Salespeople have a hard life because there is an iron law in the Chinese marketing world: success is measured by sales volume, and heroes are made by performance. Indeed, no matter how perfect the sales model or marketing process, if the expected goals are not met, the boss will still say no. Therefore, companies often undergo major marketing model reforms, restructuring marketing teams and distributor partnerships, leading to conflicts and tensions. In fact, internal conflicts within the manufacturer are easy to resolve during reforms; the key lies in whether partner distributors can accept and cooperate with the new changes. Small distributors can be appeased, but what about newly developed distributors? What about the major accounts that account for a large share of sales? What about distributors who have grown with the company? If distributors are disobedient, replacing one or two is fine, but a large-scale purge in a short time is like seeking self-destruction. Another phenomenon is that some business managers and sales directors who started from the grassroots find that the higher their position, the less they know how to manage distributors and help subordinates manage them. The old comrades who fought alongside them are becoming increasingly distant, and they often hear subordinates complain that such distributors have big tempers and don't buy their authority, requiring them to personally resolve trivial matters. Distributors who were once obedient have been spoiled by salespeople into "local emperors," often threatening to stop working if they don't get more investment. Some well-qualified distributors have already "died unjustly" (their distribution rights were forcibly revoked for temporary non-cooperation). Some difficult accounts still occupy distribution rights but do minimal work. The business grows bigger, but distributors become more disobedient. These marketing problems are all caused by poor distributor management. How to solve them? The answer is that manufacturers should manage distributors with more professional methods, just like managing their own employees.
When managing internal employees, companies typically categorize their work status into four types and treat them differently:
- Those with work passion but lacking work methods: these employees need more training and coaching to provide correct work methods.
- Those with work methods but lacking passion: find out the reason for their lack of passion and communicate effectively.
- Those with both passion and methods: give them promotions, raises, and authority.
- Those with neither methods nor passion: either give them instructions and demand results, or transfer them directly.
The first state is most evident in new employees. After being selected through layers of interviews by HR and sales departments, new employees are undoubtedly full of drive and eager to prove themselves. However, without effective work methods, they hit walls everywhere, and their efficiency and results are naturally low. If guidance and training are not provided in time, new employees quickly enter another state: lacking both methods and motivation, losing confidence, and even losing hope in the company's future.
After receiving proper training and guidance, employees' work abilities improve daily, and their efficiency and results become impressive. At this point, they enter the second state: having both passion and methods. To maintain this good state, managers typically give raises, authority, and promotions, leading to greater challenges.
If an employee's abilities far exceed their job requirements but they haven't received raises or promotions, they naturally feel resentful, thinking that working more or less is the same, so why bother? They may start doing minimal work, transitioning from having ability and passion to lacking passion, becoming "old oil" in the marketing world, or even considering leaving the company. At this point, leaders need to communicate and motivate effectively, explaining that it's just a matter of opportunity.
Employees lacking both methods and passion usually result from two situations: one is joining the company by "passing off fish eyes as pearls" (i.e., not being qualified), and the other is not improving after communication and warnings during the second and third states. Leaders should then consider adjusting their positions or directly "taking them down," and must not let "one piece of rotten meat spoil the whole pot of soup."
The quality of an employee's work state depends entirely on the leader's management methods. This management approach is called "situational leadership." Can this method be applied to managing distributors? The answer is yes. We can also manage distributors in different situations and cooperation states.
Here, let's revisit an old question: what is the relationship between manufacturers and distributors? You can ask employees, and you'll get various answers:
- Statement 1: "Distributors are the manufacturer's gods and breadwinners..."
- Statement 2: "Both parties are partners and close comrades..."
- Statement 3: "Distributors are just the manufacturer's delivery tools; if they don't obey, we deal with them..."
- Statement 4: "Both parties are both friends and enemies; when interests align, they are close, but when interests conflict, they fight..."
Each answer sounds reasonable but incomplete. If combined, they would be perfect. In my view, there are four states in manufacturer-distributor cooperation, summarized in 16 characters: "志同道合" (like-minded), "同甘共苦" (sharing weal and woe), "同床异梦" (different agendas), and "同归于尽" (mutual destruction).
"Like-minded" type: The manufacturer finds a distributor that perfectly meets the criteria—having vehicles, people, money, and network, and exclusively distributing the product. They cooperate fully in payment, delivery, and distribution. The distributor finds that the product agency fills a gap in their product line and offers high profits. The manufacturer keeps promises, handles rebates, settlements, and old or defective goods promptly, and regularly provides training for the distributor and their staff, helping manage inventory, finances, and market building.
"Sharing weal and woe" type: The manufacturer cannot find a distributor with ideal hardware in the sales area, such as insufficient funds or lack of sales network, but they have good reputation, market awareness, and high willingness to cooperate. In this case, the manufacturer reduces pressure on the distributor, emphasizes distribution and after-sales service, and both grow together. Eventually, the distributor grows bigger with the manufacturer's support, and the manufacturer's market business also increases.
"Different agendas" type: The manufacturer and distributor have completely different mindsets. The manufacturer wants market share, while the distributor wants return on investment. The manufacturer wants the distributor to stock more and distribute all items, but the distributor doesn't want to tie up too much capital and only sells fast-moving and profitable items. The manufacturer wants the distributor to develop the sales network, but the distributor requires the manufacturer to regularly provide vehicles and people for distribution. The manufacturer wants the distributor to advance expenses for market development, but the distributor demands expenses be paid in advance or simply fabricates and embezzles. The manufacturer doesn't think about helping the distributor with distribution but just pushes inventory; doesn't solve issues with near-expiry products, defective goods, or market legacy problems, and makes empty promises beyond their authority... When problems accumulate, both parties start considering whether to continue cooperation.
"Mutual destruction" type: The manufacturer frequently changes sales models and salespeople, not resolving issues or promises made by predecessors. The distributor lacks strength and is unwilling to spend time and effort to work with the manufacturer, truly occupying distribution rights but not accepting or cooperating with any changes. The manufacturer is powerless against cross-region dumping and ignores distributor interests, leading to a breakdown in cooperation. If the distributor voluntarily gives up distribution rights, it's fine, but if the manufacturer forcibly revokes them, it will cause a melee and require solving many market legacy problems. Old distributors dumping goods, slashing prices, threatening salespeople, etc., can directly make the market chaotic and unmanageable.
These situations happen around salespeople all the time. If we classify manufacturer-distributor cooperation relationships based on the situation, we can map the "like-minded" type to "willing and capable" distributors, the "sharing weal and woe" type to "willing but not capable," the "different agendas" type to "capable but unwilling," and the "mutual destruction" type to "unwilling and incapable." Then we can apply situational management to different cooperation states, "prescribing the right medicine."
"Willing and capable" distributors: These distributors are determined to follow the manufacturer's pace. The manufacturer should maintain a good cooperative relationship at all times, be punctual and keep promises, and treat any issues in cooperation as their own, solving them sincerely. In addition to material rewards, give spiritual rewards, such as trophies and certificates of encouragement; at distributor conferences, have them give reports as flag bearers and dine with the general manager. These distributors appreciate professional training and guidance from the company, so the manufacturer should invest in this area, regularly inviting internal experts in HR, finance, distribution, and sales for internal training. P&G excels in this regard.
"Willing but not capable" distributors: These are like new employees within the company. The manufacturer should sacrifice more benefits and carefully nurture them, such as giving smaller inventory pressure, providing more vehicles and people for distribution, setting achievable goals, and increasing profit targets. The manufacturer must not focus only on short-term interests, act arrogantly, or threaten to revoke distribution rights with "big factory bullying small distributor" tactics. Remember, small saplings can grow into towering trees. Most of the loyal distributors of Hualong Jinmailang Group grew up with the manufacturer from "pedaling tricycles."
"Capable but unwilling" distributors: The reasons for this state are mainly two: (1) Problems in normal cooperation were not resolved, such as expired goods not handled, marketing expenses not reimbursed and becoming bad debts, or market issues not addressed by the manufacturer. (2) The manufacturer suddenly changes the sales model (e.g., starting direct operation for key KA stores, increasing distributor inventory, or forcing product profit compression) and reduces personnel and expense investment, making it hard for distributors to accept.
If it's the first case, for long-term market building, the manufacturer should first clarify the facts, then solve it once and for all, and keep evidence to prevent the distributor from reneging later. For reasons caused by changes in the marketing model, company leaders and employees should work together to persuade the distributor, reasoning and appealing to emotions, explaining the reasons for reform and the expected results. If necessary, use unconventional means, such as having leaders play the bad cop and employees the good cop at distributor conferences, or setting up a "Hongmen Banquet." When Yihai Kerry Group underwent internal marketing reform, a sales director told a top-three national distributor: "Either we die together, or we talk about feelings."
- "Unwilling and incapable" distributors: This is the type we least want to see. This state arises from poor management in the previous three states. In my 8 years of managing distributors, my approach to such distributors is simply "cut them off quickly," because there is no cooperative value left. We can't wait to find new distributors, and the market can't wait. Even if the distributor threatens salespeople or vows to dump goods from other regions, we must cut them off, because distributors won't hold grudges against money. The manufacturer just needs to compensate their normal losses. In China, I've never seen a distributor who would keep fighting with a manufacturer forever.
Classifying distributors for situational management seems simple but is complex because the four states are interrelated and can interchange at any time. This requires the manufacturer to first do its own job well during cooperation, genuinely consider the distributor's and the market's interests, and solve problems promptly. Only then can the harmonious relationship between manufacturer and distributor go further.
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