---
title: "Distributors, Take Charge of Your Own Business!"
description: "The real lifeline of a distributor's business is not monthly sales volume but the number of active customers multiplied by the number of product items sold. Salespeople, driven by commission, often neglect new and small stores, leading to a shrinking customer base and product range. Distributors must manage and track these metrics, adjust performance assessments, and focus on maintaining and growing their customer and product portfolio."
author: "魏庆老师"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-07-13"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/distributors-take-charge-of-your-own-business-5091ecab/"
markdown: "https://xinjignxiao.com/en/articles/distributors-take-charge-of-your-own-business-5091ecab.md"
original_source: "https://mp.weixin.qq.com/s/Ex69VcKvjXGx3xmnbq5n9Q"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86-%E8%AF%B7%E7%AE%A1%E5%A5%BD%E8%87%AA%E5%B7%B1%E7%9A%84%E7%94%9F%E6%84%8F-5091ecab.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-take-charge-of-your-own-business-5091ecab/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Distributors, Take Charge of Your Own Business!

> The real lifeline of a distributor's business is not monthly sales volume but the number of active customers multiplied by the number of product items sold. Salespeople, driven by commission, often neglect new and small stores, leading to a shrinking customer base and product range. Distributors must manage and track these metrics, adjust performance assessments, and focus on maintaining and growing their customer and product portfolio.

Click 'Read Original' for details.

**What is the 'lifeline' of a distributor's business? It looks like sales volume, but it's not.**
**How is sales volume generated?**
**It comes down to two metrics:**
**'Number of active purchasing customers' and 'number of product items purchased per customer'.**

**Business 'lifeline' = Active customer count × Product item count**

**Distributors, think from the boss's perspective: Is this month's sales volume more important, or this month's customer count and product variety?**
**If you're a salesperson, you'd say sales volume is more important—because salespeople earn commissions. From the boss's perspective, customer count and product variety are definitely more important.**

**So-called sales volume is just running a promotion within your existing 'active customers' and 'current product items'.**

**You have 300 active customers and mainly sell one product. I have 700 active customers and mainly sell three products.**
**Let's run a stocking promotion and see who has the bigger volume!**

**A distributor's business 'lifeline' is not this month's sales volume, but 'active customer count' multiplied by 'product item count'.**

**The lifeline is crucial but fragile. Distributors' lifelines are being destroyed by their salespeople.**

**Salespeople are destroying the boss's 'lifeline'**

As mentioned before, distributors' current personnel management state: 'A salesperson is responsible for a market area, selling goods for commission. Employees arrange their own daily routes and number of visits...'

Such a management state inevitably leads to the following consequences—

**Scenario simulation:**

I went out with a distributor's salesperson to visit the market, and this guy only visited stores he was familiar with. After finishing the first store, he skipped the second one next door and went straight to the next street...

I said, 'Why aren't we going to this store?'

He replied, 'Teacher Wei, this store doesn't want goods, and I'm not familiar with them.'

I said, 'If you're not familiar, how do you know they don't want goods? Whether they want goods or not, cut the chatter, you must go.'

The salesperson reluctantly hung his head and went in, asking, 'Boss, do you want any goods?'

Think about it: he doesn't visit this store often, it's a new store with no relationship, and on the first visit, the boss definitely won't order.

The store owner said, 'Leave your card, and I'll contact you if I need anything.'

The salesperson came out and glanced at me, as if to say, 'See, they don't want it, right?'

I ignored him. After finishing the third store, this guy tried to skip stores again. I stopped him again: 'Stop! You must visit every store one by one!'

The salesperson even said to me, 'Teacher Wei, this store won't order, do you believe me?'

I said, 'How would I know? Whether they order or not, you have to go. That's your route, and you must visit all your stores.'

Under my pressure, the salesperson went in again...

We wasted the whole morning like this. At lunch, the salesperson said to me, 'Teacher Wei, we earn money by selling goods, not by giving lectures!'

Think about it: Is what he said right? Absolutely right.

The boss assesses salespeople on sales volume, so when they go out, their only task is to turn the goods in the truck into cash. Therefore, distributor salespeople definitely prefer visiting large stores that generate volume, not small stores. They prefer visiting familiar old stores with good relationships, not unfamiliar new stores...

The result? A distributor boasted to me, 'Don't worry, I can definitely do well in this area. It's just a small county town, and I have 10 trucks running.'

A small county-level city with 10 trucks—do you think that's enough? Seems impressive, right? Probably enough.

I ask you: When these 10 trucks go out, will they skip small stores for large ones, skip new stores for old ones? Will they skip places that are far or hard to park? Will they skip areas under road construction? Will they skip stores where the owner is slow, orders little, and talks too much? Will they skip stores where the owner's wife is unattractive...?

Even with 10 trucks running in a county town, with high investment costs, there are still dead corners everywhere.

The manufacturer assigned the Baoding market to Distributor Wang as the general agent. There are 2,000 stores in Baoding, but Wang's drivers and salespeople always visit the 1,200 old stores they know... and never visit the other 800 stores!

So I ask you: Is it possible that these 1,200 old stores might close, go bankrupt, or switch businesses?

Is it possible that if you deliver late or provide poor service, they'll stop selling for you? If you cut prices and they lose profit, they'll stop ordering...

Will old customers be lost? Definitely!

Are new customers being developed? No!

So the number of active customers shrinks.

Additionally, many distributors still pay their employees based on sales revenue. With sales revenue commissions, new products will never sell well!

Why? With sales revenue commission, whether selling old or new products, the commission is 3%. Am I stupid? I'd rather sell old products than new ones.

Old customers are lost, new customers aren't developed, so the customer count decreases. Not selling new products means the product item count doesn't increase either.

**Customer count shrinks, product item count shrinks, and the 'lifeline' shrinks—with serious consequences.**

**How can distributors protect their 'lifeline'?**

**Daily management: Guide salespeople to focus on the business 'lifeline'**

**Scenario simulation:**

When distributors assign tasks to employees, employees always say, 'The task is too high!'

Okay, next time an employee says 'The task is too high,'

Call the employee over, **review the terminal customer purchase records, and measure whether the lifeline has shrunk.**

Boss: 'Damn it, last month I told you to visit 300 terminal customers in your area. Check last month's purchase records: 45 customers purchased more than twice, 180 purchased at least once, and 120 terminal customers didn't purchase at all last month. Why?'

Salesperson: 'They didn't order well; the economy is bad...'

Boss: 'Nonsense! That means you went out and visited big stores but not small ones, old stores but not new ones. You skipped around. You didn't visit those 120 customers at all. Don't you dare deny it! Let's go back and revisit the street you covered yesterday...'

Salesperson: '&*......%¥, okay, I admit it. I'll correct it next month. Next month I'll visit big, small, old, and new stores one by one. By the way, boss, how did you know?'

Boss: 'Nonsense, I did the same thing back in the day...'

The next salesperson goes out and visits big, small, old, and new stores one by one...

Salesperson: 'Boss, this month I visited all the big and small stores. 236 out of 300 terminals ordered, but I still didn't meet the sales target...'

Boss: 'Come here, look at the slogan on the wall: Sales equals customer count times product variety, understand? Last month, 236 out of 300 terminals ordered, with an average of 1.03 items per terminal (total items purchased / number of purchasing customers). What does that mean? You're selling old products but not new ones. What are you going to do next month?'

Salesperson: 'I'll change. I'll visit all stores, big and small, and recommend both old and new products, trying to get them to order more items.'

Folks, when the salesperson comes back next month, first, the number of purchasing customers will increase, and second, the number of product items purchased will also increase. Do you think sales volume will increase?

**Data analysis: Track the business 'lifeline'**

B2B companies have an advantage over traditional distributors: they use online APP ordering, and their backend has IT support to analyze data anytime. Almost all B2B companies track and analyze these numbers daily, weekly, and monthly—

Daily active users = number of active customers per day
Effective daily active users = number of customers with daily purchases over 200 yuan
Monthly active users = number of active customers per month
Effective monthly active users = number of customers with monthly purchases over 5,000 yuan
Total items purchased = sum of items purchased per store per month
Average items per store = total items purchased / number of purchasing customers

Traditional distributors' data infrastructure is relatively primitive, **but that's okay; taking a small step forward is a new height.**

Distributors should at least analyze the following metrics monthly:

**Active rate** = number of terminal customers purchasing this month / total number of terminal customers ever

**'Dying outlets'** = list of outlets that haven't purchased in 60 days
**'Dead outlets'** = list of outlets that haven't purchased in 90 days

—If the active rate declines over several months, the boss should quickly visit those 'non-ordering,' 'dying,' and 'dead' stores to find out what's wrong.

Is it because the salesperson didn't visit, so no one called on them, requiring management of visit rates?

Or is it because there are damaged goods with old dates that haven't been returned or exchanged, requiring customer complaint handling?

Is it because consumer promotion gifts were withheld, requiring promotional posters to be put up?

Or is it because poor display leads to no sales, requiring rewards and penalties for display standards?

There must be a reason. Find the reason and solve the problem from personnel management, visit rate management, promotion policies, complaint handling, price management... to increase active customers. 'Revive' the 'dying' and 'dead' terminals.

Otherwise, more and more 'dying' customers will become 'dead.'

**Assessing employees on 'number of new product distribution stores' is self-deception**

First, correct a common mistake: Don't assess 'increments'; assess 'stock.'

What does 'assessing increments' mean?

For example: Tell employees that the daily new product distribution task is 10 stores. For every store beyond 10, reward 10 yuan. For every store below 10, penalize 10 yuan...

When pushed to the wall, grassroots salespeople have ways: they'll split cases, sell on credit, use display rewards to distribute...

Wow, this month they distributed to 100 stores and earned 1,000 yuan in distribution rewards.

Next month, they distributed to 60 stores and earned 600 yuan.

The third month, another 60 stores and 600 yuan.

Then you go to the market to check the new product distribution rate: in his area, only 120 stores still have the product.

That's not right. 100+60+60 should be 220 stores?

**This is the result of assessing increments: the duck lays eggs but doesn't care about them.**

They only care about distributing new products, without follow-up visits to those stores, still skipping small stores for big ones...

As a result, won't the new products be dumped in the stores without maintenance, shelf placement, or display, so they don't sell, and the terminals stop ordering?

Won't the stores withhold the consumer buy-one-get-one gifts, so the new products don't sell, and the terminals stop ordering?

Won't some stores cut prices on new products, so terminals don't make money and stop ordering next time?

Won't there be damaged goods needing returns or exchanges, but our sales rep didn't visit, the store owner got angry, and stopped selling for us?

Etc., etc. In three months, 220 stores were distributed, but in the fourth month, only 120 remain. This phenomenon is too common.

**Assess salespeople to manage the business 'lifeline'**

Note: It's harder for manufacturers to assess salespeople because they don't have terminal order data, so they assess distribution rates, which requires monthly statistics and is very cumbersome.

For distributors, it's simpler: use the 'purchase rate' for each item to replace the distribution rate.

**1) When market coverage is below 50%**

When market coverage is below 50% (purchasing terminal customers / total market customers), the distributor's customer base in the area is insufficient. Then only assess one dimension: 'number of purchasing customers.'

Each sales rep's 'purchasing customer maintenance target' = X+Y+Z
X = number of terminal customers who purchased last month
Y = number of new purchasing customers required this month
Z = number of customers lost last month (those who purchased before but not last month count as lost)

For example, a sales rep had 80 purchasing terminal customers last month, this month requires an increase of 20, and lost 5 customers last month. So this month's target is 125 customers. If the month-end purchasing customer count exceeds 125, reward 20 yuan per customer. If less than 125, penalize 15 yuan per customer. If less than 80, penalize 30 yuan per customer.

Effect: Salespeople will not only visit big and familiar stores but also small and unfamiliar ones, and handle customer complaints promptly... for fear of losing 'purchasing customer count' and not getting paid.

Reminder: Salespeople may cheat by splitting large orders into small ones (one customer order split into eight customer orders).

Monitoring: Implement an order-taking pre-sales system where salespeople take orders and drivers deliver, monitoring each other. Also, the boss should do daily phone and field checks to see if orders are split to inflate customer count, with penalties tenfold.

**2) When market coverage exceeds 50%**

When market coverage exceeds 50% (purchasing terminal customers / total market customers), then assess two dimensions: 'number of purchasing customers' and 'number of product items.'

Each sales rep's 'purchasing customer maintenance target' = X+Y+Z (as above)

Each sales rep's 'purchasing item maintenance target' = A+B+C (items can be total items purchased or a designated new product; here, we use a designated new product as an example)

A = number of customers who purchased the designated new product last month
B = number of new customers required to purchase the designated new product this month
C = number of customers lost last month for the designated new product (those who purchased before but not last month count as lost)

**3) Simplification:**

Distributors have different levels; the formulas and numbers in this article are examples. Don't quibble over numbers. Reports, details... are all fleeting; the thinking is most important. Finally, here's a simplified plan based on the above assessment approach to inspire thinking.

Keep the original sales commission system unchanged. If an employee's daily purchasing customer count exceeds 15, reward ... yuan that day. If new product purchasing customer count exceeds 10, reward ... yuan that evening. For every customer lost at month-end compared to last month, penalize ... yuan.

**Customer count is the length of the business 'lifeline'; product item count is its diameter.**

Refer to my four dimensions—'daily management,' 'data analysis,' 'assessing stock,' and 'assessment plan'—to develop your own methods and manage your business 'lifeline' well.

Source: Wei Qing Training (ID: weiqingpeixun)


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

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