There are two areas in the sales planning process where most distributor managers fail: Execution and Evaluation. Execution is basically the process of putting a plan into effect. It’s not rocket science. But it demands consistency and discipline. It requires the ability from individuals and teams to deliberately, consistently and relentlessly implement a decision or plan. A distributor manager becomes an expert when his wins and losses are not left to chance.  Evaluation is about the ability to use the right performance metrics and make sense out of them. By understanding how to evaluate performance, execution can become a purposeful strategy rather than an outcome of luck.

How do you measure the performance of your distributor partner? Are you using a robust set of metrics?Scorecards Explain and Predict Performance

As a commanding officer, you must know what target you are trying to aim and shoot at. Otherwise, you might experience shooting yourself in the foot. The main job of a scorecard is to help explain and predict performance.  Without a clear criteria what constitutes a good performance, it is difficult to explain the outcome or understand what you achieved and how to replicate it. Without clear metrics, you will be tempted to blame the weather, the geo-economic and political environment rather than your own performance. The right metrics in the scorecard also help predict performance. When you know exactly the set of metrics that drive performance (or results) you can predict what can potentially happen in the end when certain activities are not implemented accordingly. I will discuss this further in the illustration at the end of this chapter. 
               
Different companies vary in the way they measure their distributor’s performance. There are companies who formulate performance criteria that they do not communicate with distributors. On the other hand, most progressive companies openly discuss and agree with their distributors how performance should be measured. They set clear criteria and guidelines to ensure a more objective performance evaluation.

How to Develop a Performance Scorecard
               
There are generally two types of performance scorecards adopted by various companies for their distributors: Outcome-Centric and Activity-Centric scorecards.

Outcome-Centric Scorecard
               
The most commonly used is what I call the Outcome-Centric scorecard. This approach measures a distributor’s performance based on desired results, such as: sales volume or value, market share, and profit. While this is simple to use for both principal and distributor, it can encourage opportunistic behaviors and short-term perspective.
               
In most cases, a sales target is achieved at the expense of long-term goals. They mistake the forest for the trees that they do not aim for the grand plan. They dump stocks, cut prices, offer longer credit terms just to get customers, implement sell-out programs that damage image of brands, all in the name of achieving the desired results only for the moment. Always be reminded that policy influences behavior. If it’s your policy to reward performance purely based on topline results, distributor will be tempted to deliver results, regardless.  So, how do you influence this behavior among your troops?

Activity-Centric Scorecard
               
As the term itself suggests, the performance metrics are largely based on activities, specifically, sales activities. This approach believes that when the right sales and selling activities are effectively done, desired outcome naturally follows. Likewise, it argues that the right activities are building blocks to long-term success. They form the foundation of a solid sales territory penetration and lasting customer relationships.
               
The good news is you don’t have to choose either one. You can actually combine them.
 
This article is an excerpt from the best-selling book Distributor Management: Winning Tools in Managing your Distributors as Partners by Emilio Macasaet III. This year, the author will release his highly-anticipated second book, 6 Steps to Effective Key Account Management. He is also the Chief Distribution Specialist of Mansmith & Fielders, the only advocacy-based training firm with focus in marketing, sales, strategy and innovation. For information email info@mansmith.net.