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When communicating with distributor friends, they often ask the same question: how can I quickly and effectively increase my distribution profits? Similarly, I often ask them in return: what do you think should be done to quickly increase profits? Their answers are basically the same, seeking breakthroughs from two aspects: one is to expand sales of existing products or add brands and products; the other is to increase the sales proportion of high-margin products.

Their answers are correct, but not comprehensive, nor specific; they are only vague concepts. Even the two paths everyone knows are: one is to increase profits by expanding sales, and the other is to increase profits by adjusting product structure.

Marketing is an art, but also a science. For both enterprises and distributors, profit is not only earned through hard work; it comes from the profit module analysis of the marketing management system, scientifically and realistically calculated. In other words, profit is calculated. The increase in distributor profits comes from the marketing strengthening and management improvement of the following major modules.

First, profit increase from effective expansion of sales There are two paths to expand sales: first, expand sales of existing products; second, add new brands and products. Often the two complement each other, but if not managed well, they can also create significant contradictions. This is also what many marketing experts or gurus often advise distributors: rather than representing many brands and products poorly, it is better to select a few and make them strong. The theoretical basis is that on one hand, representing many brands and products will inevitably disperse the distributor's energy, resulting in poor performance across the board; on the other hand, if the brands and products you represent cannot achieve a leading position among the manufacturer's portfolio, you cannot receive greater support from the manufacturer; your marginal returns will be greatly reduced.

This makes sense, but the premise is that the represented brands are many and varied, lacking planning and complementarity. The future development and competitive trends of distributors determine that to become a true regional hegemon, distributors must do well with existing brands and products, while also appropriately expanding new brands and products, walking on two legs without veering off course. Look at the excellent distributors with large sales scales around us; they all represent many brands and products and do relatively well.

Of course, expanding and increasing sales is by no means simply piling up more products or developing more terminal networks; rather, it involves analyzing products, finding suitable terminals, and pairing them with appropriate promotion models to effectively increase and expand sales. On one hand, it is necessary to expand distribution coverage as much as possible and carry out horizontal distribution; at the same time, it is essential to use the "28 rule" principle, find the 20% of key terminals suitable for product sales, and carry out intensive cultivation to achieve vertical growth and more effectively expand sales.

Second, profit increase from structural adjustment of distributed products We all know that increasing sales of high-margin products can increase profit. At the same time, we are also painstakingly guiding sales personnel to promote high-margin products. But the results are not ideal because we are not clear about which terminals and what methods are most effective for promoting high-margin products. Many times everyone knows where the problem lies or where the breakthrough point is, but they do not know how to break through.

The characteristics of high-margin or new products are high prices, large profits, and difficult promotion. Whenever distributors encounter manufacturers promoting new products, they are initially excited. With the manufacturer's cooperation, they formulate a promotion plan, then hold a mobilization meeting, and then start distributing goods across the entire market and all terminals. The result is that the goods are placed on shelves but do not sell; over time, terminals begin to return goods. Gradually, distributors feel that new products are hard to promote and stop promoting them.

To promote high-margin products well, it is necessary to understand the promotion model for high-margin products. The author summarizes a formula for product structure adjustment: high-margin products + 20% of terminals or markets + resource concentration + appropriate promotion model = product structure adjustment. In the early stage of promoting high-margin products, it is essential to lock onto the 20% of terminals with large existing product sales or 20% of markets with good foundations. These markets or terminals have large existing product sales, have a solid relationship with the distributor, and are willing to cooperate in promoting new products. Therefore, the promotion of new products must first lock onto target terminals and markets. Second, concentrate resources and expenses. Although high-margin products have larger promotion resources, if they are scattered in the early stage, they will not form momentum, and later there will be a lack of sustained investment resources, after all, promoting high-margin products is a protracted battle. Third, try different promotion models in key terminals and finally find a more suitable and effective promotion model.

Third, profit increase from management efficiency improvement through scientific and standardized management Scientific and standardized management includes two levels: first, standardization of management processes; second, standardization of marketing team management.

The marketing management process must be market- and service-oriented, striving for simplicity and speed. It focuses on four aspects: first, feedback of market information, aiming to let the company grasp market dynamics in a timely manner and feel the market pulse; second, handling of market issues, aiming to provide good service to terminal customers and consumers; third, rapid advancement of company strategies and plans, aiming to strengthen and enhance rapid marketing execution; fourth, management of payments and products, avoiding more bad debts and product expiration and waste.

The core of process management standardization is to improve efficiency, strengthen service, reduce waste, and save operating costs.

Fourth, strengthening comprehensive profit increase through improved labor efficiency Welch once said: when employees' income is highest, it is definitely when the enterprise's management cost is lowest. Therefore, improving labor efficiency can strengthen the increase of comprehensive profit. This will be elaborated in the next chapter.

This article emphasizes one point: management should focus on both results and process. Result management should be incentive-based, which can most effectively mobilize the team's enthusiasm and unleash the potential of team members. Process and behavior management should be based on systems and penalties, emphasizing employees' basic work attitude and sense of responsibility.

Fifth, surplus value profit created by leveraging funds Distributors generally have a big problem: lack of effective fund management. This is manifested in two aspects: first, when they have no money, they find ways to borrow or take loans; when they have excess money, they deposit it in the bank; second, they lack analysis and planning for how much working capital each brand and product needs. The result is extremely low fund utilization efficiency, and even the marginal return on funds is negative. On one hand, there is a large amount of inventory in the warehouse; on the other hand, they pay interest on loans.

Distributors should strengthen fund management. For each brand, set minimum and maximum inventory levels and annual capital turnover, and calculate the fund utilization efficiency of each brand based on product gross margin. Then use the surplus funds for other investments to obtain surplus value profit. For example, buy land and build their own standardized warehouses and office spaces (first, to establish image; second, for appreciation effects); invest in supporting core backbone employees (who want to start businesses) to open up new distribution fields, etc. This will be discussed in detail in later chapters.

The increase in distributor profits is mainly achieved through the above five aspects. Strengthening and improving management in each aspect can easily increase distributor profit by at least 10%. The key lies in scientific and standardized management, formulating annual operating plans and budgets, and strictly following the operating budget and systematic management advancement.

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