The first step in my consulting work is always market research, and a key part is in-depth interviews after visiting distributor markets. In the past year or two, I've noticed an interesting phenomenon: distributor bosses born in the 1980s and 1990s have deeply realized that learning ability is the primary productive force, and they are willing to invest time and money, but the results are often unsatisfactory. As one post-90s second-generation distributor said: "I want to change the status quo, increase sales and profits. I've bought many books, attended many courses, and participated in many study tours organized by brand owners. It's not that they have no effect, but I always feel that fragmented knowledge points cannot be condensed into more valuable things for practical implementation and monetization." Today, I will briefly sort out the logical framework for distributor learning, focusing on the business and operational issues that distributors care about most.
At the business level, What do distributors need to learn? First, we need to understand at the business level: what indicators should distributors pay attention to improve? When mentioning this, many distributors naturally say, "The indicators I need to improve are only two: one is the sales target given by the brand owner, and the other is the profit target I need for my own business." This is not wrong; sales revenue is the most direct business indicator for distributors, reflecting the scale and growth of their business. By formulating effective sales strategies and marketing activities, increasing product sales is the primary task for distributors. Profit margin is an important indicator of distributor profitability. Distributors should focus on cost control, price management, and sales efficiency to improve profit margins and ensure healthy and sustainable business development. However, the above two can only be defined as result indicators; the results of business are sales and profit. Without good processes, there will be no good results. So what process indicators should we focus on? These indicators are the direction and content that distributors need to learn and improve. Let me list several common indicators that distributors need to pay attention to and improve at the business level:
1. Customer satisfaction: Customer satisfaction is an important indicator to measure the quality of distributor service. Distributors should pay attention to customer feedback, promptly solve customer problems and needs, provide high-quality pre-sales and after-sales service, improve customer satisfaction, and promote customer loyalty and word-of-mouth.
2. Channel coverage: Channel coverage refers to the scope and number of regions or channels that distributors cover in the market. Distributors should continuously expand and strengthen their sales channels to cover a broader market, thereby increasing sales opportunities and market share.
3. Inventory turnover rate: Inventory turnover rate is an indicator to evaluate the efficiency of distributor inventory management. Distributors should reasonably control inventory, avoid excessive unsold and expired inventory, improve inventory turnover rate, reduce inventory costs, and improve capital utilization efficiency.
4. Market share: Market share is an indicator to measure the proportion of distributors in the entire market. Distributors should conduct market research and competitive analysis, formulate effective marketing and sales strategies, increase market share, and enhance their competitive advantage.
5. Product and brand value: Distributors should pay attention to the value and awareness of the products and brands they represent. Through active product and brand promotion and management, enhance brand awareness and reputation, thereby increasing product attractiveness and market competitiveness.
6. Customer conversion rate: In addition to focusing on sales revenue, distributors should also pay attention to customer conversion rate, which is the ratio of converting potential customers into actual purchasing customers. Through effective sales skills, personalized marketing strategies, and high-quality customer service, improve customer conversion rate and achieve higher sales efficiency.
7. Channel cooperation: Distributors need to establish close cooperative relationships with suppliers or manufacturers. By optimizing channel cooperation and collaboration, jointly explore markets, improve product quality and service levels, and achieve common business growth and benefit maximization.
8. Data analysis and decision-making: Distributors should attach importance to data analysis and decision-making capabilities. By collecting, analyzing, and utilizing market and business data, understand sales trends, customer needs, and competitive situations, make timely decisions, adjust business strategies, and improve operational efficiency and performance.
9. Profit margin: Profit margin is an important indicator of distributor profitability. Distributors should focus on cost control, price management, and sales efficiency, improve profit margins, and ensure healthy and sustainable business development.
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If we list the above indicators one by one, I believe many distributors can list more, but these are point-like issues; they are useful but not highly valuable. We can classify them into five major categories to form a business support system.
The first category is learning product knowledge: Understand the characteristics, functions, and advantages of the products and brands you distribute, so as to provide accurate information and suggestions to customers.
The second category is learning sales skills: Master basic sales skills, such as customer communication, needs analysis, relationship building, and negotiation skills, to improve sales performance.
The third category is learning market analysis: Learn how to conduct market research and analysis, understand market trends, competitors, and customer needs, to formulate effective sales strategies and plans.
The fourth category is learning channel management: Learn how to effectively manage sales channels, including cooperation with suppliers, inventory management, and logistics operations, to ensure products reach customers in a timely manner.
The fifth category is learning financial management: Understand the basic concepts and methods of financial management, including cost control, profit analysis, and cash flow management, to ensure stable and sustainable business development.
It is not difficult to see that the 9 points mentioned above can correspond one-to-one to the following five knowledge frameworks. For example, customer satisfaction, channel coverage, and customer conversion rate all belong to the category of channel management learning; data decision-making and analysis, market share, etc., belong to the category of market analysis learning; profit margin and inventory turnover rate belong to the category of financial management learning. At this point, distributors need to establish five major learning frameworks and classify fragmented knowledge points into them, thereby building their own business system from point to line, and from line to surface, to maximize value in market competition.
At the operational level, What do distributors need to learn? For distributors, the definition of operations should be: How products flow smoothly and quickly from the brand owner's production line through various channel links to consumers. Distributors need to solve various difficulties encountered in the product flow channel. For example, common problems reported by distributors: high inventory pressure is essentially a problem at the downstream channel end; products not being distributed is essentially a problem at the terminal outlet end; products not selling is essentially a problem at the consumer end. The solutions to these problems are the knowledge points for distributor operational learning. Forming an operational knowledge framework is as follows (suggested):
The first category is learning product strategy, guided by the brand owner and combined with the actual situation at the time, including: 1. Product labeling; 2. The selling logic of each product; 3. Product channel chain grading system; 4. Product channel chain pricing system; 5. Achievement of each category last year and opportunity forecast; 6. Whether the first engine product is complete and whether it is necessary to start the second engine product; 7. How to standardize channel product age management, etc.
The above constitutes the knowledge system of product strategy.
The second category is learning channel strategy based on the distributor's market status, including: 1. Channel definition and required SKUs; 2. Channel breakthrough priority; 3. Channel outlet coverage requirements; 4. Channel execution standards; 5. Business area planning guidelines; 6. Scientific outlet visit planning; 7. Outlet management: rating system; 8. Clear regional battle map; 9. Achievement of each channel and opportunity forecast; 10. Distributor safety stock & age management, etc. The above constitutes the knowledge system of channel strategy.
The third category is learning organizational strategy based on salespeople, including: 1. Accurate configuration of team size; 2. Establish regional market organizational structure chart; 3. Salary and sales assessment linkage mechanism; 4. Recruitment and training of organizational members; 5. Configuration of marketing management team, etc. The above constitutes the knowledge system of organizational strategy.
The fourth category is learning expense strategy based on terminal outlets, including: 1. Plan expense categories well; 2. Sort out expense management; 3. How to make the proportion of expense bearing transparent and rule-based; 4. Solutions to common difficult problems in expense issues; 5. Procedures and systems for routine expense operations, etc. The above constitutes the knowledge system of expense strategy.
The fifth category is learning consumer strategy based on consumers, the core is simply three points: acquiring new customers, repurchase, and average transaction value. In plain language: 1. Guide consumers to buy; 2. Drive consumers to buy again and repeatedly out of habit; 3. Find ways to increase the quantity or amount of consumer purchases. The above constitutes the knowledge system of consumer strategy.
The sixth category is learning the time node control for the efficient advancement of the above five strategies. A good marketing strategy must be supported by a good time advancement strategy, including: 1. Review the problems encountered in time advancement last year; 2. Do a good job of closed-loop work in each time period; 3. From stage to the whole year, ensure the goal does not deviate; 4. Do a good job of each strategy, time advancement chart, and mark intersections, etc.
The above constitutes the knowledge system of time advancement strategy.
Final Thoughts The economic downturn and severe squeezing from upstream and downstream channels have forced distributors to reflect on themselves. Besides the courage and experience that made them successful, what other core competitiveness do they have to participate in market competition?
If distributors want to keep up with the development speed of manufacturers, they must continuously surpass themselves and create greater market performance. To do this, they must learn, improve their innovation ability through learning, and then improve their brand power through innovation, ultimately forming their own industry influence.
Only by loving learning, being good at learning, and learning with heart can distributors maneuver freely and remain invincible.
From October 9 to 11, 2023, in Shenzhen, during the 5th China FMCG Conference, we will hold the 1st China FMCG Distributor Conference. At that time, we will invite 16 benchmark distributor bosses from across the country and relevant industry executives to share their business thinking on distributors.
In addition, New Distribution, together with Zhoupu Data, has launched the industry's first "2022-2023 China FMCG Distributor Business Condition Survey Report". Through this research report, we help distributors see the present clearly and see the future. At the first China FMCG Distributor Conference, we hope to witness it with you!