Partner tiers for a small manufacturer: gold, silver or just two

Picture sixty dealers, one sales head and two field people. Somebody suggests gold, silver and bronze. A bigger rival has them. Before you print certificates, ask what each tier would change in how you spend your own time. Gold and silver earn their place only when dealers differ so much that one support plan fails most of them. If your partners fall into two clear groups, two tiers are enough.

Why tiers by last year's purchases mislead

The simplest scheme ranks dealers by what they bought. The top group lands in gold, gets the best scheme and the visits, and goes on buying the same amount. Meanwhile a dealer in a growing town, who stocks you badly but could sell far more, sits in bronze and is ignored.

That is a ranking of history. A tier should answer a forward question: where does your limited time earn the most next season?

Two questions per dealer

Ask these of each partner and answer only high or low. Finer scoring gives false precision from the few facts you hold.

How much could this dealer realistically sell of your range in a year? Look at the size of the town, the number of shops of the type your product sells through that the dealer serves, and how much of the counter you hold today. That is the potential.

How much of your effort does that sale cost? Count visits, credit chasing, returns, training and reminders. A dealer who pays on time and reorders after one call costs little. One who needs a visit before every order costs a lot.

Together the answers give four kinds of dealer, and each deserves different handling:

• High potential, low effort: protect and feed. First call on launches, the best display material, visits on a plan.
• High potential, high effort: build. A joint plan, training and a field visit before the season, with a date to review it.
• Low potential, low effort: serve by phone. Reorder reminders, standard terms.
• Low potential, high effort: hold or let go. No extra visits, clear terms, no new credit.

Two tiers or three?

Count what you actually give a dealer that differs by group: visits, credit, display, scheme, launch stock. If the count is two or three, a third tier only creates a middle group nobody can describe. A silver dealer who gets bronze treatment plus a name on a certificate has been handed a label.

Use three tiers only if you can list several differences between the middle and the bottom that a dealer could feel. Otherwise run two, and call them priority and standard.

An invented example: a bedsheet brand with dealers around Erode

Take an invented handloom bedsheet and towel brand in Erode with about forty dealers across western Tamil Nadu and northern Kerala. The owner's first tiers were by value: eight dealers in gold, with the big scheme and every visit. Three of the eight sat in towns where shoppers were moving to a rival, and each needed payments chased.

When the owner added the potential question, a different pattern showed. Two dealers outside the gold group ran large shops in busy bazaars and stocked only two of the five ranges. They were high potential and low effort, and they had been getting a reorder call and nothing else.

The owner moved to two tiers: eleven priority dealers and the rest standard. Priority dealers got a pre-season visit with the full range laid out. Standard dealers got the phone and the price list. The three declining gold dealers were told on a short call that visits now followed a rule, and the owner showed them the page. Two stayed in priority because their numbers recovered against that rule. One moved to standard, grumbled once and kept ordering. The figures here are illustrative.

The tier note a new salesperson can read

Keep it to one page so any new hire can apply it.

How we score: potential = (how, in plain words). Effort = (how).
Priority gets: (visits, display, launch stock, scheme step)
Standard gets: (phone reorder, price list, standard terms)
Moving between tiers: when a score changes at the review, not on a mood
Who may override, and where the exception is written:
Next review date:

A dealer who disagrees should be able to read the rule. That prevents some of the quarrels tiers start.

Where tiers go wrong

They go wrong when sell-in is the only evidence. A tier built on purchases rewards stocking, not selling, so collect some view of sell-out before you rank anyone. Our post on measuring dealer and distributor performance covers the numbers to gather first.

They go wrong when tiers become entitlements. If a dealer treats priority status as owed, the review will feel like a punishment. Say at the start that tiers are reviewed and that the rule decides.

They also go wrong when you have under a dozen partners and know them all. A notebook with a next action beside each name beats a scheme.

Finally, expect the first review to be awkward. Someone you called gold will drop. Tell the dealer before the list circulates, show the two answers behind the placement, and name the one change that would move them back. A dealer who hears that from you has a path. A dealer who hears it from a rival at a trade meeting has a grievance.

When most dealers land in one square

List your partners this afternoon and place each as high or low on both questions. If one square holds nearly all of them, your problem is a missing programme and not the tiers; the post on designing a channel partner programme is the place to start.

Partner segmentation and tiering is the service that sorts the list and sets support for each group, and the rest of our sales work sits under sales. To start, tell us what you need.