2007 Autumn
Channel Management
Insights
Partner
Scorecards:
Evaluating
Channel
Effectiveness
PART 1
As we head into another new year, it
seems one of the new “Buzzwords”
being discussed among clients and the
industry in general is “scorecards”.
Interestingly, the use of the term
as it relates to vendor and channel
communities means different things
depending on the industry.
For most packaged goods (food and
drug) and other consumer good
manufacturers, the use of the term
often refers to vendor scorecards.
Specifically, how the retailer scores the
vendor across a number of attributes,
including; delivery and stocking policies,
marketing programs, and other metrics
related to category profitability. It
is then up to each vendor to plan a
solution that will improve their failing
areas or they will risk being de-listed
from the retailer’s merchandising
assortment.
Alternatively, for most business-to-
business marketers, a partner scorecard
refers to the vendor’s evaluation of
an individual partner or reseller as
a means to gauge profitability and
growth potential. These Partner
Scorecards are the primary subject of
this article— and a focus at CCI.
For the 23-years of CCI’s existence,
vendors have been seeking a way to
measure the profitability and true
potential of their channel partners. Our
own anecdotal data, as well as more
formal research conducted by other
parties, indicates that the inability to
secure meaningful, actionable insight
about partner and program activity is
the #1 issue among strategic sales and
channel managers. Like the old adage:
“I know that half of my advertising is
going to waste, I just don’t know which
half.” Channel managers continue to
launch new channel programs to a
more diverse channel organization
with little insight as to what’s working
and why. This is particularly frustrating
as product life cycles, customer
needs, and channel business models
are changing more rapidly than ever
before. Essentially, this enhances the
need for accurate, real-time insights.
After all, doubling sales volume vs YAG
is really no accomplishment if the cost
to do so consumes all the contribution
margin and ties up your resources. But
how do you know???
In the past, factors that have limited
the ability to develop valid metrics have
included one or more of the following:
CCI provides software and services to
help marketers manage, measure, and
optimize sales channel performance.
• The inability to effectively measure
sell-through volume, particularly in a
multi-tiered, multi-distributor channel
model.
• The inability to correlate marketing
program participation to incremental
sales gains (and more importantly
the direct and indirect cost of those
marketing programs).
• Disparate systems and processes
that can’t really provide roll-up
reporting across a number of
dimensions—because they were really
never designed to do so.
The technology and
acumen are now available
to vendors of all types to
capture key insight about
their channel partners,
and individual channel
programs.
Well, we are at the dawn of a whole
new era. The technology and acumen
are now available to vendors of all
types to capture key insight about
their channel partners, and individual
channel programs. Armed with
this insight, vendors can achieve
greater channel optimization through
improved program efficiency, partner
effectiveness, and faster speed to
market (or at least improved reaction
time).
Through CCI and other companies, the
technology exists to capture POS data,
Continued on Page 4
02 Business

Bridging the Exchange Rate Gap for

Global Channel Program Payments

I
If you have been listening to the financial news or traveling abroad, you know that
the exchange rates between the US Dollar (USD$) and most other currencies have not
been in our favor. The value of the dollar has been dropping faster than Mr. Newton’s
apple. For instance, at the turn of the new millennium the Euro (€) was valued at a mere 86
cents. As of this writing, each Euro costs in excess of $1.46 to purchase, and most experts
expect it to push $1.60 in the not-too-distant future. If so, the once mighty dollar will have
experienced nearly a 50% slide in a 7 year span.

What’s the impact on these fluctuating rates for channel marketers?

The answer turns out to be “a lot” if you (or retailer) gets all the money he/she
are responsible for global program fund expected, but the manufacturer absorbs
management. For instance, in the real- all the risk of the resulting currency
Time Period Action Cost $ Cost €
January 2007 Completed Prior Approval 10,000 7800
TABLE A
a big deal if the USD was indeed growing
stronger. However, in today’s declining
U.S. market this fluctuation will have the
finance people screaming that marketing
department went over budget relative to
the original commitment of $10,000. (We
know, we get the phone calls.) The $680
difference between January and May in

March 2007 Complete activity 10,450 7800 TABLE A may not seem like much, but
when you are dealing with $ Millions,
April 2007 Submit claim 10,554 7800
the impact can influence earnings per
May 2007 Approve for Reimbursement 10,680 7800 share.
Want to keep the finance people happy?
Well, then try the approach in TABLE B
Time Period Action Cost $ Cost € We call this table (b) the base centric
January 2007 Completed Prior Approval 10,000 7800 currency model. In it, the finance people
TABLE B

get off the marketing department’s

March 2007 Complete activity 10,000 7500
back because the local currency value
April 2007 Submit claim 10,000 7450 is adjusted against a constant USD.
May 2007 Approve for Reimbursement 10,000 7350 However, in doing so, the result is a
universe of unhappy channel partners
who are complaining they haven’t
world example shown in TABLE A, which fluctuation. If they were to reimburse for received their just due as initially
date or action would a manufacturer activities based on the latest exchange approved.
use as a basis for reimbursement of the rate, they actually pay $680 more for Truly decentralized programs don’t
approved activity? the activity than they otherwise would experience these problems at the
at the time the actual prior approval was partner level because the programs
We call this example the partner centric
submitted. This fluctuation would not be are funded, administered, and paid in
model. And, in this example, the reseller

local currency—with no need to “roll up”
accounting to a central currency.
For the rest of us, the good news is that there
is a variety of ways to mitigate currency risk
and contribute to a true “win/win” scenario
for your financial people and your channel
partners.
For all international programs funded with
USD, the simplest –and most accurate way of
assuring congruity between currencies is to
buy the foreign currencies simultaneously
with the allocation of monies to your channel
partners. This way, you know exactly how
much your allocation is worth at the time
of approval. However, this requires that
you pre-fund accruals, effectively tying
up monies your financial wizards would
otherwise have plans for.
A second method involves a futures
contract with your bank and/or program
administrators to guarantee exchange
rates for a specified period of time. In this
scenario, it is the banks who absorb the risk
by locking-in exchange rates without the
pre-funding burden.
Lastly, daily reconciliation of exchange
rates can keep the reporting of accruals
and balances accurate in the base currency
while keeping claims and payments accurate
in the partner’s currency. Balances need to
be calculated using daily exchange rates
to allow for rate fluctuations. Using this
approach, the fluctuations still occur but
surprises are minimized because reporting
is generally more accurate for partners and
financial managers alike.
Relative pros and cons aside, represented
above are 5 distinct methods of financial
accounting for global channel programs.
Often, the initial choice was made because
of accounting mandates rather than channel
marketing best-practices. With the currency
fluctuations we are experiencing today, it
might be best to re-evaluate your program
financials. You may find that an alternative
approach is preferred in today’s economy,
as well as for maintaining a “win/win”
relationship with your channel partners.
What’s New 03
The Channel Champion:
Craig DeWolf
VP Sales & Marketing for CCI
You may have noticed a new title for the newsletter. Even more profound is the new
face authoring this regular column. What’s going on? Well, a lot really.
Back in 1983 when we first started as Co-Op Communications Incorporated we
specialized in offering administration of Co-Op, MDF, and other channel incentive
programs. The nature of channel programs has evolved, and there is an expanding
array of program types required to effectively manage your sales channels. We
understand the importance of managing all your channel programs in one tool for the
convenience of a centralized resource. More importantly, however, we understand that
effective channel marketing requires measuring partner performance and acumen
for all your channel programs. To that end, CCI is proud to introduce an expanded
solution set to help manage, measure, and optimize the array of programs required
by effective channel marketers. We’re proud of our ability to offer complete channel
management--and indeed-- complete channel insight. This expanded solutions set
covers the full spectrum of channel marketing programs, including:
Incentive Opportunity Partner Partner
Management Management Marketing Management
• Co-op/MDF • Lead Management • Contract/Renewal • Partner Profile
Management Manager
• SPIF/Rebate • Deal Registration
• Creative Manager/ • Partner Business
• Stretch Goal Rewards • Referral Management
AdBuilder Planner
• Trade-in Programs • Special Price Requests
• Partner Scorecards/
Report Manager
Delivering channel insight begins with the ability to deliver meaningful metrics
about your sales channel performance by capturing sales, promotion, and program
data across a number of touch-points. The information captured from all the above
activities can be combined with your POS sales data to create partner and program
scorecards. The result is that channel managers will now have the ability to conduct
quantitative analysis on partner and program performance.
It takes more than software to deliver channel insight and make informed business
decisions. So we extend our Professional Services to help clients design programs
using our vast experience and library of best practices, and analytic capabilities to
help track program performance against goals.
And finally, the astute will also notice a different head shot above—that’s me: the new
Vice President of Sales & Marketing. I’m very excited to be in this role at CCI. My
relationship with CCI started about 10-years ago when I was General Manager of J.
Brown/LMC Group, a $250MM division of Grey Advertising Worldwide that specialized
in Channel Marketing for clients in a variety of industries. I have been involved in
the development of channel programs since 1985—just as channel marketing started
being recognized as the specialized field it has become today. Through the years, I
have had a long-standing partnership with CCI. Finally, one year ago I was persuaded
to come on board because the potential “fit” was obvious to all parties then… and
indeed it is now.
 04 Scorecards continued

Solutions for complete channel insight.

channel optimization lies not in the
Continued from Front Page breadth of information you can capture,

correlate program participation with its
sales impact, capture channel profile
characteristics (both reported and
behavioral) and provide a single conduit
to manage and track multiple programs
with cross-functional reporting.
Indeed the pendulum has swung—in fact,
the industry is in danger of collecting too
much information(!) It is now possible to
track sales contribution not just at the
reseller company level, but the individual
sales rep level. This includes effective
sales volume, close ratios, length of the
sales cycle, new vs. existing clients sales,
new technology penetration, special
skills and certifications, and much-much
more.
I know what you’re thinking: “We’ve
finally reached the holy grail of channel
optimization. When can I start?”
Whoa there, Trigger. The real key to
www.channelmanagement.com
but the understanding of which leading
indicators make sense for you in making
the right business decisions. It is our
experience that these indicators for
program and partner performance
can be vastly different depending
on the type of product you sell, and
your channel make-up. For instance,
commodity products with short sales
cycles are going to require different
performance metrics than expensive
leading-edge technology products with
long sales cycles—particularly if the
latter requires special channel skills and/
or certification.
Future articles on Partner Scorecards
will focus on the considerations that will
help you decide which metrics are right
for your organization. We will also cover
the source of that information. We do
hope you stay tuned.

Channel Management

Insights
Autumn Edition
7250 Redwood Blvd
Suite 105
Novato CA 94945

2007

For more information, visit us at www.channelmanagement.com