---
title: "Distributor Boss: The Foundation of Intensive Channel Cultivation Must Be Built on the Input-Output Ratio"
description: "When it comes to intensive channel cultivation, every distributor knows it runs through their business, whether driven by their own needs or manufacturer requirements. However, few distributors seriously consider how to implement it to maximize sales and profit output. A county-level distributor in a county with a population of 1.3 million used 19 vehicles and 20 salespeople to serve 1,000 traditional small stores and 3 KA supermarkets, achieving annual sales of 50 million yuan, but complained about low profits at year-end, highlighting the need to base channel cultivation on the input-output ratio."
author: "李锋"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-10-10"
language: "en"
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# Distributor Boss: The Foundation of Intensive Channel Cultivation Must Be Built on the Input-Output Ratio

> When it comes to intensive channel cultivation, every distributor knows it runs through their business, whether driven by their own needs or manufacturer requirements. However, few distributors seriously consider how to implement it to maximize sales and profit output. A county-level distributor in a county with a population of 1.3 million used 19 vehicles and 20 salespeople to serve 1,000 traditional small stores and 3 KA supermarkets, achieving annual sales of 50 million yuan, but complained about low profits at year-end, highlighting the need to base channel cultivation on the input-output ratio.

When it comes to intensive channel cultivation, I think every distributor knows that it runs through our business from start to finish, whether it's for our own business needs or manufacturer requirements.
But how exactly to implement intensive channel cultivation, or how to achieve maximum sales output and maximum profit output on the basis of intensive channel cultivation, few distributors have seriously thought about it. Previously, I met a county-level distributor who, in a county with a population of 1.3 million, used 19 vehicles and 20 salespeople to serve 1,000 traditional small stores and 3 KA supermarkets, with annual sales of 50 million yuan.
From the above figures, it can be seen that this counts as intensive channel cultivation, but this distributor boss complained to me that despite high sales volume, when calculating accounts at year-end, there was no profit. **Therefore, the foundation of intensive channel cultivation must be built on the input-output ratio.** In the above case, the problem faced is that with 1,000 terminal customers, each person serving 50 small stores, the efficiency is too low.
Conversely, the waste of human resources and vehicles is too severe, with excessive configuration, which is the key reason for no profit. Normally, 6-8 salespeople and 6-7 vehicles can fully achieve the scale of 50 million.
How to do intensive channel cultivation well, how to allocate human resources and vehicles for different types of channels, and what are the key operational points?
To this end, New Distribution invited Mr. Li Feng, General Manager of Hongye Hengda Trading Company, to discuss intensive channel cultivation strategies for current mainstream market channels, hoping to provide some reference and inspiration for distributor friends. _It should be emphasized here: **Due to differences in FMCG categories, product differences, and the different business scales of each distributor, there is no relatively standard numerical answer in terms of operational methods, but what can be provided is the logic of operational thinking and key business points.**_
**Wholesale Channel: Fast, Simple, Few** Although I do not advocate doing wholesale channels, many distributors have large coverage areas and have no choice but to rely on wholesale channels to achieve rapid distribution. Therefore, the simpler the wholesale channel, the better; the fewer people, the better; the faster the turnover, the better. For wholesale channels, people are the first element, and there should not be too many people. Highlight advantages, suppress competitors, and make money by speed and volume**. In terms of product structure, bestsellers plus second- and third-tier brands, and even some "high-profit" products, to increase profit margins. I want to remind: **If you want to do a long-term distribution business, the wholesale channel is just a transitional stage for you to grow your business.**
Direct-operated terminals are a path every distributor must take. Without direct-operated terminals, you cannot truly help upstream manufacturers achieve intensive channel cultivation, and your value to brand owners naturally diminishes; without direct-operated terminals, you naturally cannot continuously promote new products or high-margin products, and profits cannot be guaranteed.
**Traditional Channel: Fine Management, Focus on Process Rather Than Results** Traditional circulation small stores are the channel distributors are most familiar with and do the most, but relatively speaking, they are also the most complex to manage. How to operate traditional circulation small stores well? I think the core is two handles: one is organizational management; the other is store management.
**1. Organizational Management**
First, distributors need to calculate the number of stores to configure personnel. For example, in the grain and oil category, based on one store per thousand people, position your store customer count according to population. A market with a population of 1 million should have at least 1,000 terminals. For example, the beverage category might be 1.5 stores per thousand people, with 1,200-1,500 terminal stores. After determining the target number of stores, start planning the salesperson's route and design standards. For example, each salesperson manages 150 customers, divided into 6 routes, visiting 25 stores per day.
After planning the visit routes, distributors must fully utilize digital tools to manage salespeople, assess them, and check them. This is the foundation for ensuring store activity; without visits, there are no active stores.
Here, some distributors may be entangled because they represent multiple brands, wondering whether to plan routes by region or by brand.
My suggestion: **Try to divide by region, not by brand. Try not to visit separately; if there are many brands, you can appropriately reduce the number of service customers and concentrate on visiting outlets.** With one person visiting multiple brands, salespeople can also have resources to negotiate, maximizing the use of various product resources to demand from terminal stores. If visits are separated, it not only causes fragmentation but also wastes resources. For distributors, the personnel cost of salespeople is the most expensive and accounts for the largest proportion of costs.
This is the strategy for salesperson store visits, but it is not enough. Distributors must learn to evaluate the input-output ratio of individual salespeople. For example, a salesperson responsible for 100 customers should have at least 100,000 yuan in sales per month. At the same time, combine product gross profit and output profit to measure the salesperson's contribution value.
**2. Store Management**
Regarding store management, the core is to do 5 things: expand customers, expand products, expand displays, adjust structure, and provide service. This is the core of doing traditional channel stores. For the distributor's business, the ultimate goal is to increase single-store output, maximize profit, maximize sales, and maximize product share. In the traditional circulation channel, the core tasks of salespeople are to expand customers, expand products, expand displays, adjust structure, and provide service. Distributor bosses need to check whether the salesperson's core tasks are achieved according to set standards, and promote execution through terminal performance and process indicator assessments.
The ultimate goal is the result pursued by the distributor; based on the result, tasks are assigned to salespeople. **The core of terminal store management is that salespeople execute process indicators with assessment as the guide, and distributors design process indicators with goals as the guide.**
In addition to store management, there is also price management, which is particularly important. Regarding the key points of price management, my suggestion is that no matter what product you sell, it should be at least 2-3 percentage points higher than the manufacturer's guide price.
For example, if the manufacturer says sell at 40, you sell at 41. Of course, the extra 1 yuan is not for you to put in your pocket as profit, but to give to the salesperson, so that the salesperson has resources and leverage to negotiate with terminal stores.
For example, **expand display space, add new products, and provide product gifts. Although this 1 yuan ultimately still flows to the terminal store, through this form, the salesperson has money in hand and dares to negotiate with the terminal, exchanging conditions for conditions.** Of course, price management in circulation stores should be unified, whether it's a large store or a small store, the supply price should be the same, with unified management, especially the price stability of bestsellers.
**In addition, price management also involves price increases and decreases. Regarding price increases in traditional channels, I think there is a "three-step process":**
**Step 1: Before the price increase, you must stock up a batch of goods in advance. This batch is given to stores as a transition, with prices unchanged;**
**Step 2: Use the new price for customers, but adopt a gift-with-purchase form, so that after the gift, the price is still the original price;**
**Step 3: Only then is the real price increase.**
Through these three steps, gradually let customers accept it, so that you won't lose customers and sales due to the price increase.
Even if the manufacturer doesn't provide any resources, my suggestion is that distributors earn less for 1-2 months to ensure a smooth price transition and retain customers and sales, which is a long-term strategy. Regarding price reductions: Don't immediately reduce prices for customers. At this time, if customers have inventory, they may scold you. If you want to reduce prices, first use gift-with-purchase to maintain the original price system, and after customers' inventory is mostly cleared, then use gift-with-purchase to lower prices for customers. My suggestion is, **if the reduction is not very large, try not to break the price system. Consider turning the price reduction policy into your profit, into your promotional resources, for displays and process indicators. This may have better results.**
**Modern Channel: Relationship, Professionalism** A distributor friend with annual sales of 40 million yuan only does modern channels. The entire team is 6 people: 4 salespeople plus 2 clerks, and 2 vehicles. Output is very high. Even if you only do one channel, if you do it well and finely, you can still make money.
Regarding operating modern channels, I think the core is two points: first is relationship; second is professionalism. Relationship refers to the relationship with buyers and sales staff, which I won't elaborate on here.
Regarding "professionalism," the key is to have the ability to analyze sales. Distributors need to not only master their own product sales, sales items, and profit margins, but also obtain data on related competitors, find out the top 3 products in the category in terms of product structure, product price, and product specifications, and identify problems through comparative analysis. My suggestion: **Analyze competitor POS data monthly, and use the data to attack the largest competitor in terms of volume.** If your product is the largest, defend well to prevent competitors from catching up. In addition, analyze your own internal POS data to optimize expense investment and product structure, and find room for growth.
In operating modern channels, "fee-to-sales ratio analysis" is a key indicator of whether a distributor can be profitable. Analyze the money invested, and then invest limited funds into stores that can produce the most sales. Finally, in process management, do a good job of tracking accounts receivable, which is the most important part of management. Large stores generally have credit periods. If the process is not done well, it's easy to lose money.
Especially the relevant reconciliation dates and invoice mailing dates should be clearly defined in the system. If the bill is not sent by the specified time, you have to wait until the next month, and the payment will be delayed, which directly affects the distributor's use of funds and leads to profit loss.
**Catering Channel: Professional Knowledge, Payment Management Are Key** The catering channel is relatively special; procurement is usually decided by the head chef. Therefore, the relationship with the head chef is very important.
Catering channel visit times are limited and need to be flexibly managed. For example, generally 2-4 PM is the best time. Also, salespeople should not be responsible for too many stores; too many and they can't visit them all. It is recommended that each salesperson visit within 60-100 stores.
Operating catering stores requires higher requirements for salespeople, especially for rice, flour, oil, and seasoning categories. Salespeople need strong product expertise, have common language with the head chef, and clearly know the characteristics and functions of the products. When promoting new products, the best way is on-site demonstration. **Operating catering stores has a certain threshold compared to traditional circulation channels. Therefore, to build confidence in salespeople, the best way is to win over the best local hotel, setting a benchmark for salespeople. This can also be used as a case to persuade other catering stores.**
Regarding payment management, many catering distributors have a common problem: because of good relationships, they don't sign contracts. In the end, the restaurant owner runs away, owing more than 100,000 yuan.
Unlike modern channels, catering customers are relatively riskier. Whether it's a large or small store, or the length of the credit period, contracts must be signed, and payment standards must be established. Establish a tracking system; once payment is not made in time, handle it immediately.
**E-commerce Channel: Not Recommended to Enter** With the rise of new retail and home-delivery e-commerce, many distributors are eager to try. It's good to be enterprising, but I still suggest distributors be cautious about e-commerce channels.
Most distributors have been on the traditional path for over a decade, with strong inertial thinking in operations, and the e-commerce playbook is quite different from traditional distribution thinking, making it hard for distributors to adapt quickly.
Of course, if your business scale is large enough and you have manufacturer support, you can try, but you must build a professional team. **Overall, I don't recommend distributors to touch e-commerce channels. The dividend of online e-commerce has basically disappeared, and FMCG offline business still accounts for a large proportion.**
Putting time and energy into traditional offline business doesn't necessarily mean earning less, but you need to use the right methods. Online business seems to reach consumers directly with good profit margins, but the energy, time, and related costs required are not low at all!
Instead of spending time, energy, and resources on exploring a new thing, it's better to bury your head and study how to dig out more increments in the existing market and find more profits.
The above are my personal views and opinions on the operation of current mainstream channels. For local and regional distributors, rooting in traditional circulation channels, and if capable and conditional, or with corresponding product matching, operating catering channels, these two types are the foundation for a distributor's survival!
**Are you "watching" me?**


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