Loyalty glossary · 12b. B2B, channel and trade incentives (26)
Sell Out Data
Sell out data is information on what a channel partner actually sells to an end customer, as opposed to what the supplier sells to the partner. It is the only evidence that a trade incentive has rewarded real demand rather than inventory loading.
Sell out data measures what a channel partner sells to the end customer, not what the supplier ships to the partner. A trade incentive that rewards sell in data pays for the partner's warehouse. A trade incentive that rewards sell out data pays for a sale that has actually happened.
The channel's oldest tactic is buying ahead of a quota period to hit a tier or earn a rebate. Sell in data cannot see that. Sell out data exposes it because the end customer never appears. A programme that ignores sell out data is paying partners to move boxes between buildings, not to create demand.
Sell out data is expensive and incomplete. Partners must report point of sale transactions, and many do not. A supplier may collect clean sell out data from 30 percent of partners and nothing from the rest. Those silent partners are invisible to the programme unless someone decides to treat missing data as zero, and that decision changes the economics.
Work the arithmetic to see the scale. A programme has 1,000 partners and accrues rebates at 2 percent of sell in revenue for the quarter. Only 60 percent of partners report sell out data, and their average sell out is 80 percent of sell in. The true rebate liability is 2 percent of 80 percent of 60 percent, which is 0.96 percent of total sell in. On a quarter worth 10 million dollars, the programme over accrues by 104,000 dollars.
Activity based qualification should run on sell out data. If it runs on sell in data, the active member rate becomes meaningless because a partner can look active while stuffing the channel. Accruals then inflate and the programme carries a liability for sales that never reached a customer. Switching to sell out data later forces a write-down, which is the price of measuring the wrong thing for too long.