As a distributor's business matures, its rights and responsibilities can be simply divided into three layers: first, the owner with product rights as the core function; second, the general manager with operational management rights as the core function; and third, market operators with sales and maintenance rights as the core function. These three layers collaborate to manage the market effectively.
It is not difficult to see that the key contact point for brand owners among these three is the general manager with operational management rights. This role determines market development and also determines the core interests of both the manufacturer and the distributor. How can the function of this key position be maximized? Currently, transitioning from an employment system to a partnership system is the most common and effective way.
In recent market visits, some brand owners have begun to encourage, and some distributors have spontaneously developed their professional managers (general managers) into management partners, giving them shares, or even contracting some market areas to them, forming a community of interests, fully stimulating their management initiative, and achieving good results.
Although the mechanism is good, it is difficult to implement without support. Today, from a practical perspective, I will share some support strategies that brand owners provide to these "management partners."
Daily Work Guidance for Management Partners
The contracting model is not about replacing management with contracts, nor is it about contracting without managing. The reason is simple: the current business environment is complex, and distributor businesses cannot do without the support of think tanks. Brand owners should set up middle-level managers in regional markets as the communication contacts for "management partners," supporting and assisting in the completion of performance and process tasks, summarizing key work nodes each month, standardizing operations accordingly, and at the same time, maintaining a more stable collaboration rhythm with brand owners, completing various indicators in an organized and planned manner.
So what are the specific job responsibilities of these middle-level managers? They can be roughly divided into eight points:
- Personnel operation discussions to identify practical problems; 2. Training support to solve practical problems; 3. System/operational resources, the use of digital tools and the implementation of digital management; 4. Quarterly/monthly policy mechanisms, formulating different marketing plans based on different market competitive landscapes; 5. Expense/activity applications, liaising with brand owners to seek resource support; 6. Logistics/orders/deliveries, ensuring smooth logistical services; 7. Allowance and subsidy applications/disbursements, reviewing and disbursing brand owner support; 8. Management/assessment/verification operations, continuously optimizing the cooperative team and improving market operational capabilities.
To fulfill their job responsibilities and genuinely assist "management partners," middle-level managers must help them achieve the following specific work content:
1. Monthly Management Cycle Work Items:
a. Logistics: actual sales this month, calculate next month's sales forecast, and estimate next month's goods demand. b. Capital flow: confirm the profit sharing for completed sales last month, complete unified profit settlement, and arrange for the distributor to prepare next month's payment. c. Commercial flow: product entry into stores, display, transactions, and sales status; settle this month's expenses and incentives. Assist "management partners" in analyzing this month's sales performance, applying for next month's expenses, and verifying last month's expenses. d. Consulting: preparation of reports/materials and communication for monthly assessments.
2. Organize and Participate in the Company's Monthly Review Meeting:
Arrange for each "management partner" to participate in a fixed monthly meeting at the brand owner's office to discuss last month's performance, this month's priorities, and next month's policy applications. Specifically, this includes the following content:
a. Introduce a summary of each "management partner's" total performance last month and share successful cases. b. Last month's performance report: store visits/display scores/transactions; sales performance and product category feedback; analysis of "management partner's" morning meetings/line follow-ups/system execution/score execution. c. This month's key product category activities: new product and activity launches/new task assignments; resources and policies; this month's completion forecast. d. "Management partners" present and discuss their plans and applications within next month's budget with the brand owner's middle-level managers, who then provide action guidance and include them in this month's business plan for execution. Based on this, announce the "management partner's" M-month target achievement forecast and M+1-month rolling targets, which are consolidated and confirmed layer by layer to headquarters. e. Individual case discussions, personnel replacements, individual needs, etc.
3. Expense Applications and Upward/Downward Communication
a. Expense settlement: liaise with brand owners to settle relevant market expenses and subsidy support. b. Expense reimbursement: combine with the system to prepare expense verification materials. c. Expense analysis: analyze last month's market expense usage and effectiveness, and plan next month's market expense usage. d. Expense application: apply for next month's expenses.
4. Daily Interaction Between Brand Owner Middle-Level Managers and "Management Partners"
a. Around performance:
- Effective outlet count: month-over-month analysis of effective visits; 2. Outlet order count: month-over-month analysis of outlets placing orders; 3. Outlet distribution: month-over-month analysis of outlet orders; 4. Performance achievement: analysis of purchase amount and sales progress.
b. Around process:
- System scoring accuracy: analysis of differences in understanding and execution of display standards; 2. New store audit accuracy: analysis of differences in understanding and execution of new store audit standards; 3. New outlet progress: analysis of new outlet progress and incentive disbursement; 4. Effective transaction outlets: month-over-month analysis of transaction count/rate.
c. Around management:
- Downstream customer management: recruitment, settlement, goods demand and payment amounts, and order management cycle for downstream customers (distributors, wholesalers, etc.); 2. Salesperson management: recruitment, training, coaching, and conducting daily/weekly meetings.
Expense Support and Explanation for Management Partners
Doing market work requires spending money, and the use of expenses must have its principles, which can be summarized in three points:
a. If budgeted expenses can be reduced while achieving goals, the savings are shared among all; b. If expenses outside the budget are spent but not implemented or committed goals are not achieved, future applications will not be approved; c. Additional stable allowances and vehicle sales are related to salespersons' daily vehicle sales visits, with more work leading to more rewards.
Let's take a brand owner's implementation plan as an example:
1. Bundled gifts/rewards/support within and outside budget:
a. Market support expenses are based on actual terminal needs, with both fixed expense support (within budget) and additional expense application support (outside budget) based on grassroots operators' expense applications, meeting diverse market needs; b. Market support expense verification methods are flexible: both this month's bundled gifts with goods, next month's system evidence-based verification (do it and get it), and manual verification when standard conditions are met, with the longest verification time controlled within 1 month; c. Market support expenses have an additional pre-payment function during the start-up period: for example, pre-pay the first 2 months' store entry fees (additional gifts beyond the norm); pre-pay the first 2 months' new store incentives; pre-pay the first 2 months' salesperson allowances;
d. Market support expenses have a foolproof mechanism: if verification conditions are not met, quarterly reconciliation is added to maximize the guarantee of market support expense payment.
At the same time, evaluate the match between expenses and performance:
A: Performance achieved, high expense usage (self-earning less), evaluate the reasonableness of expense usage and whether there is room for improvement;
B: Performance not achieved, but high expense usage, evaluate process execution and whether to continue applying for expenses to drive performance (outside budget);
C: Performance achieved, low expense usage, earning more;
D: Performance not achieved, but low expense usage, evaluate expense usage during process execution: is it deferred execution or deducted next month?
2. Expense Application and Verification:
a. Verification process for market support expenses within budget:
System execution process:
- Salespersons use the system to submit new store/product display photos (far/near views)/store system orders;
- Salespersons use "store tags" & display agreements to report display outlets.
System review process:
- Management partners complete first-level scoring for "new store audit" and display agreement review;
- Brand owner middle-level managers complete second-level display scoring;
- Headquarters system completes second-level review of new stores and third-level display scoring; brand owner verification and disbursement process and three-party notification details;
b. Application & verification process for market support expenses outside budget: includes expense application and approval (management partners fill out the out-of-budget market support expense application form, brand owner middle-level managers review and draft a submission for regional/headquarters approval);
- System execution and inspection (use the system for evidence and report relevant activities with "store tags" and sales data);
- Brand owner's approval and notification issuance.
3. Specific management measures and processes for additional stable allowances and vehicle subsidies should pay attention to two points:
a. Standard operating procedures for salespersons' distribution process; b. Management measures and disbursement mechanisms for various subsidies.
4. Rebate settlement and notification: clearly inform all settlement time nodes to avoid productivity decline caused by information barriers.
5. Monthly income & earnings settlement: income and earnings should be fair, just, transparent, and timely.
Final Thoughts
Developing the general manager into a distributor partner is a complex decision that requires consideration of multiple factors. First, ensure the general manager has sufficient business acumen and experience to take on the responsibilities and role of a distributor partner.
Second, determine accurate equity ratios and distribution methods to avoid future disputes and cooperation issues, formulate detailed management and decision-making mechanisms, and clarify the relationship and responsibilities between the general manager and other partners.
Then, consider that after the general manager becomes a partner, adjustments to the distributor's existing business model and management structure may be needed to achieve better operational efficiency and economic benefits. Actively communicate and coordinate to ensure smooth cooperation between the general manager and other partners, jointly achieving the distributor's long-term growth goals.