If you were given 100 million yuan for market terminal expenses, how would you invest it? In the FMCG sector, besides end consumers being our ultimate target users, the most important are the traditional offline retail outlets. There are nearly 5 million mom-and-pop grocery stores in China alone, plus hypermarkets and convenience stores, totaling about 6-7 million retail terminals. These retail terminals are business entities in themselves. Whether distributors or brand owners, they must consider investing in them, hoping that these stores will sell more of their products. When it comes to investment, a topic inevitably arises: How should we invest? Any enterprise or organization has limited resources. How to maximize efficiency under limited resources is a question every operator thinks about daily. As a manager, the boss demands capturing the national market, but you only have 100 million yuan. You can't say it's impossible. Things are accomplished when funds are insufficient. If money were unlimited, it wouldn't be business management. Many might think we should serve stores, not manage them. But pure service means meeting customer demands, and each store has different demands. Some stores have low output and contribute little to the enterprise, yet have many demands. Therefore, based on the varying contributions of stores and the limited resources of the enterprise, any distributor or brand owner should do "customer management" rather than customer service. The most effective way to manage customers is "tiered management." For example, during the recent COVID-19 outbreak, initially there was a chaotic approach where severe, mild, and suspected cases were all admitted to hospitals. But in early February, "tiered treatment" was implemented for patients. Suspected cases were isolated in designated hotels; mild cases were observed in makeshift hospitals; severe cases were treated at Huoshenshan Hospital. Gradually, the epidemic improved, and confirmed cases declined daily... This article focuses on "tiered management of terminal store customers," discussing how to spend 100 million yuan wisely to ensure maximum efficiency.
1. How to tier terminal customers? 2. How to ensure the input-output ratio is greater than 1? 3. How to implement tiered management for township customers?
-01- How to tier terminal customers? The first step in tiered management is to determine your resources and the number of customers to match. With 100 million yuan in terminal expenses, how many customers should you invest in? 30% or 50%? The expenses are borne by the enterprise, and the number of customers needs to be determined by management. If we divide the total customer base into four tiers, the top three tiers can receive both service and investment, while the last tier receives only service without investment. The specific proportions should be matched according to each enterprise's market coverage and human resources. For enterprises that already have customer data, they can filter based on historical data from the previous year, such as planning to invest in customers with an annual return of over 20,000 yuan, or investing in the top 40% of existing customers. Additionally, for markets planned for new development, sales data is unavailable, but basic terminal customer information for the local market can generally be obtained. Based on the service capacity of sales personnel, match the number of customers and target outlets. After determining the number of customers, the second step is to further tier the target investment customers. The specific operations are as follows:
1. VIP customers (8%-10%) VIP customers, as the name implies, are the core customers. They sign strategic cooperation agreements with the enterprise, usually in the form of annual agreements. Typical examples include regional chain internet cafes, regional chain restaurants/supermarkets, and well-known local factories. These top customers receive resources that are not simply about placing freezers or securing prime freezer positions, but rather 360-degree comprehensive services, such as regular high-level meetings and exchanges, and online resource sharing and promotion. You can even send mid-to-senior managers to provide offline sharing and training courses to these regional customers.
2. TOP customers (12%-20%) They sign TOP agreements with relatively fixed expense allocation. Depending on the customer type, personalized settings can be made, such as 100 yuan/month for roadside small supermarkets, or 1000 yuan/month for campus supermarkets. There is no comprehensive resource investment; only specific projects are locked in, such as SKU count, floor displays, and freezer positions. Specific details are reflected in the agreement terms based on the actual situation of the store. At the same time, monthly business targets are set for TOP customers, such as monthly sales of no less than 10,000 yuan.
3. Small TOP customers (20%-36%) For small TOP customers, there are no business targets; they only need to meet the agreement requirements. Even if they perform poorly and don't buy a single box in a month, the agreed fee is still paid. Typically, the fees for small TOP customers are relatively low, ranging from 50-150 yuan/month. These stores have relatively limited business flexibility. Monthly beverage sales are very limited. Even if you give more money and make more demands, sales volume won't increase significantly because the surrounding foot traffic is limited. This is an objective limitation on category sales capacity. The remaining 40-50% of terminal customers do not receive investment but are still serviced. Since frontline sales representatives visit by region and route, there is a long-tail effect. Combined, their contribution to business is still significant. Simple visits and service are provided, along with a "small package" sales promotion: two boxes of regular bestsellers plus one box of regular products, with a discount of 5 yuan for three boxes. (Note: The discount cost here is a sales expense, not a market expense.)
-02- How to ensure the input-output ratio is greater than 1? Of course, some may wonder how to ensure a positive input-output ratio. Therefore, under tiered management, there is also a "mobility system." For TOP customers, "cleanse" once every 3 months. For example, if they fail to meet targets within 3 months, or if they fail inspections during project execution within 3 months, there will be a warning period (buffer period). Office personnel will visit to understand the situation and report explanations. If still the same, they are removed. For small TOP customers, mobility is generally once a year. Of course, if some local distributors have good plans, they can consider cleansing twice a year. Additionally, if a small TOP customer's annual sales reach the sales revenue requirement for TOP customers, they can directly sign a TOP customer agreement the next year. Increase investment, but correspondingly raise requirements and set business targets. For VIP customers, generally there is no mobility. Because the number of VIP customers is small and they are easily identified, such as a Wanda Cinema operating in the local market, they directly become VIP customers without consideration. These customers usually have a one-store-one-policy approach, with no standard agreement. For example, cooperation with stores inside Foxconn factories requires both parties to sit down and negotiate, and sometimes profitability is not considered in the early stages. The mobility system ensures the overall input-output ratio remains positive to the greatest extent. At the same time, for situations where the ratio cannot be positive during daily sales, we require sales personnel to "distribute premium products." For example, if we invest 100 yuan in a small TOP customer, but because there is no business target, it may not be recovered for some reason. In this case, we require frontline sales personnel to distribute high-value products. Since there is a 100 yuan investment, the customer relationship should be good, so we ask the owner to stock 3 boxes of new products. New products have relatively higher gross margins, and through the introduction of new products, the overall input-output ratio can basically be ensured. Note: The business targets mentioned above refer to "bestsellers and old products." When the invested amount cannot be recovered, use "customer relationship investment" to introduce a small number of new products as a balance. It should be emphasized here: The new products launched by FMCG companies today are increasingly segmented. Unlike the past, when a new product could be sold to all consumers, now new products have target user profiles, and precise distribution is done based on these profiles.
-03- How to implement tiered management for township customers? Nowadays, more and more FMCG manufacturers are aware of the importance of county and township markets and are advocating "sinking markets." The allocation of market expenses to sinking markets also follows "tiered management." However, customer tiering in township markets is less complex than in urban markets. The density of FMCG sales points is generally estimated based on population. Therefore, for township markets, population can be directly used as an indicator, along with surveys by local office managers (town business types, economic levels, sales point situations, etc.), to directly divide into three levels: A, B, and C. Special environments or markets can be fine-tuned. Generally, A-level towns follow the urban tiering standards, but without VIP customers, mainly TOP and small TOP customers. Core actions include displays, stacking, and freezer positions, as well as some consumer activities. B-level towns only have small TOP customers. For township markets, one key point needs emphasis: Township markets differ from urban markets in characteristics. Looking at the annual cycle, urban market sales are very smooth and stable. But in township markets, there are obvious peaks and troughs. Especially during traditional festivals like Dragon Boat Festival, Mid-Autumn Festival, New Year's Day, and Spring Festival, the return peak brings a sales surge. Seizing these nodes and making special expense allocations is very necessary.
Summary: The above is the logic of customer tiering management. It is not only applicable to FMCG manufacturers but also to distributors with independent distribution capabilities. For FMCG manufacturers, directly investing expenses in terminal stores requires strong organizational management capabilities to match expense execution and verification. For distributors with independent distribution capabilities, customer tiering management is relatively easier, not only because they have historical sales data for precise allocation, but also because the corresponding "mobility system" can be shortened to quarterly or monthly, maximizing expense efficiency.
About the author: Pan Lihua, Sales Operations Manager at Swire Coca-Cola, student of Get University's 0th cohort. Over 15 years of sales management experience in Coca-Cola, familiar with FMCG market layout, strategy formulation, and team management. Skilled in market insight and team motivation.