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Recently, while giving a public lecture in Hangzhou, a sales manager from a food company posed this question to me:
"Now that our company has grown, we are required to go down the channel and set up county-level market agents. However, our existing old clients are mainly at the prefecture-city level, and their coverage includes the areas we need to develop. The old clients do sell our products in these areas, but very limitedly. Now we want to develop new clients, but there are issues in communicating with the old clients. The old clients refuse to give up these areas. We have tried many methods, such as giving the old clients a corresponding commission on the sales of newly developed clients, or counting the sales of new clients into the old clients' total sales, but the results are not good. So, I want to ask Teacher Cui: is there a better way to communicate with the old clients so that they will eventually agree to let us develop new clients, and agree psychologically?"
Many FMCG marketers will encounter this problem. Channel下沉 and refined operations are necessary for companies that have reached a certain scale; otherwise, relying solely on prefecture-level distributors will lead to rough market management. Therefore, channel flattening and marketing focus下沉 are inevitable trends for companies to cope with market competition.
How to solve the problem of uncooperative prefecture-level distributors? I think we can start from the following aspects:
Count sales into the distributor's quota, but give sufficient commissions. Although this company has given some commission to old clients, we need to review whether the intensity is enough to whet the client's appetite. Distributors are profit-driven by nature. If the company's profit margin allows, it is appropriate to sacrifice short-term gains for long-term market growth. This is also an effective transition or buffer.
Let old products continue to be handled by old distributors, but use new products to develop county-level clients. Of course, marketing personnel should first inform old clients to avoid "acting first and reporting later," which would make clients feel disrespected. At the same time, tell new clients that the market already has a certain brand foundation and they can operate boldly. This way, products do not conflict, which can alleviate direct conflicts between manufacturers and distributors, and gradually achieve the company's operational goals.
Assess old distributors on their development of county-level sub-distributors, sales volume, market share, product structure adjustment, terminal outlet development and coverage, etc. If they pass and market sales increase, they can continue with the prefecture-level agency model. After all, regardless of the channel model, the ultimate goal is to increase sales and market share. "One enterprise with two or even three systems" is worth exploring and trying. However, the marketing focus must be下沉, and control and maintenance must reach core sub-distributors and terminal outlets. For those who fail the assessment, have limited sales in county-level markets, or are stubborn, the company can forcibly cancel their prefecture-level agency, leaving them only responsible for their local prefecture-level market, and develop county-level markets separately.
The original channels can also continue to be handed over to the distributor, but for channels they have not opened, such as modern trade, catering, school, and other group buying channels, the company can set up dedicated county-level distributors to operate them, gradually changing the passive situation.
In fact, a company's development history is a history of continuously eliminating, optimizing, and integrating distributors. In the integration process, it is impossible to satisfy all distributors. It is necessary to eliminate unqualified distributors who cannot keep up with the situation and add dynamic new distributors to put market sales on the track of refined operations. This requires a price, but it is necessary. Procter & Gamble's "kill the big accounts" movement in the last century initially led to a sharp decline in sales, but the subsequent sustained and substantial growth proved that this strategy of channel and operational focus下沉 and intensive cultivation of the market was not wrong.
Channel reform is also a revolution. Since it is a revolution, it is inevitable to infringe on the interests of some old clients. But in the long run, as long as it is conducive to the sustainable development of the enterprise, these costs are worth it.