a supply number. Coverage: the number of active outlets or accounts the partner sells to in the territory, against the number that exist, and the new ones opened this quarter; a partner selling more to the same ten accounts is not growing the territory. Inventory: stock held against a month or two of secondary sales, by product, with ageing — too little and they miss sales, too much and they stop ordering; the range they hold against the range they should.

Pipeline: for partners selling considered products — equipment, projects, institutional — the deals in progress with value and stage, reviewed like your own pipeline; for retail channels, the accounts being opened. Execution: the programme’s requirements done — display, trained staff, service standards, warranty registrations, reports on time, scheme rules followed — checked on a visit and scored. Five numbers, one page, one quarter.

A partner selling ten lakh a quarter in a territory worth fifty is underperforming; one selling ten in a territory worth twelve is excellent. Read every number as a share of potential — secondary sales as a share of the territory’s annual potential, coverage as a share of the outlets that exist — and rank partners on that share, not on absolute sales, which mostly ranks territories. Maturity: a partner in their first year is judged on the first-quarter plan and activation — training done, accounts opened, reordering; a partner in year three is judged on share of potential and growth. The same numbers, different expectations, written into the tier requirements.

This adjustment is what makes the review fair, and fairness is what makes partners accept the actions that come out of it.

Monthly, the channel manager reads the page for every partner: secondary sales against plan, stock cover, reports received — fifteen minutes per partner — and flags the ones off plan. Quarterly, the review meeting with each significant partner: the five numbers against plan and potential, what worked, what did not, what each side will do in the next quarter, in writing, with the partner’s agreement. Annually, the tier review: who moves up, who moves down, who exits, on the year’s evidence and the programme’s requirements.

Corrective actions by finding: low sales with good coverage — a mix or demand problem, fix with training or a campaign; low coverage — a prospecting plan for the partner’s salespeople with joint visits; high inventory — stop supply, run the stock down, fix the range; thin pipeline — joint pipeline work and lead routing; poor execution — a written notice against the programme requirement with a date. A partner below plan on three of the five for two quarters, with the actions done, is in the wrong tier or the wrong territory.

The mistakes: measuring primary sales; ranking partners on absolute numbers; no potential number, so nobody is underperforming; reports chased rather than required; reviews that recite numbers and end without actions; and tolerating a partner who neither performs nor reports because replacing them is work. A safeguard: for each partner, write their share of territory potential on one line; the ranking will not be the one you had in your head.

A managed channel has a one-page scorecard per partner, potential numbers per territory, monthly reading and quarterly reviews that end in agreed actions, and tiers that move on evidence. This is the channel-performance management we set up — the potential numbers, the reporting format and the partner obligation, the scorecard, the review rhythm, and the corrective-action rules — and the free audit starts by putting your partners on one page against their territories’ potential.