Introduction: In a market with slow growth and fierce competition, distributors generally face sales pressure, and declining sales not only affect target achievement but may also lead to reduced profits and lost market share. Therefore, it is necessary to help distributors think about how to maintain profits while selling more. Although not easy, there are still some effective methods to reference. Below is an analysis of distributor Lao Liu's approach.

Lao Liu also faced similar problems, but he was open to new methods and willing to experiment. He worked with the manufacturer to develop a plan and piloted it 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 region during the same period. Lao Liu's method can be summarized in the following six steps.

1. Select Key Stores

  1. Collect market data: Sales representatives collect data from their assigned outlets, tallying sales of our brand and other relevant brands to determine category capacity and brand share, 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 the salesperson knows the outlet well, they can also add an incremental sales score.
  3. Select key stores: Screen from high to low scores, excluding poor-quality outlets such as those lacking single-store data, overdue receivables, or cross-region selling violations. The remaining top 5%-15% of outlets are designated as key stores.

2. Identify Drivers

  1. Classify outlet levels: Categorize key stores into tiers, for example, by sales volume into gold, silver, bronze, iron, etc., and provide different services according to tier.
  2. Determine key factors: 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.

3. Set Benchmarks

  1. Select competitors: After summarizing all key stores, identify the main competitors in these stores, which could be a single brand or a category of brands.
  2. Achieve first place in key factors: After clarifying the key drivers of TOP stores, benchmark against competitors' investment in these factors. Our investment must be greater than or equal to competitors' to ensure our key factors are superior, and set assessment standards.
  3. Develop execution standards: For each type of outlet, keep key factors within 7 items. Each factor must have specific, measurable, and achievable execution standards. For example, for facing, specify which brand to benchmark, where, and how many facings are considered compliant, 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 if not. Distribute to the execution team.
  5. Coach relevant personnel: After distributing materials, gather the execution team including salespeople, promoters, and inspectors for unified explanation and training, and conduct on-site drills to ensure understanding.

4. Allocate Resources After determining the operations, resource gaps will appear. The following methods can be used to allocate resources:

  1. Focus superior resources: Adjust resource allocation to concentrate resources from bottom-tier stores to key stores, ensuring that the top 5%-15% 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 in key stores for 3-6 months until the store no longer generates incremental sales. This does not affect original profits and may also earn more rebates and rewards. For example, if the distributor's gross profit 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; then the store can exchange for an additional 600 yuan in gifts on top of the original expenses.
  3. Seek manufacturer support: Lao Liu also obtained support from the manufacturer, which provided an additional 3% expense support for incremental sales. This way, both parties jointly invest in market building, achieving a 1+1>2 effect.

5. Adjust Incentives

  1. Adjust assessment: The original assessment scheme was unreasonable; the more salespeople sold, the less commission they got, and there were no special incentives. Therefore, change the commission system to encourage more work for more reward, enrich incentive measures, and include praise, honor, and levels.
  2. Reward incremental sales: Alternatively, without changing the original compensation plan, add incremental sales commission, using a portion of the incremental sales as an incentive fund to reward salespeople with high incremental sales, thereby driving overall sales growth.
  3. Set benchmarks: Rank salespeople by incremental sales proportion and cost-effectiveness ratio, identify those with high incremental proportion and low cost-effectiveness as benchmark salespeople, and award 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, allowing those with good cost-effectiveness to have more resources.

6. Strict Requirements

  1. Frequent visits: After investing resources to achieve first place in key factors, 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 between levels.
  3. Cross-checking: Establish a cross-inspection system using mutual spot checks between regions to ensure execution effectiveness and fair assessment.
  4. Reward and punish: Timely praise and reward regions and individuals who perform well, and criticize and punish those who perform poorly.

Through these six steps, you can quickly increase sales in key stores in the short term. After hitting the sales ceiling, you can gradually reduce incremental investment over 3 months and return to normal investment levels. During this process, some stores may see sales decline, but you will find that store sales are much higher than before, and some stores do not decline after reducing investment. Therefore, this method can effectively improve single-store output. At the same time, after improving the top 15% of stores, it can be replicated to other stores. By improving the output of major stores, you successfully help distributors sell more.

Source: 为之 (Wei Zhi)

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