Case Study: In Dancheng County, Henan, there was a distributor who controlled 382 outlets. He represented a certain beverage brand, with annual sales of about 3 million yuan, and he believed he was doing quite well. During a casual conversation, I said to him, "Your market has huge potential; I estimate sales could easily double again." The distributor was quite unconvinced and immediately retorted, "You're speaking from a position of comfort. We've been in this business for years and have tried all the methods; we can't double it again." I said, "Don't argue with me. You currently control 382 outlets, but do you know how many outlets there are in your county?" Many people count the total number of outlets in a county by going village by village. That method is very complicated. We can simply use a simple method: divide the county's population by 400. Generally, in densely populated areas like the Central Plains and East China, divide by 335; in sparsely populated areas, divide by 400. The reason for this is that on average, every 335 or 400 people in China have one retail shop. Based on this calculation, you can basically determine the number of outlets in the area. I calculated it for him using this method and concluded that the area had about 2,000 outlets. The distributor was shocked and refused to believe it. I said, "Let's go out and take a look." So we drove a delivery truck through two towns and surveyed about a dozen villages. After returning, the distributor said nothing. Because during the tour of the two towns, his product was visible in the towns, but not in the villages. Moreover, in town shops, generally only large shops had it, not small ones. From our survey of these two towns, his distribution rate was only 23%, leaving 77% uncovered. The next day he asked me, "Mr. Wang, what do you think I should do to increase sales?" I said, "Very simple: assess the number of outlets. At this stage, don't assess other factors; only assess the number of distribution outlets, and for a single product, assess the number of outlets." Now this distributor began to control the operation of outlets. He required each marketing staff member to be responsible for 245 outlets, visiting and delivering to 20-40 outlets per day, with a minimum of 20 and a maximum of 40. One vehicle was responsible for two townships, and soon the entire county's network was under control. To be honest, the initial cost was very high, but once he built all the outlets, it meant he achieved 100% distribution coverage, and the benefits were very high. It turned out that later, a single product from this distributor achieved annual sales of 11 million yuan. Then, he used the established network to promote other products, and sales also increased rapidly. A distributor who had been in business for many years with annual sales of only a few million yuan has now grown to annual sales of over 30 million yuan. This is the power of comprehensive distribution and channel control. Because by quickly stocking the entire controlled network, he had the final say over all products in the channel. We say that developing new markets and new outlets is one of the most effective ways to increase product volume. When you have a mature sales network, without increasing resource costs, adding new products equals adding profit. This means that the public resource of the channel becomes your monopoly resource. So how to turn public channel resources into monopoly resources? You can start from the following five aspects. 1. Recognize the importance of controlling channels Managing the network is more important than managing products. Products have a life cycle, just like people are born, age, get sick, and die; but networks have no life cycle. Once built, it's like taking the elixir of life—as long as you put products into this network, they thrive. Treat the channel as your own. Channel expansion is a laborious, time-consuming, and costly task. Manufacturers hope distributors will do it, and distributors hope manufacturers will do it. Everyone hopes others will build the channel while they enjoy its convenience, forgetting that building a channel is like building a road—once the road is built, Mercedes, Audi, and BMW can all speed along it. 2. Have products that can control the channel For a company, not all products are high-profit. Some products earn fame, some earn profit, and some just move volume. At this time, a reasonable product mix is the most effective way to control the channel. For example, a company can use volume products to increase channel customer stickiness, because with the largest sales, secondary wholesalers and terminals cannot do without them, allowing exclusive sales; companies can also earn profits through profit products and enhance image through brand products. No product can control the channel once and for all, so product updates and replacements, as well as product combinations, are particularly important. 3. Have reasonable channel profits so everyone can make money We see in life that some people can rally others with a call. Why? Not only because they share the same goals, but more importantly, following them means "there's soup to drink and meat to eat." Many people who make big money are often experts at sharing money, because they know that the more you give to others, the more you get in return. The most effective way to control secondary wholesalers and terminals is to let them continuously and reasonably earn relatively high profits. When you promote new products and can enable distributors, secondary wholesalers, or retailers to earn more profit, they will become the most loyal recommenders of your products. They will not allow competitors to enter, and at that point, the company naturally turns public resources into its own monopoly resources. 4. Cultivate relationships through periodic visits Feelings are developed through interaction. Friends often call each other and get together occasionally; that's emotional connection. If you don't interact for a long time, even the best friends will drift apart. The frequency of interaction determines the distance of the relationship, and feelings determine loyalty. Marketing personnel should periodically visit core sales points to increase the distributor's affection for the company. For example, make a point to visit distributors, secondary wholesalers, and even terminal markets often, help with small tasks, do what you can, such as organizing shelves, cleaning, and chatting. Over time, feelings develop. 5. Turn downstream into an alliance Turn secondary wholesalers into distributors and establish a community of interests. Core secondary wholesaler sales points have good feelings toward you and are in a community of interests with you, so they will fully promote your products. With profit and feelings, you can sign exclusive sales agreements with them. Doesn't that turn public resources into monopoly resources? Excerpted from Mr. Wang Guanqun's best-selling book "Focus: The New Engine for Performance Growth in the Next 10 Years," Chairman of Beijing Yingxiao Li.