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| Sep 05, 2005 8:48 am |
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re: re: Channel Compensation Plans |
Pranav Rachh
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I agree with all that Dan has to say. These are the basics required by any channel partner - and for a channel sales strategy
I however like to add that Return On Investment - ROI is a concept that is more in tune with what the channel wants. depending on the place, the investment could be space if space is expensive, or labour or money. For eg: what is the revenue per sq foot of his shop that you will give to them or if you give low margins, but he is still able to rotate his inventory faster, then the ROI is high . if the margin is 10 bucks on a product worth 100 bucks, his margin is 10%. If he invests 1000 bucks to buy 10 pieces, then he earns 100 bucks. not much. but if he sells 40 pieces every month, then it is 400 bucks of profit a month, 4800 a year. on an investment of 1000 ! ROI is 480 % though the per piece margin was only 10%. Even if the margin is 5%, the ROI is still 240% .......
This is usually how the channel looks at the new products and brands. thats why they ask how much are you going to promote the new brand / product. Also what are the ancillaries that he will be able to sell with your product - because the ancillaries also bring in additional revenue, usually at a higher margin than the main product
Regards
PranavPrivate Reply to Pranav Rachh (new win) |
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