---
title: "Distributors: How Can There Be Business Growth Without Perfect Execution?"
description: "Recently, while visiting the market with a company's marketing team, I observed some common phenomena. After in-depth discussions, it became clear that these issues stem from incomplete small closed loops in marketing. For a company's model to operate smoothly and achieve sales and profit growth, every node must form a closed loop. This article illustrates this with examples from market visits, such as the closed loop for blank outlets, the closed loop for sales velocity, and the closed loop for expense implementation."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-11-06"
language: "en"
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---

# Distributors: How Can There Be Business Growth Without Perfect Execution?

> Recently, while visiting the market with a company's marketing team, I observed some common phenomena. After in-depth discussions, it became clear that these issues stem from incomplete small closed loops in marketing. For a company's model to operate smoothly and achieve sales and profit growth, every node must form a closed loop. This article illustrates this with examples from market visits, such as the closed loop for blank outlets, the closed loop for sales velocity, and the closed loop for expense implementation.

Recently, I visited the market with a company's marketing team and observed some common phenomena. After in-depth discussions with company personnel, I found that behind these phenomena are small closed loops in marketing that were not executed properly. For a company's model to operate benignly, if the closed loops at each node are not realized, the overall operation will be greatly compromised. To achieve sales and profit growth, it must be the result of stable operation of small closed loops at each link under the big closed loop of the operating model. Below, I will give a few examples based on my market visits.

**Closed Loop for Blank Outlets**

When it comes to blank outlets, we need to ask ourselves several questions. **1. What are the reasons store owners don't take goods?** Slow turnover, no after-sales guarantee, insufficient profit, previous unpleasant cooperation, poor service, lack of interest in the product, etc. **2. What are the reasons related to frontline staff?** After being rejected several times, they stop visiting; they don't care about many outlets on the route; previous conflicts with customers; historical issues; cost disputes leading to loss of customer goodwill; low sales at the outlet not worth visiting, etc. **3. What are the reasons related to distributors?** Lack of attention, insufficient focus, high delivery costs for small orders, previous unpleasant experiences, conflicts of interest, etc. **4. What are the reasons based on market competition?** Competitors buying exclusivity, competitors offering high margins, competitors providing better service, etc. Everyone agrees that "no outlets, no sales," but in reality, the number of blank outlets has not decreased; instead, it has increased. This is a typical problem with the outlet loop closure.

Let's distill the above reasons:

**First distilled as: Customer relationship & Profit;**
**Second distilled as: Customer relationship & Visits;**
**Third distilled as: Customer relationship & Delivery;**
**Fourth distilled as: Customer relationship & Competition.** In China, the entire supply chain cannot ignore the customer relationship factor. This is why many online brands or new retail models fail to land. Good distributors not only satisfy profit links at every level but also never slacken in emotional connection investment. Returning to the closed loop for blank outlets, to solve the profit issue, you can implement **special entry policies for blank outlets** (e.g., cumulative order rewards, first order entry rewards, special display rewards). To solve the visit issue, you can use **process rewards** (e.g., 0.5 yuan per visit) or result rewards (e.g., points for each visit, redeemable later based on first order or monthly transaction amount). To solve the delivery issue, you can **work on delivery subsidies** (e.g., 5 yuan per order for the first 5 orders to new outlets). To solve the competition issue, you can **first build customer relationships and wait for the right time to break through** (e.g., when the competitor's exclusivity contract is about to end, intensify visits to secure your own exclusivity). Then establish a check and review mechanism to complete the small loop. **Let's sort out the closed loop for blank outlets: Customer relationship—Profit—Competition—Visits—Delivery—Incentives—Check—Review.** Here, let's also discuss: What is a blank outlet? How to define it? Outlets that have never cooperated? Outlets that haven't ordered for a period, e.g., six months? Outlets that have changed ownership and reopened? Outlets that haven't ordered a specific SKU? So the definition of a blank outlet is not static. Before executing the closed loop, you must clearly define blank outlets based on actual needs to avoid "passing the buck" later.

**Closed Loop for Sales Velocity Logic**

Why doesn't a product sell fast? What factors affect product velocity? Many people attribute slow-moving products to being new, weak brand power, high prices, etc. These are indeed objective reasons, but under the current environment, what subjective changes do we need to make? For example: Many years ago in winter, I was waiting for a train at the station. Since I left early without breakfast, I went to the convenience store in the waiting room to buy something to eat and drink. I saw the store owner using an electric rice cooker to heat many cans of Six Walnuts (a walnut milk beverage). After asking, I learned that the owner had been hospitalized a couple of days ago, and relatives visited and brought more than a dozen boxes of Six Walnuts. The owner couldn't consume them all, so brought them to the store to sell individually, selling one or two boxes a day. In my impression, Six Walnuts was a gift pack product, with almost no single-can sales. Let's analyze the above example: As a consumer, I hadn't eaten breakfast and wanted something hot—this is a clear "person" need. The convenience store had many products to choose from, but few that were hot and could serve as a meal replacement—this is a "product" need. The steaming electric rice cooker easily caught my eye, making me walk over and buy without even asking the price—this is a "place" need. For a product to successfully close a sale, the needs of person, product, and place must be met simultaneously. That's a closed loop. Conversely, looking at the problem of slow-moving products: Is the target consumer segment accurately identified? Does the distribution meet consumer needs? Does the scene setup accelerate consumer purchase desire? Translated into execution, it becomes: **Lock down outlet attributes, determine display standards, confirm personnel incentives, and establish check and review mechanisms. The small closed loop based on person, product, and place is completed.** **Let's sort out the closed loop for product velocity: Outlet attributes—Display standards—Incentive confirmation—Check mechanism—Review mechanism.** Here, let's discuss another point: Can you sell ice-cold beer in winter? My personal experience tells me absolutely yes. I remember once having a clay pot stew with friends. When the firewood was lit, the temperature in the private room rose quickly, and soon everyone was down to their underwear. The owner brought a case of ice-cold beer, and it was incredibly refreshing. I still remember it vividly. So the same "person," the same "product," under different "places" can have vastly different consumption needs. Many companies are good at making gift box products. After reaching a large volume, they want to sell them individually. Can they simply take the product out of the gift box and put it on the shelf to sell?

**Closed Loop for Expense Implementation**

How to implement expenses has always been a headache for companies and software companies. FMCG operations are inherently a process where sales and expenses complement each other. Many people propose online expense solutions, but the essence is still the implementation of the expense closed loop. Marketing personnel commonly encounter market expenses and channel expenses. **The purpose of market expenses is to accelerate product velocity; the purpose of channel expenses is to accelerate product distribution. Whether these purposes are achieved is the key standard for testing expense implementation.** Take market expenses as an example: Salesperson A serves two outlets. One outlet sells 20 cases per month and is entitled to 2 cut-case displays with 2 cases of expense support, but the store owner is not sensitive to expenses and doesn't nitpick. The other outlet sells 5 cases per month and is entitled to 1 cut-case display with 1 case of expense support, but the store owner is very strict about expenses. So the salesperson misapplies the expenses. It seems to pass smoothly, but there is a huge hidden danger because walls have ears. Once the store owner finds out, it's a big problem. It directly affects the credibility of the company, distributor, and salesperson, and the loss outweighs the gain. But such situations happen often and are one of the important causes of legacy issues. This is a typical problem in expense implementation. With the deepening of digitalization and refined management, the link between per-store market expense investment and output is getting tighter. The expense closed loop should include the following:

> **1. Expense Budget: Based on overall sales forecasts for region, stage, product, and organization, derive the total expense budget;**
>
> **2. Expense Application: Based on the total budget, set upper and lower limits for different outlet levels (usually divided by monthly sales);**
>
> **3. Expense Execution: Take photos as evidence, collect distribution data and outbound data;**
>
> **4. Expense Check and Verification: Strictly follow regulations (phone and on-site spot checks);**
>
> **5. Expense Review and Analysis: Evaluate the overall effectiveness of expense usage.**
>
> **Let's sort out the closed loop for expense implementation: Expense Budget—Expense Application—Expense Execution—Expense Check & Verification—Expense Review and Analysis.**

Here, let's discuss another point: What are the consequences if expenses are not closed? I once saw a distributor who didn't have a closed loop for channel expenses. He set a policy of buy 3 get 1 free, buy 5 get 2 free. He thought that as long as products were distributed to outlets, he didn't need to care about the salespeople's little tricks; a little expense fraud was okay. However, over time, salespeople found that fraud was faster than selling goods, and they all started to have crooked thoughts. Later, customer complaints kept coming, and they had to punish some salespeople, leading to resignations and team instability. This is a typical business failure case caused by the expense closed loop not being implemented.

**Final Thoughts**

In actual market visits, we can easily find high-quality blank outlets, products that are slow-moving due to display issues or person-product-place mismatch, market expenses being intercepted at various levels, and other common problems. But often, one good thing covers up a hundred bad things. As long as sales are good, everything else is just touched upon. But that's not the case. A thousand-mile dike collapses from an ant hole. In market visits, we must see through the surface to the essence. Every phenomenon is a missing small closed loop behind it. Without the perfection of small closed loops, the company's big marketing model is just a castle in the air. This indeed requires continuous thinking and improvement by frontline personnel.


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Contact: zhaobo258@gmail.com · +86 158 5481 7671