Regardless of size or strength, every company has a desire to require distributors to be exclusive. This model, which requires distributors to dedicate all company resources to one's products, or to establish dedicated marketing organizations with independent sales teams or exclusive stores, can transform distributors into quasi-subsidiaries or quasi-offices, greatly enhancing cooperation and execution.

However, it is foreseeable that distributors will have many doubts and concerns when transitioning to exclusivity, and they may even resist or oppose it. Faced with this situation, how do we promote exclusivity? Li Zhengquan believes this requires a systematic approach using five strategies: block, entice, pressure, force, and surround.

1. Block

Block means keeping new distributors who cannot accept exclusivity out of the system, and gradually eliminating distributors who do not meet the requirements for exclusivity.

Regardless of brand strength, during the process of recruiting new distributors, sales teams often face pressure from recruitment targets, so their requirements for distributors tend to be lower than headquarters' requirements. Therefore, we need to strengthen the review of distributor qualifications and contracts, and also set clear hard indicators, such as the specific number of marketing personnel dedicated to our products, and the specific amounts of operating funds and deposits.

Based on Li Zhengquan's experience, when recruiting new distributors, we inevitably encounter three types: First, those who do not accept the concept of exclusivity. These distributors are not aligned with our philosophy and should be excluded from recruitment. Second, those who do not meet the hard conditions for exclusivity in terms of terminal resources, deposits, or working capital. For these, we should categorize them: if they cannot meet the conditions for full exclusivity, they can develop towards lower-level exclusivity; if they cannot cover a whole city, they can do exclusivity for a district or a channel type. Clearly, it is important to predefine clear conditions for exclusivity. Third, those who meet the conditions and accept the concept but make excessive demands or lack the commitment to fulfill exclusivity requirements within a tolerable time. These distributors usually lack strong willingness, and may have agreed initially to establish dedicated sales organizations, but later delay due to wavering resolve. Therefore, we should keep away from distributors who lack strong willingness, otherwise problems will arise.

For existing distributors, it is unrealistic to expect all to transition to exclusivity in a short time. This requires a transitional and guiding process, as well as concrete measures to promote exclusivity, gradually cleaning out those who cannot comply.

Specific practices can include:

First, establish multiple cooperation levels for exclusivity, such as distributors who can dedicate all resources to our brand, exclusive distributors, and those who can achieve different degrees of exclusivity in independent business departments, dedicated sales teams, dedicated promotion teams, or even independent offices and budgets. This allows distributors with different levels of awareness and conditions to find their place, and then upgrade step by step from exclusivity to full exclusivity. Of course, those who do not accept exclusivity will eventually lose their position.

Second, classify distributors more finely based on the cooperation levels, making basic judgments on which are likely to achieve full exclusivity, which are more likely to accept exclusivity, and the difficulty of promoting each.

Third, start promoting exclusivity with distributors who are easier to change. For example, new entrants are more likely to accept exclusivity. P&G considered this when it introduced distributors from unrelated industries like real estate and apparel in its "exclusive focus" channel reform. Additionally, distributors whose sales of our brand account for a large proportion of their business, or whose profit contribution is large, or whose regional markets are weak but showing growth, are easier to promote.

Fourth, those struggling below average order volumes or with small absolute order quantities are often candidates for adjustment or elimination. If they lack recognition of exclusivity, they should be directly removed. A functional food company, when promoting its exclusivity system, directly targeted distributors with monthly orders under 10,000 yuan who did not accept exclusivity.

2. Entice

Entice means formulating special benefit policies based on exclusivity levels, creating a gap in benefits between ordinary and exclusive distributors, and between different levels, so that distributors see the tangible benefits and can make money and grow. For example, for full exclusive distributors, send elite sales management teams to assist, provide 1.5 times credit as cooperation fund, provide more co-sales personnel and days, and additional subsidies; for exclusive distributors, reduce incentives accordingly.

In fact, making distributors believe they can make money through exclusivity is the basic incentive. All our efforts in exclusivity aim to meet and exceed this expectation. But how can we make distributors truly believe this?

For some distributors, not much effort is needed because they are already making money. We just need to convince them that exclusivity will bring more profit and comfort. For those who are struggling, we need to show them tangible benefits and future hope. Li Zhengquan believes the following points are important for both groups:

First, analyze the current situation, find the crux, and clarify achievable paths and methods, combining the distributor's conditions, regional market reality, and the manufacturer's market support and marketing actions. For some, simply analyzing current terminal share vs. target, current SKU distribution vs. achievable, and current terminal performance vs. achievable can dispel doubts. But the analysis must be thorough, direction accurate, and methods feasible. For others, more effort is needed.

Second, quantify support. Special market support policies are needed to induce exclusivity. To make distributors believe, these supports must be quantified. For example, how much more in return/exchange quotas, increased advertising and promotion expenses, number of promotions, how advertising materials and display support will be amortized, what kind of training and how many trainers/managers will be sent to coach the sales team, and whether they will exit after training qualified sales managers and teams, and how many co-sales personnel and for how long.

Third, cite examples of results. Even when just starting, there will be some "loyal" distributors who mainly or only sell our products. These success stories need to be publicized.

Fourth, profit commitment. Know the annual advertising budget, promotion rate, marketing management costs, gross profit, and the potential for terminal coverage, SKU distribution, per-store sales, and market growth. With this clarity, we can even make profit commitments. For example, a building materials company promised distributors an annual profit rate of no less than 15%, with the company making up the difference.

Fifth, prepare feasible solutions to help distributors make money and upgrade their management. Although we will tell stories and provide special policies, distributors care not only about policies and money but also about the manufacturer's efforts to help them upgrade and develop sustainably. At this point, the manufacturer's mature management concepts, models, and manager teams become attractive because distributors need to improve and develop, and need to prevent the manufacturer from "withdrawing" and reduce dependence. Therefore, we must emphasize and utilize measures like management output and team coaching, focusing on truly building the distributor's capabilities.

3. Pressure

Exclusivity requirements and supporting policies will bring pressure to distributors. To accelerate the transition, we must be prepared to apply continuous and increasing pressure.

As shown in the figure (omitted), it is crucial to form a pressure transmission chain or closed loop. Li Zhengquan summarizes it as: top management shows determination, middle management divides, teams are taken over, and downstream becomes "new life."

First, top management shows determination: When promoting exclusivity, the general manager and marketing director must frequently express their determination, dispelling the wait-and-see attitude of distributors who think "it's not that easy," and encouraging them to embrace the transition.

Second, middle management divides: This refers to dividing the territories and channels of distributors who are easier to "cut," shrinking their influence, and making more distributors feel the pressure that if they don't cooperate, they will be divided and eventually replaced.

Third, teams are taken over: Before promoting exclusivity, we can increase control over the distributor's sales staff by hosting business meetings, training, distributing bonuses, and buying insurance. We can also send managers and key staff to the distributor to take positions like vice president of marketing, marketing director, or sales manager, taking charge of their sales team and business. Of course, this is done through effective assistance to strengthen control.

Fourth, downstream becomes "new life": By providing services and support to sub-distributors, we can induce some willing sub-distributors to transition to exclusivity. This will transmit more pressure to the distributor.

Gree Electric has adopted measures including supporting downstream distributors to continuously pressure its joint-stock sales companies and their invested distributors to maintain the "purity" of the exclusive sales system. Gree's joint-stock sales company model has been a source of pride, but some "disobedient" companies emerged—some engaged in "extracorporeal circulation," transferring Gree resources to new companies registered personally. To curb this, Gree gradually increased shareholding, rotated executives to prevent corruption, penetrated distributor networks to downstream, and quickly formed new companies to replace old ones. Later, it established some wholly-owned sales companies. Through this pressure transmission, Gree effectively enhanced the execution of its exclusive system and control over regional sales organizations.

4. Force

Force means compelling distributors to transition to exclusivity within a time limit, otherwise canceling their qualification and terminating cooperation. This tough measure is easier for strong brands to use.

Besides linking to distributor qualification, there are other ways to force the transition. For example, by promising sales and profits, sending a business team to fully take over the distributor's business, directly managing the team, and letting the distributor only enjoy investment and profit rights—this is a way to make them "change whether they like it or not."

5. Surround

Surround means creating an atmosphere of collective exclusivity, immersing distributors in the fervor of the exclusivity movement, accelerating their response and transition. In fact, as the exclusivity system gradually advances, distributors' mindsets will change, and factors will emerge that force them to accelerate or "find another way." If we also use media or measures to publicize the benefits of exclusivity and the tangible benefits gained by early adopters, it will have a surrounding effect on laggards. Training, meetings, internal publications, websites, public media, and even distributors themselves are all useful.

For example, there will naturally be connections among distributors. A distributor hesitating at the door of exclusivity may have a friend who has already transitioned. If that friend can speak for the company, it will have a surrounding effect.

Another example: at distributor conferences, set up a special segment where distributors who have transitioned share their experiences, and pair it with incentives like "sign exclusivity agreement on the spot and win a prize," which may accelerate the decision of hesitant distributors. Such meetings can be modeled on recruitment conferences.

The exclusivity movement and related actions should also be publicized through internal publications, websites, and even public media to form a dominant atmosphere and wave. For instance, during P&G's "exclusive focus" campaign, public media, while criticizing P&G's dominance, also influenced slow-moving distributors with the thought "if I don't change, I might be next," which is also a surrounding effect.

WeChat public account Business Trends, author Li Zhengquan (WeChat ID: lizhengquan01). This article is from his upcoming book "Leadership Execution: Improving the Execution of Marketing Teams and Channel Partners."

-END-

Content Selection

Click the title below to read directly: [Line Sales Rep Practical Operation Guide (with full PPT download)]