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Using Sabermetrics to Drive Partner
Performance
Using Sabermetrics to Drive
Partner PerformanceSanjoy Chatterji
Founder
January 2015
Entomo
Leading provider of turnkey cloud-based channel
management software and services.
We help businesses overcome distribution channel
complexities to maximize revenues, reduce costs, improve
partner performance, and ensure compliance.
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 4
Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 5
Moneyball and Sabermetrics
• Conventional Wisdom
Home Runs
Hits
ERA (Earned Run Average)
• Sabermetrics
OBP (Hits + Walks + HBP)
OPS (OBP + Slugging)
DICE (Defense Independent
Component ERA)
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
9
Is Sabermetrics Old News?
You Decide!
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
10
Is Sabermetrics Old News?
You Decide!
• Even in 2014, brute-force spending did not guarantee
success Top 5 spenders did NOT make it to the World Series
KC Royals spent 1/3rd the top spender (Dodgers) and made it to the Series
SF Giants spent about 2/3rd of the Dodgers and won it all
• Moral of the Story
Spend smart
Look for value, where others are looking for glitz
Don’t spend big bucks on raw high school talent
For better predictability, spend on more polished and refined college
talent
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 12
How does any of this apply to the Real
World?
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 10
“How Smart Data is Transforming Criminal Justice, Healthcare, Music, and even Government Spending”
-- Anne Milgram
ex-Attorney General of NJJanuary 2014
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 11
Talk: The Moneyball Effect
When she became the attorney general, Anne Milgram
discovered a few startling facts:
Her team did not know who they were putting in jail
They had no way of understanding if their decisions were actually
making the public safer!
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
12
Talk: The Moneyball Effect
Sound Familiar?
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
13
Channel Sabermetric Example
Gross Margin
= Selling Price to Partner
– COGS
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 14
Looks good,
so far!
Is there
anything left?
“Effective” Gross Margin
= Gross Margin
– Ship & Debit/Special Pricing Credits
- Volume Rebates
- Price Protection Credits
- Other Credits (e.g., WHA, Coop/MDF)
- Sales Commissions
Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 15
Basic Partner Performance Scorecard
• Partner Reporting Frequency
• Partner Reporting Timeliness
• Unmatched Reported Part #s
• Customer “match rate” in POS data to some External
Database
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
16
Intermediate
Partner Performance Scorecard
• Revenue Trend for each partner
• Gross Inventory Trends for each partner
• Sales Against Quota
• Gross Margin for Sales
• “Reach” Expansion in the Channel
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
17
Channel Sabermetrics (KPIs)
• “Effective” Gross Margin for Sales
• Rollforward Inventory Variance
• “Days on Hand” Scoring
• ROI on Channel Incentive Programs
• Forecast Reliability
• Partner “Reach Revenue”
• Non-Revenue Metrics: CSAT, Training, Certifications, …
• Incentives Based on KPI Scores
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 18
Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 19
Channel Maturity Model
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 20
Started operations in 2000
Collect POS, Inventory
Implicitly Trust Data from Channel
Match Customers to External Database
Little or no verification of provided data
Basic Scorecard
Initial/Learning
Defined
Collect other types of info: Claims, Forecast, RMA, ...
Manual spot-checks of some data and claims
Match Customers to Internal Database
Provide Channel Incentives to increase sales
Intermediate Scorecard
Optimized
Integrated Channel
Management System
Triangulation and
Automated Verification of
all data: POS, inventory,
claims, …
Commissions and Revenue
Recognition on Reconciled
POS and Validated Back-
end Credits
Opportunity Tracking
Channel Sabermetrics
Using Scorecards to
Incentivize Partners
Evolution of the Scorecard:
You can only Score what you Track
Examples of Optimized Triangulation and Validation
• Match Customer Names to Internal Customer Master
Matching to external vendor-provided database, e.g. D&B, not useful
Need to match to customers who are represented in channel or sales
incentive programs
Or need to match, to see how the channel is really extending “reach”
• Sales in Sales Out (SISO) Reconciliation at Partner/Item level
How do you know that the 500 units reported in the POS was in inventory?
Maintain roll-forward inventory
Determine inventory trends: prevent potential stockouts or writedowns
• POS and Inventory Valuation based on FIFO of Sell-In Invoices
Using Price Book or Reported Price in POS doesn’t account for Broken
Prices
Examples of Optimized Triangulation
and Validation
• 100% Claim Validation
Prevent big source of revenue leaks
• Revalue Transactions after back-end credits to get “Real
Revenue”
Determine real effectivity of distributors
Pay commissions on this value
Recognize revenues on this value
• Program ROI
Revenue uplift
• Design or Deal to Revenue Mapping
Close the loop between Opportunity and Revenues
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 22
Elements Feeding a Scorecard
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 23
Poll Question #2
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 24
Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 25
Basic Scorecard
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 26
• Reporting behavior
• Partner responsiveness
• POS report quality
• Inventory report quality
• Claims report quality
• Sales performance
• Qualitative evaluation
Weight Score
Overall Score = Net revenue
Net credits
Ending inventory
Basic scorecard, plus:
• Revenue & revenue score
• MDF
Incremental revenue
ROI
MDF Leverage Score
• Total bookings and booking score
• Customer satisfaction score & index
• Composite score
Intermediate Scorecard
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 27
Channel Sabermetrics
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 28
Intermedieate scorecard, plus:
• Distributor Credit Overview Rollforward contribution
Sales accuracy contribution
Day-on-hand (DOH) contribution
Clawbacks & Net Credits
• Distributor Scorecard Beginning & ending inventory
Rollforward performance
Sales accuracy and performance
DOH & DOH deviation
By brand / product family
Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
Proprietary and Confidential | Copyright 2015 Entomo, Inc. 29
Scorecarding is Like Football
• Just like football needs a multi-dimensional approach
Offense
Defense
Special teams
Defense scoring
Offense defending
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 30
Scorecarding is Like Football
• Effective Channel Scorecards also need a multi-pronged strategy
Collect and normalize data
Validate and analyze everything (trust but verify)
Use Channel Sabermetrics to your advantage: Create relevant KPIs
Reward the behavior you want to encourage
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 31
Scorecarding is Like Football
• Case in point: Seattle Seahawks, 2015 NFC Champions
Offense: Stunk
Defense: Solid
Special teams: Stellar
Still won, because they had a
multi-dimensional strategy
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 32
Final Thoughts
Proprietary and Confidential | Copyright 2015 Entomo, Inc.
Final Thoughts
• Scorecards can be used to mold partner behavior
• Ensure that the data you feed into the scorecard is valid
(Garbage in Garbage Out)
• Scorecards, while useful, need careful planning and design
• Identify where you are on the Channel Maturity Model
continuum and design accordingly
• Walk before you run
• Ensure you have access to appropriate technology and business
practice expertise
1/22/2015 Proprietary and Confidential | Copyright 2015 Entomo, Inc. 34
Q & A
Please type in your questions using the “Questions” box …
Post-webinar questions can be sent to:
- or -
425-372-0544
www.entomo.com
Proprietary and Confidential | Copyright 2015 Entomo, Inc.