In order to ensure the success of your business and maintain a strong partnership, you’ll need to monitor and evaluate your distributor’s performance in an ongoing manner. You rely on your distributors to efficiently connect your customers to your products. This means that an underperforming distributor is essentially a weak link that can damage the entire chain of your business structure.
How exactly can you assess your distributor’s performance, though? What metrics can you use to understand where they are succeeding and where there is room for improvement? How can you encourage your distributors to make changes that better serve your business goals?
In this article, we’ll be answering all of those questions and more.
1. Focus on the Right KPIs
One essential step you’ll want to take when evaluating distributor performance is establishing clear performance metrics. The key performance indicators (KPIs) you define should align with your distribution goals.
Examples of KPIs that could help you gain a greater understanding of your distributor’s success include:
- Market share
- Sales volume
- Inventory turnover
- Customer satisfaction
- On-time delivery
- Order fulfillment rate
- Return rate
- Product mix
At the same time, using these numbers to inform a more holistic understanding of performance is important rather than taking them as the be-all-and-end-all of distributor success. There are more subjective factors that are equally important when evaluating performance, including:
- Whether their brand values match your brand values
- Whether they have proven themselves to be eager to promote your products and business to their existing audience
- Whether they have a great track record with customer satisfaction
- Whether there are any conflicts between their products and services and those offered by your brand
2. Use a Channel Partner Score Card
Having the ability to track KPIs is great– it can offer you valuable insight that you otherwise never would have been able to use to your advantage. At the same time, you can track performance in so many different ways that it can be difficult to hone in on the most important metrics and KPIs.
One way to ensure you’re focusing on the KPIs that are most meaningful to your success and distributor performance is to create a channel partner scorecard. Essentially, this is a document that outlines the criteria you are primarily using to determine the success of a channel partner.
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Not only does this help you evaluate the performance of distributors, but it also gives your partners a clearer sense of what the expectations are. You can use these scorecards to compare and contrast performance between distributors and even gain a deeper understanding of how each channel partner will likely perform in the future.
3. Audit Financial Performance
An essential part of a successful channel partnership is transparency in financial reporting. In order to evaluate the overall performance of your distributors, you’ll need to look specifically at their profitability, efficiency, and financial health.
There are a number of key aspects you’ll want to keep in mind when you are auditing the financial performance of your distributors, including:
- Revenue growth: Take a look at the revenue growth over time of your distributors in order to determine their success in expanding sales. A positive sign of effective performance is consistent and steady revenue growth.
- Profitability analysis: When evaluating your distributors, take a look at their profit margins and compare their gross profit margins to industry benchmarks. Beyond that, you can assess their ability to manage expenses by analyzing net profit margins.
- Inventory management: You can also look at the inventory turnover rate of your distributors to gain greater insight into how efficiently they manage their stock. Reduced carrying costs and effective inventory management are associated with a high turnover rate.
4. Evaluate Promotional Efforts
Another important step you can take to assess the performance of your distributors is to take a look at their marketing and promotional efforts. What strategies and activities are they using to reach their target audience? Do their efforts align with your brand’s personality and image as well as your target market?
Beyond ensuring that their marketing strategies align with your brand image, you’ll want to look at the efficacy of these efforts. Do they help to drive sales? Are they connecting with audiences in a way that supports your larger goals?
5. Monitor Customer Service and Satisfaction
One of the most critical aspects of the distribution process is customer satisfaction. If the end customers aren’t satisfied and happy, it means that something important has been lost along the way.
You can track complaint resolution, response times, and overall customer feedback directly related to the distributor’s service to gain valuable insight.
6. Conduct Market Research
You can also learn more about the performance of your distributors by conducting your own market surveys and research.
By gathering independent data about the perception of your distributor’s performance and products, you can get a better picture of how your distributors are impacting brand perception and customer satisfaction.
7. Keep the Communication Lines Open
Keeping track of KPIs and taking other measures to evaluate distributor performance is a great start, but it’s also important to ensure there are open communication channels between your brand and your distributors.
Make sure that you are checking in with your distributors regularly by scheduling meetings to specifically discuss performance. This way, you can build a collaborative environment where you and your distributor can openly share your thoughts about opportunities for improvement and potential obstacles while swapping valuable feedback.
Have you teamed up with channel partners to help you boost brand awareness, increase your revenue, and expand your audience? If so, make sure you check out our definitive guide to motivating channel partners in 2023.
8. Reward Distributor Loyalty
It’s important to remember that a channel partnership is a two-way street. Though you’ll want to ensure that you have a clear path for evaluation performance on the part of your distributors, you also don’t want to overlook the fact that they will also be evaluating your brand’s role in their business.
While it’s great to closely examine exactly how your distributors are performing, this information is practically useless if you don’t take actions that motivate your channel partners to perform at their best.
One of the most impactful things you can do to encourage distributors is to offer a B2B rewards program. This could include either cash or non-cash rewards, giving your channel partners both recognition and reward for a job well done.
When you’re designing a rewards program, the best choice is often to reward individuals for activities that align with your brand and its values, demonstrate an excellent work ethic, and lead to happy customers. Using this approach, you can start building lasting relationships with channel partners and customers while also helping you achieve your long-term goals.
Tips For Maintaining Strong Relationships With Distributors
Your relationship with distributors is something that needs to be maintained over time– you can’t simply set up an agreement and never pour any energy into it again. You can do several things to ensure that you and your distributors have a strong relationship and are working in tandem to reach your shared goals.
Here are some tips and tricks you can use to make sure that your distributors are performing at their best and understand the objectives of your brand:
- Communicate monthly: Though email is the go-to communication channel in this day and age, it’s best to connect via phone with your distributors at least once a month. Creating a rapport over the phone can help you build a long-term relationship that can significantly increase your chances of long-term success as a brand. It’s important not to overlook the human element when considering the performance of your distributor.
- Open access to promotional material: You’ll want to ensure that your distributors always have all of the promotional material relevant to their point of connection to your business. Their office should always have all promotional material you carry, including case cards and shelf talkers.
- Process orders promptly: How quickly and consistently you fulfill orders can have a big impact on your relationship with your distributor. Regularly processing orders within twenty-four hours helps your business appear much more professional than those always having supply issues and taking multiple days to fulfill orders.
- Create an annual plan: Having an annual plan that you review and tweak every year in person with your distributor is also important for maintaining strong relationships. These plans can include a discussion of targets, support, marketing, and more.
- Request depletion reports: You’ll want to ask for depletion reports on a monthly basis. This way, you can offer help ASAP if you see stagnant and high levels of inventory.
- Give out incentives and rewards promptly: Having an incentive program for your distributors is a great way to motivate them to push your products. This can help strengthen the relationship you have with your distributors. At the same time, if your incentive payouts are inconsistent or slow, this can negatively impact your relationship and outweighs the incentive program’s perks. Using custom automated software like the ones we build at Level 6 helps ensure you never have to worry about late rewards or perturbed distributors.
Tips For Improving Distributor Performance
Once you have taken a closer look at your distributors’ performance, you might take some steps to help encourage improved performance.
There are a number of things you can do to ensure that your distributors are helping rather than hurting your brand’s ability to reach its goals:
- Provide your distributors with case studies: Providing case studies can be a great way to help your distributors sell your products. These studies illustrate examples of how and where your offerings have been successful within certain target markets. This type of content can help you build credibility as a brand with your distributors while also being useful tools for the distributors as they sell your products.
- Create product launch packages: It’s essential that your distributors have all of the product information that they need in order to present your offerings to customers. Ensure that all product collateral is regularly updated with your distributors and that you promptly send out launch packages when releasing a new product. As a part of your launch package, you might also consider sharing an overview of the other marketing activities you’re undergoing to make the product launch a success.
- Host conferences: Another great way to improve distributor performance is to bring together all of your distributors through regular sales conferences. This is a great place to educate distributors, discuss company updates, and launch new products.
- Offer webinars: Putting on regular webinars is an excellent way to ensure the lines of communication are continuously open with your distributors. You might cover topics including emerging technology, new products, or training. Make sure that you set aside enough time at the end of any webinar you host for a Q&A session.
- Provide avenues for feedback: Another key aspect of a strong relationship with distributors is ensuring they have ways to share any feedback they might have. Make sure there are clear paths they can use to submit requests and suggestions. You can reinforce these systems in email correspondence, conference calls, and at conferences.
Driving Business Growth Through Incentive Programs
Your distributors are a vital part of your business– after all, you rely on them to efficiently connect your products to your customers. This means that your relationship with your distributor and their performance can have a massive impact on your success as a brand.
If you’re looking for ways to build stronger relationships with your distributors or channel partners, an incentive program might be just what the doctor ordered. Not only can you reward your partners for achieving goals that align with your own business goals, but you can also use your incentive program as a data collection tool that helps you make better business decisions.
Level 6 has been a leader in custom programs for nearly two decades. Our mission is to help businesses turn their ideas into a reality, offering custom software and custom programs that are cost-effective and provide an unbeatable ROI.
Are you ready to design the perfect incentive program for your distributors, sales team, customers, or employees? If so, schedule a call with us today to get started.
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
