Introduction In a market with slow growth and fierce competition, distributors generally face sales pressure. Declining sales not only affect target achievement but may also lead to reduced profits and lost market share. Therefore, we need to help distributors figure out how to sell more while keeping profits unchanged. Although it is not easy, there are still some effective methods to reference. Below, we analyze the approach of distributor Lao Liu.

Lao Liu once faced similar problems, but he was open to new methods and willing to experiment. He worked with the manufacturer to develop a plan and ran a pilot in his region. After three months, the pilot stores achieved over 150% sales growth, while overall sales grew by 50%, compared to only 10% growth in the same period for the region. Lao Liu's method can be summarized in the following six steps.

Select Key Stores (01)

  1. Collect market data: Have salespeople collect data from their assigned outlets, tallying sales of our brand and other relevant brands to determine the category capacity and brand share of each outlet, so as to identify growth potential.
  2. Comprehensive scoring and ranking: After aggregating all outlet data, score and rank stores based on two dimensions: total outlet capacity and our brand share. If salespeople know their outlets well, they can also add an incremental sales score.
  3. Select key stores: Screen stores from high to low scores, removing poor-quality stores such as those lacking single-store data, with overdue receivables, or blacklisted for cross-region selling. The remaining top 5%-15% of outlets are designated as key stores.

Find Drivers (02)

  1. Classify outlet levels: Categorize and grade key stores, for example, by our product sales into gold, silver, bronze, iron, etc., and provide different service levels accordingly.
  2. Determine key elements: Identify the key drivers for each type of outlet. For example, for snack foods, in traditional small stores, location, facing, and inventory are important for driving sales, while in hypermarkets, location, multiple points, and promotions may be more important. Key drivers can be determined through correlation analysis or with the help of experience and expert opinions.

Set Benchmarks (03)

  1. Select competitors: After aggregating all key stores, determine the main competitors in these stores, which could be a single brand or a category of brands.
  2. Strive for first in key elements: After clarifying the key drivers of TOP stores, benchmark against competitors' investment in these elements. Our product must be equal to or greater than competitors, ensuring our key elements are superior, and set assessment standards.
  3. Develop execution standards: For each type of outlet, keep key elements within 7 items. Each element must have specific, measurable, and achievable execution standards. For example, for facing, specify which brand to benchmark, where, and how many facings count as meeting the standard, and strictly assess salesperson execution.
  4. Provide operational tools: After all standards are set, create an operation manual with operational instructions, business processes, and assessment systems, specifying what to do when, how to operate, what happens if done well, and what happens if not. Distribute to the execution team.
  5. Coach relevant personnel: After distributing materials, gather the execution team—salespeople, promoters, merchandisers, and inspectors—for unified explanation and training, including on-site drills, to ensure team understanding.

Allocate Resources (04) After determining the operations, resource gaps emerge. Resources can be allocated through the following methods:

  1. Focus superior resources: Adjust resource allocation to concentrate resources from bottom-tier stores to key stores, ensuring the top 5%-15% of key stores receive no less than 45%-80% of resource investment.
  2. Convert incremental gross profit into expenses: Invest all gross profit from incremental sales at key stores for 3-6 months until the store no longer generates incremental sales. This does not affect original profits and may even yield more rebates and rewards. For example, if a distributor's gross margin is 15%, they can promise 12% of incremental sales as a promotion fund, which stores can exchange for gifts of equivalent value. Suppose Store A originally sold 10,000 yuan per month but this month added 5,000 yuan in sales; the store can then receive an additional 600 yuan in gifts on top of the original expenses.
  3. Seek manufacturer support: Lao Liu also secured support from the manufacturer, receiving an additional 3% expense support for incremental sales. This way, both parties jointly invest in market building, achieving a 1+1>2 effect.

Change Incentives (05)

  1. Adjust assessments: The original assessment scheme was unreasonable—the more salespeople sold, the less commission they earned, with no special incentives. Therefore, change the commission system to encourage more work for more pay, enrich incentive measures, and include praise, honors, and levels.
  2. Reward increments: Alternatively, without changing the original compensation plan, add incremental sales commissions. Use a portion of the points from incremental sales as an incentive fund to reward salespeople with high increments, thereby driving overall sales growth.
  3. Set benchmarks: Rank salespeople by incremental share and cost-effectiveness ratio. Identify those with high incremental share and low cost-effectiveness as benchmark salespeople, and give them honors or promotions and raises.
  4. Adjust configuration: Adjust regional and resource allocation to ensure benchmark salespeople are responsible for the largest and most important regions; if not, reassign. Ensure benchmark salespeople are allocated the most expenses, giving more resources to those with good cost-effectiveness.

Strict Requirements (06)

  1. Frequent visits: After investing resources to strive for first in key elements, maintain a higher visit frequency than competitors to strengthen customer relationships and ensure key drivers remain first.
  2. More communication: Establish a continuous training and communication mechanism to ensure timely information transmission, smooth communication, and consistent understanding across levels.
  3. Mutual checks: Establish a cross-check system using regional mutual spot checks to ensure execution effectiveness and fair assessment.
  4. Reward and punish: Promptly praise and reward regions and individuals who perform well, and criticize and punish those who do not.

After these six steps, sales at key stores can be rapidly increased in the short term. Once the sales ceiling is reached, gradually reduce incremental investment over three months, returning to normal investment levels. During this process, some stores may see sales decline, but you will find that store sales remain much higher than before, and some stores do not decline after reducing investment. Therefore, this method can effectively increase single-store output. After improving the top 15% of stores, it can be replicated to other stores. By increasing the output of major stores, you successfully help distributors sell more.

Final Tips

  1. Focus on superior stores, adjust resource allocation, concentrate resources from bottom-tier stores to key stores, ensuring the top 5%-15% of key stores receive no less than 45%-80% of resource investment.
  2. Select key stores by screening from high to low scores, removing poor-quality stores such as those lacking single-store data, with overdue receivables, or blacklisted for cross-region selling, and designate the remaining 5%-15% as key outlets.

Source: 为之 (ID: gh_98f8e108c99d) Author: Liu Huaming, Senior Consultant at SMI, MBA from Sun Yat-sen University, specializing in regional expansion challenges across modern and traditional channels.

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