Dealer Research: How to Get the Truth from Dealers?

Finding a dealer is like finding a partner. On first meeting, each side tries to present their best side, at least not showing their less flattering aspects. So in a man's eyes, he often sees a demure and sweet lady, and a woman sees a gentle and polite gentleman. Once you get familiar, you discover the woman has a loud voice and the man is a heavy smoker. After marriage, you see the real person, complete with flaws. Picking feet, passing gas, shaving legs—all normal human behaviors.

So it is with finding a dealer. It's not that if a dealer exaggerates or boasts, he necessarily has ill intentions. Later, when you gradually discover his shortcomings, it doesn't mean he used tricks or deception to lure you in. Perhaps he genuinely wanted to show his best side, just with a bit too much exaggeration. For salespeople, the key is to stay clear-headed and know which words are polite, which are formalities, and which are truly honest.

This places high demands on salespeople. You must not only discern truth from lies but also judge whether polite words will critically affect future cooperation. In other words, you need to be able to talk nonsense with a straight face and still extract useful information from his web of lies.

1. How to Discern Dealer Sales Data?

Asking about sales volume is common in research. When we ask about annual sales, does the dealer know our intention? Of course. Generally, exact annual sales figures are sensitive, and exaggeration or understatement is likely. Those who say "a few hundred thousand a year" and those who say "a few hundred million" may both be unreliable. Few will directly tell you, so the real figure must be corroborated indirectly.

In our earlier field research, we mentioned warehouse visits. What do we look at? One key point is the total cubic volume of the warehouse. Each industry has a different value per cubic meter, but each enterprise has an approximate value. For example, in the lighting industry, branded products are worth about 10,000 yuan per cubic meter. If a dealer tells you he has annual sales of 100 million, and you see his warehouse is at most 1,000 cubic meters, you know his inventory is no more than 10 million yuan.

Then ask: "Mr. Zhao, how many times a year does your inventory turn over?" Dealers are less sensitive about turnover rate, but they have a rough idea. Since it's not directly linked to their financials, they are less guarded, and the number will be close to reality. For instance, he says about 5-6 times a year. Then you can reverse-calculate: 10 million inventory times 5-6 turns equals at most 60 million, so the 100 million claim is at least 40% inflated.

Does a small lie mean you can't cooperate? Of course not. If 60 million is still a decent size, why take offense? As long as you know the truth, it's fine to proceed if suitable.

2. How to Ask About Dealer's Network?

When researching channel partners, we not only learn about the partner but also visit their sub-outlets. Partners don't like to reveal annual sales, but if you ask to see representative outlets, they'll introduce their most loyal retail stores, boasting about their excellence and influence, and how much they sell monthly.

With retail purchase data, how should we research at the retail outlet? Since it's a representative outlet, we'll hear praise for the partner: great service, great brand, great sales. To evaluate whether these "quality" outlets are truly good, you need to ask further questions to see through the fog.

"Your business looks good. I'd like to ask, Mr. Zhao has been cooperating with you for years. What proportion of your store's sales does his business account for?"

How does the retail owner typically answer? Usually: "It's okay, probably quite a lot!"

If the owner doesn't give a specific answer, you continue: "Quite a lot? Is it around 50%?"

"Not that much," the owner starts making judgments.

"Then 30%? At least 30%?" You narrow it down step by step.

"Not that little either," the owner continues.

"Then it's about 40%?" You can guide to a conclusion.

"Probably about that."

If the partner earlier said this store sells 5,000-6,000 yuan a month, that's likely true. Then the owner says the partner's share is about 40%, so the store's total monthly sales are clear: about 15,000 yuan. Whether that's an excellent or influential store compared to local peers is also clear.

3. About Money: Rich or Poor?

The dealer's financial situation is another focus. Larger sales volume doesn't necessarily mean better finances; in fact, larger dealers may have more cash flow problems. For a new partner, we can't know his bank loans or savings, but we can find out if his cash payments are normal.

Money is private for dealers. Only the finance person or the dealer's wife (often the same person) knows the truth. But who can we ask? The dealer's employees.

How would employees know how much money the dealer has? They don't, but they know if they get paid on time. By checking salary payments, we can infer if the dealer has cash flow issues:

"How many times a month do you get paid?"

"Several times? Are you kidding?" The employee nearly jumps.

"Does the salary come early each month?"

"Early? I'd be satisfied if it comes on time!"

Whether the dealer pays employees on time is a key indicator of financial health. If cash flow is tight, salaries are the first to suffer. So chatting with employees can quickly reveal if there are money problems.

This platform will soon organize several salons titled "How Dealers Should Operate B2B." We'll invite dealers with practical experience to share their local market strategies. Interested dealers can add the author's WeChat by scanning the QR code below:

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