Recently, I've been asked: 'How should we define the direction of distributor annual meeting training?' My answer is often: increasing distributor cohesion and brand owner centripetal force through slogans, mobilization, and vague propaganda has little value. How can distributors make profits? How can they improve cost-effectiveness? How can they enhance their management team's capabilities to retain talent? These are the things distributors care most about in the current sluggish market. The best training for distributors is: combining the company's next-year business strategy, doubts, and difficulties to provide operational guidance, improve distributors' money-making ability, enhance their spending efficiency, and strengthen team management. It's more important for them to learn something practical that can be applied in the market than anything else. So what should be covered in distributor annual meeting training? I think we should consider the following four points.
Core Training Point 1: Understanding the Brand Owner's Next-Year Strategy Many people say this part should be delivered by senior brand owner executives, and indeed it should. But since when, when executives speak at conferences, most distributors' first reaction is suspicion: 'Is the brand owner trying to trick me again?' So this content also needs to be integrated into the course design by the trainer. Let me share a case: A brand owner organized distributor training to solve a pain point. Most distributors focused heavily on building presence in hypermarkets and A/B-class supermarkets, but paid insufficient attention to community convenience stores, especially those with fresh produce. The sales head emphasized this in meeting after meeting, but with little effect. How was the training course designed? First, macro-level data from authoritative sources showed distributors the situation of community convenience stores: In 2019, commercial area stores accounted for 18.1% of stores, while community stores accounted for 30.4%. By 2021, commercial area stores accounted for 17.4%, and community stores accounted for 58.7%. This told everyone that retail formats and channel types are changing, and that losing community convenience stores would mean losing more than half of FMCG business. Second, it explained the value of community convenience stores:
a. Time convenience: close to consumers, long business hours; b. Product convenience: diversity in categories, brands, packaging, specifications, and stable quality; c. Service convenience: the convenient experience services bring to customers. Finally, it elaborated on the derivative services of convenience stores. Many community convenience stores either establish their own 'community owner groups' or join existing ones, then use these groups to run 'order online, deliver to door' new retail businesses. This is very convenient for people who want to reduce travel. After ordering, it takes only 3-5 minutes for the purchased items to arrive at your door. For urgently needed items, most people are willing to order this way. With this logic, using a third party to convey the core value of community convenience stores will surely achieve twice the result with half the effort. Summary: For brand owners organizing distributor annual meeting training, the first important thing is to instill the company's next-year operational strategy into distributors through third-party training, so they understand the company's direction and where they should focus their efforts. This training is no longer a standard course; it needs to be adjusted and optimized according to the brand owner's strategic needs.
Core Training Point 2: How Distributors Make Money Making money is an eternal topic and a surefire way to increase distributor cohesion and brand owner centripetal force. In business, talk business. Don't talk about international situations or inspirational chicken soup; only talk about how to run your own business well and create more profit. Let me share a case: A brand owner wanted distributors to make more money, but in fact, distributors are only willing to sell familiar products and work in familiar channels. This involves the issue of business structure. How was the course designed? About five years ago, when the demographic dividend hadn't completely disappeared and the FMCG industry was growing overall, distributors had a subconscious belief: sell more, earn more. As long as sales went up, profits would naturally follow, because incremental growth could cover everything. But now the market has changed. Distributors generally feel that sales are gradually increasing while annual profits are gradually decreasing. This is a typical case of 'pulling the cart without looking at the road' and a typical lack of digital analysis.
1. Improve Gross Margin by Adjusting Channel Structure Habitually, many distributors divide their channels into the four types above. Obviously, A, B, C, D are different, and different products have different channel gross margins. This provides one explanation for why annual sales gradually increase while annual profits gradually decrease. For example: In 2022, sales were 1 million, with 80% from traditional channels. In 2023, sales were 1.3 million, with 50% from wholesale channels. Sales grew 30% year-on-year, but if B% is much larger than C%, annual profits will inevitably decrease. Therefore, distributors must use the market sales data collected by sales staff to analyze channel sales share and channel profit contribution share. Only by understanding these two basic data points through digital analysis can they grasp the direction for the next year and avoid the situation where volume increases but profits decrease. Common operational methods are:
a. Focus resources to generate more sales from high-margin channels; b. Become the NO.1 in the high-margin channel segment; c. Achieve absolute market share leadership, far ahead of the second place, and strive to make your market share in that channel equal to the sum of the second and third place.
2. Improve Gross Margin by Adjusting Product Structure Everyone in the FMCG industry knows: different products have different gross margins, and the same product has different gross margins at different stages. Products generally have four stages: introduction, growth, maturity, and decline. The introduction stage has the highest gross margin, while the maturity stage has relatively lower gross margin. So there are two main factors affecting product gross margin: one is the product type, and the other is the product's stage. This provides two other explanations for why annual sales gradually increase while annual profits gradually decrease. For example:
First, in 2022, Product A was in the introduction stage, with sales of 1 million and a gross margin of D%. In 2023, the product was in the maturity stage, with sales of 1.5 million and a gross margin of G%. If 1 million * D% ≤ 1.5 million * G%, profits will inevitably decrease. Second, in 2022, sales were 1 million, with main product B. In 2023, sales were 1.2 million, with main product C. If B * E% ≤ C * F%, profits will inevitably decrease. So at this point, distributors need to conduct data analysis on each product's gross margin, sales share, and product development trends based on annual sales and competitor conditions. Only by understanding these data can they know where the future sales focus should be and which products are the main profit drivers. Common operational methods are: a. Tilt resources and energy toward key high-margin products to increase their sales share. b. Launch new products. Distributors should understand that brand owners offer the highest channel margins only when new products are launched. Although it's difficult, it's also the most profitable time. Summary: Distributors making money is an eternal training topic. Many principles may be understood by everyone, but there's a big gap between understanding and doing. It requires constant reminders and emphasis. Moreover, in recent years, with business being difficult, many people always think about getting rich through whimsical ideas, forgetting the basics. If no one reminds them, business will get worse and worse.
Core Training Point 3: How Distributors Improve Cost-Effectiveness Doing market work definitely requires spending money. Many brand owners have strict market expense usage mechanisms, but the result is more constraints on market expansion. Improving distributor cost-effectiveness can be divided into two parts: one is making every expense count, and the other is minimizing operating capital. Let me share a case: Many distributors have a catchphrase: 'I invest millions a year and end up making so little, I might as well put it in the bank and earn interest.' At this point, brand owners are more concerned about where the distributor's money is invested and whether it's invested valuably. How was the course designed? Operating capital generally includes four parts:
Advance payments: Simplify reimbursement processes and speed up expense verification.
Channel receivables: Strive for cash-on-delivery, adjust channel structure, and implement aging management.
Inventory occupation: Adjust inventory structure and improve customer service levels.
Accounts receivable: Strive for the best manufacturer policies and adjust the manufacturer portfolio. Summary: The above points are the most concerning and headache-inducing issues for distributors. Distributors must not only learn to make money, but also learn to spend money better and more accurately, so as to increase revenue and reduce costs, maximizing profits. Therefore, course design should revolve around the brand owner's own operational characteristics and give distributors sufficient empowerment.
Core Training Point 4: How Distributors Manage Personnel In daily work, managers often say: 'The team is hard to lead, and people are hard to manage.' But why is the team hard to lead? Why are people hard to manage? Most of the time, they can't articulate the reasons. It's hard to define specifically why it's hard to manage. In essence, there are three aspects to pay attention to: the team's distribution mechanism, the team's cohesion, and the team's organizational performance. Let me share a case: Whether a distributor's sales organization can withstand market tests depends on whether it can enable ordinary employees to achieve performance and continuously improve organizational performance in an era of intensifying competition. How was the course designed? When an employee fails to achieve performance, the problem is sometimes not the employee themselves, but rather the inability to clearly recognize the reasons affecting their performance improvement or the gap between them and excellent colleagues. And this reason is often difficult to articulate in words. We can improve the team's organizational performance from the following six points: Specific matters must be quantified to be well understood. For example, performance assessment, sales targets, and growth targets cannot be achieved without numerical quantification. Organizational expense-to-sales ratios involve expenses and profits, which are inherently numbers. Work planning, business goals, and resource allocation are also numerical indicators. Distributors are already implementing these items; they just need to strengthen methods and techniques, and continuously optimize based on different products and market competition patterns. But some distributors will ask: How do we quantify team development? Let's take an example: Quantified dimensions for career planning in team development:
- Personal cumulative annual achievement rate ranks top three in the team; 2. Personal regional growth rate ranks top three in the team for the year; 3. Mentorship system: comprehensive score ranking top three based on number of mentees, mentee turnover rate, mentee performance achievement, and growth; 4. Team reputation score: poor, average, good, ranking top three; 5. Market terminal store owner reputation: sample survey of poor, average, good, ranking top three. These five indicators are scored. Once achieved, employees can be immediately promoted to reserve cadres, receive better treatment, and participate in PK for regular cadre positions, activating the organization. This solves the team career planning problem in a fair and just environment and reduces the risk of losing excellent personnel. Summary: The core of team management is to achieve quantifiable tracking and improvement of personnel during the management process, making the improvement of human efficiency clear. This is also the weakest link in distributor management and needs effective improvement.
Final Thoughts Many brand owners like to invite international authoritative institutions to train distributors. They first analyze the international situation, then the industry development, and finally present data to explain the development trends of the brand's product category. These things are not without value, but the audience is wrong. In any domestic company, less than 20% of distributors have business scale exceeding 50 million. What they may need is not this. Distributor training should not be too high-end. In plain terms, it's about the trivial matters encountered in regional operations, but it's precisely these trivial matters that affect distributor development. Finding and solving them is the best strategy, and it's also the common voice of distributors!