The document discusses the application of sabermetrics in channel management to enhance partner performance and maximize revenues. It outlines various types of scorecards, a channel maturity model, and emphasizes the importance of smart spending and data validation in assessing partner effectiveness. The final thoughts stress the need for careful planning and technology access to effectively utilize scorecards for driving desired partner behaviors.

1. Using Sabermetrics to Drive Partner
Performance

2. Using Sabermetrics to Drive
Partner Performance
Sanjoy Chatterji
Founder
January 2015

3. 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.
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4. Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
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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)
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6. Is Sabermetrics Old News?
You Decide!
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7. 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
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8. How does any of this apply to the Real
World?
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9. “How Smart Data is Transforming
Criminal Justice, Healthcare, Music, and
even Government Spending”
-- Anne Milgram
ex-Attorney General of NJ
January 2014
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Talk: The Moneyball Effect

10. 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!
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Talk: The Moneyball Effect

11. Sound Familiar?
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12. Channel Sabermetric Example
Gross Margin
= Selling Price to Partner
– COGS
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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

13. Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
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14. Basic Partner Performance Scorecard
• Partner Reporting Frequency
• Partner Reporting Timeliness
• Unmatched Reported Part #s
• Customer “match rate” in POS data to some External
Database
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15. 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
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16. 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
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17. Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
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18. Channel Maturity Model
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 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

19. 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

20. 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
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21. Elements Feeding a Scorecard
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22. Poll Question #2
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23. Agenda
• Moneyball and Sabermetrics
• Types of Channel Scorecards
• Channel Maturity Model
• Sample Scorecards
• Final Thoughts and Q&A
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24. Basic Scorecard
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• 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

25. 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
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26. Channel Sabermetrics
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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

27. 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

28. Scorecarding is Like Football
• Just like football needs a multi-dimensional approach
 Offense
 Defense
 Special teams
 Defense scoring
 Offense defending
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29. 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
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30. 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
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31. Final Thoughts
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32. 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
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33. Q & A
Please type in your questions using the “Questions” box …
Post-webinar questions can be sent to:
webinar@entomo.com
- or -
425-372-0544
www.entomo.com
Proprietary and Confidential | Copyright 2015 Entomo, Inc.