What is a simple construct to measure the performance of channels of distribution?
For example, if we want to compare the return on investment in channels of distribution among different companies (in my case they are SMEs). What would be a simple construct to compare channels performance?
Another example if we want to track the channels performance over the lifetime of the organization what would be the measure?
Although this is important to my current research but it is not central. Therefore, I do not need to go for multiple scales, nor I want to go in contraventional discussions I just need a simple generic construct that is safe to use in measuring the performance of the channels.
Amr,
You have asked a question that is very broad, the answer to which may take volumes. I have found one author very clear on the issues you raised, which may be interesting to you: Valos and Vocino (2006) ' An integrative marketing channel performance measurement framework' Journal of Database Marketing & Customer Strategy Management (2006) 14, 17 – 28.
doi: 10.1057/palgrave.dbm.3250037
Beyond this we can then discuss specific problems that you may have with the topic.
Thank you
Hi Amr,
I give you short explanation how you cav measure performance of channels of distribution in telecom operators (not SME but I think it will be helpfull to you). You need to measure:
- GA - gross add
- churn
- NA (net add) = GA - churn
- ARPU - Average Revenue per User
- fraud (part of churn - customers who leave operator without paying invoices).
So, in cahannel you have to measure new customers and those who left your company (services) - of course, there are two types - fair users who pay their invoices and leave your services and frauders.
There are differenceies among customers regarding their spending - in telecom industry we measure ARPU. This item is very important because you can calculate (assume) your following income in the cnannel that will be = (GA - churn) x ARPU (we do forecasts for following months in this year and for following three years - assumptions including analysis of historical data, assumptions of development new product and services, development of competitors, new entrants on the market, new technologies which can substitue telecom products and services (such as OTT services)....).
In my opinion in any industry you can have the same measurement items - you have to find them, analyze them and set calculation formula(s).
If you need any further my assistance you can contact me directly by e-mail adress: [email protected] .
Best regards.
Igor
As other collegues have said, the main idea is take a ratio between direct cost from every channel and the return / revenues that you get. When talking about SME, could be a bit more difficult, but the rates should be simmilars, if not equals. The key question may be where you can get the data that you need, but it would be not so much difficult, specially if you talk from european SME's .
In other words, that means working with direct company's data, could be difficult to found aggregate data.
Best regards.
Manuel
Take a look at the book, "Managing CHANNELS of DISTRIBUTION" by Rolnicki, K. 1998 ISBN: 0-81440335-2
You should also inquire with AMACOM (American Management Association) NYNY for more recent titles in this area.
Best of luck with your research.
Cheers,
Rich
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