Click the image above for details Many distributor friends have come to me, saying that they have made many wrong decisions in their business and regret it. Under the pandemic, business is even more directionless and confusing. So in the digital age, how can distributors find the direction of their business? How can they make correct decisions? I still believe in the saying, "No data, no decision; with data, good decisions." With data support, distributors can find the direction of their business and no longer struggle with decision-making. Why do I say this? Because without data, distributors' judgments about business are often subjective and one-sided. Making judgments based on one's own thinking often leads to deviations and errors. Human cognition is limited, and as times change, experience-based judgments are unreliable; only data is the most accurate. So in this era of data-driven marketing, distributors cannot continue on the old path of extensive development, relying on luck and boldness. Now, to grow their business, distributors must rely on refined, standardized, and systematic management, all of which are based on data. Data does not lie; data gives us the correct direction. Today, let's talk about how to make decisions regarding products and department personnel through data analysis. -01-
Using Data to Maximize Product Sales and Profits
After a distributor takes on a brand or product, how to analyze whether the product sells well? And how to improve product sales and profits? I will tell you through data. There are four key points: 1. Distribution Rate The distribution rate of a product indicates whether consumers can see the product in more channels in the market. In the FMCG industry, if a product is seen by consumers, it is likely to be purchased, so the distribution rate directly affects product sales. So when studying a product, the first thing to study is the distribution rate. For example, Jiangxiaobai launched a plum wine and required a distribution rate of 90% within one month. From the company's requirements, we can see the importance of distribution rate. So how to use data analysis to achieve this distribution rate? For example, a distributor's product was launched in January, and by the end of February, the distribution rate reached 46%. The requirement is to reach over 70% by the end of March. Some bosses in this situation hold meetings with salespeople and assign tasks, knowing only that the current distribution rate is 46%, which is too low. They tell salespeople to work harder and complete the task. Without specific data, everyone is confused, and salespeople don't know how well they are doing. Whether they can complete the task depends entirely on luck. Assigning individual tasks without evidence makes it hard for salespeople to accept them willingly. To better achieve this goal, it is necessary to track data in real-time to understand the progress of goal achievement. First, publish the distribution rate achievement to the sales team weekly or more frequently, along with the growth rate, and even the progress of each salesperson. For example, by March 15, the overall distribution rate reached 60%, while salesperson A has already achieved 70%, and salesperson B's area only has 52%. With this comparison, you can immediately see who is on track and who is not. Then assigning tasks individually becomes indisputable. They are all running stores in nearby areas; why can others do it and you can't? With data support, once someone in the team can achieve a certain goal, setting standards to assess others becomes reasonable. This makes distribution rate assessment more targeted. When the distribution rate is high, sales naturally rise. 2. Product Distribution Product distribution is also an important part of a distributor's business. On the basis of ensuring distribution rate, the more SKUs distributed, the greater the product sales. Sometimes sales don't increase because distribution is not done well. For example, a brand has 30 SKUs, but a salesperson only distributed 16 in the market, barely over 50%. In comparison, a salesperson who met the sales target distributed 26. This data makes it clear that the problem of not meeting sales targets is due to inadequate distribution. Similarly, like distribution rate, use data to make salespeople with poor distribution realize their problems, then assign tasks individually or send help to improve distribution in that area. Distributors should know how to set goals, promptly analyze data, compare with the same period in the past, and set a challenging but achievable goal. Then break down the goal into time periods and individual salespeople, regularly analyze progress, and assign tasks to specific areas and individuals. In this way, problems are continuously solved, sales in lagging areas gradually improve, and the company's overall performance rises. 3. Product Profit Now let's look at product profit. As a distributor, the ultimate purpose of representing a product is profit. Many distributors have this problem: sales look good, selling 30,000 to 50,000 cases a month, which seems gratifying, but the profit is pitifully small. Where is the problem? Sales without profit often occur because the boss does not analyze product profit. Maybe those tens of thousands of cases were sold with a 100-plus-5 promotional policy, which doesn't make money. So distributors should analyze product profit data, allocate costs reasonably, and seek benefits from the market, so as not to end up with good sales but no profit at the end of the year. From a product perspective, use data to analyze profit margins, sales share, etc. As shown in the figure above, Product 1 has a sales share of 15% and a profit share of 16%, making it a core product. Product 7 has a sales share of 3% but a profit share of 6%. If this product is given focused investment to increase sales, say to 10%, its profit share could reach 20%, which is considerable. Product 10 has a sales share of 1.6% but creates 4.7% of profit, almost profiteering. For Product 3, which has a high sales share but almost no profit, consider raising prices, reducing promotional intensity, and controlling costs to improve its profit margin. Products with low sales and low profit should be eliminated. All this information can be seen at a glance through such data tables. 4. Sales Volume Sales volume is the lifeline of a distributor. Without sales, how can there be profit? So, for core products with high sales, distributors must pay attention, even at all costs to ensure the high-efficiency product lines do not have problems. Here is another table: It is clear that there are 4 major product lines with sales shares in double digits. If any of these product lines has a problem, it cannot be compensated by other products even if you work to death. In summary, in terms of products, we must rely on data to make decisions on product strategy, promotional policies, etc. Only then can we achieve optimal product structure and maximize sales and profits. Data will make your business direction very clear and your decisions very correct. -02-
Department and Personnel Incentive and Balance Management
Incentives and management of sales teams and personnel are often the most headache-inducing parts for distributors. As bosses, many distributors spend most of their energy on team incentives and management. Some teams lack initiative and are not proactive; some salespeople are psychologically unbalanced and unconvinced about salary distribution... Differences between people can be huge. How to balance a team and make it cohesive and combat-effective is important but difficult. So a method that can efficiently motivate and manage the team, and make all departments and salespeople convinced, is what every distributor dreams of. Now I want to tell you, data analysis is an excellent tool that improves management efficiency, is fair and just, and convinces people. Let's analyze from several dimensions how to solve various problems among departments and personnel in the sales team. 1. Monthly and Quarterly Profit Analysis of Departments Every distributor company should conduct regular profit analysis for all departments, publish the ranking of profits created by each department, and fully display data such as gross margin, net margin, profit amount, and expense ratio for each department. Through this data, it is clear why each department earns more or less. Remember, data does not favor anyone, so speaking with data convinces everyone. In my company, we have profit checks every quarter and month. First, compare with the same period last year to see if the overall business is growing or declining, then compare departments. Some departments may have exceeded the profit of the same period last year, while others have less than last year. After seeing this data, the lagging departments will feel uncomfortable themselves, and rewards and punishments have a basis, making people convinced. With this data, you can know who is doing well and who is doing poorly, and promptly urge lagging departments to catch up, rather than blaming them at the end of the year when performance is poor. Here is another table. Through this table, department managers will know how much money each product line earned, what the profit share is, what the sales share is, and what the profit amount is. They will have a clear direction and know what to do next month or quarter. Those who reach the position of department manager generally have some ability. After giving them data, they will hold internal meetings and explore. For example, one of our branch companies, after a meeting, focused on a core product line and saw a surge in profit the next month. 2. Per Capita Contribution Analysis In addition to data analysis for each department, we should also count each person's contribution and calculate per capita contribution. With an average value, you can clearly see the gap between salespeople. For example, in the same department, salesperson A creates monthly sales of 400,000, while salesperson B only creates 150,000, and the per capita monthly sales is 250,000. This way, salesperson B can clearly realize they are lagging and understand that their contribution to the company is insufficient. When income rankings are published at company meetings, there is no room for dissatisfaction because the gap is clearly shown by data. 3. Salesperson Sales, Profit, and Income Rankings After salespeople know they are lagging, they also need to analyze in which aspects they are lagging. At this time, data on sales volume, profit, etc., for each salesperson is important. Many bosses blindly pursue sales achievement, and even in performance appraisals, they simply use sales volume or sales as the standard. Few distributors publish net profit. In fact, some excellent salespeople, although their sales achievement is only above average, have low expense ratios and create high profits. For such salespeople, the boss should compensate them. Distributors should rank salespeople based on various data. In my company's actual situation, in monthly PK, the salespeople with the worst data feel ashamed and embarrassed. Because they are given the same territory, the same number of customers, and the same resources, but their profit is at the bottom. When business data is public, there will be no objections to income rankings, and everyone accepts the results. This way, each salesperson feels balanced. Others earn more because they contribute more; there is no reason to feel unfair. They will clearly know that the value they create for the company is far from enough, so they will consciously catch up. At the same time, regular publication of data allows salespeople to clearly know their task progress and catch up in time when lagging, which greatly helps improve the average level of the entire team. As a boss, while using data to convince everyone, you should also appropriately introduce incentive policies based on data, such as competition rewards for department teams, travel recommendations, and other group rewards that benefit the team, which help improve team cohesion. For individuals, there should also be rewards, the most direct being bonuses for champions in sales and profit rankings. The role of data is undeniable. The key is regular detection, timely publication, and knowing how to analyze and use it. Here I have a small suggestion: specifically hire one or two clerks to organize data and create intuitive, beautiful tables. The monthly salary for two clerks may not even exceed 10,000 yuan, but it could create an additional profit of hundreds of thousands or even millions for your business, which is very worthwhile. Mr. Li Feng, President of Anshan Hongye Huanda, will attend the "2020 (Third) China FMCG Conference" held by New Distribution in Shanghai from August 24 to 26 as a guest speaker. He will share more practical content on how distributors can increase sales. Interested friends should not miss this conference.