Now, your list of vendors is going to be significantly different than this list, a typical list for a catalog brand. So please follow along, and sub in your vendors where applicable.
In this example, I evaluate my vendors on the basis of five objectives.
- 20% = Increasing Company Profitability.
- 20% = Increasing New + Reactivated Buyers.
- 20% = Increasing The Number of New Winning Items.
- 30% = Outstanding Customer Service.
- 10% = Innovative Ideas.
Within each category, each vendor is graded from 0 (horrific performance) to 100 (exemplary performance).
I know, I know, I can hear folks screaming already ... "We host your database, how the heck can we ever contribute positively to the number of new, winning items?" Tough. There are all sorts of ways you can contribute. Create custom variables in the database that segment customers who purchase new items on a regular basis - how about that? Every vendor can contribute. Every. Vendor.
The criteria come from the objectives the Marketing Vice President is evaluated against for the upcoming year - by doing this, we align vendor incentives with the objectives that determine if the Marketing VP gets to keep her job or not. Fair enough?
After scores are tabulated, a weighted average score (called "Net Score") is calculated. The table is then ranked, from highest "Net Score" to lowest "Net Score".
You don't want to be on the bottom of this list, do you?
But if you are on the bottom of the list, you know exactly why you are on the bottom of the list.
- Co-Op #3 is at or below average at everything. I wouldn't want to be this co-op, with three co-ops outperforming it.
- The Affiliate Vendor is horrific at customer service. That one should be easy to fix, right?
- Co-Op #2 gets high marks for innovation, and those high marks keep Co-Op #2 out of the worst spot on the list ... probably keeping names flowing through Co-Op #2 and not Co-Op #3 as a result.
- The paper rep gets low marks for customer service and profitability ... that's what will happen when you lock your client into long-term deals that are only beneficial to the paper rep.
I would share this dashboard, on a monthly basis, with every vendor. Create an email distribution list, and share the list - share it with your Executive Team, share it with the employees in your department, and share it with every vendor.
Yes, Co-Op #1 should know that Co-Op #3 is performing poorly, and Co-Op #3 should know they are worse than all other Co-Ops. Everything should be transparent. If you're at the bottom of the list, you know exactly why you're at the bottom of the list.
In upcoming days, I will talk about annual objectives, and I will talk about how to determine the 0-100 scores for each vendor.