KPIs were formed during the mature phase of the market. This is not an article sympathizing with salespeople, but a deep dive into how brands and distributors can break free from deep distribution and enter a new growth track. Because it involves new growth models, it may be challenging to read. Liberate salespeople from inappropriate deep distribution KPIs, but re-arm them with better incremental actions to re-enter the growth track. Deep distribution KPIs have become the industry standard and have been effective for 20 years, so there must be a reason. The actions of deep distribution are not complex, but only industry leaders execute them best. The main reason is the strong management capabilities of industry leaders, who have rolled out a simple system nationwide, and the KPI system has been instrumental. Liberating salespeople, some instinctively react: Does that mean letting salespeople do whatever they want? For "sales champions," not managing might be better than managing. A boss told me that when he was a "sales champion," the stricter the company managed, the worse his sales. But when he became the boss, he managed frontline sales even more strictly. This is the difference between "prescribed actions" and "optional actions." The strength of a company lies in its "prescribed actions"; the strength of "sales champions" lies in their "optional actions." Compared to small companies, large companies can make ordinary people achieve extraordinary results because their management actions are in place. Deep distribution evolved from early exploratory actions to standard actions, and finally to KPI assessment actions. It is both a solidification of past actions and an alienation from the changes of the times. Actions that were effective 10 years ago are now seriously out of touch with reality after being solidified. Note particularly: When I deny the incremental value of deep distribution, I am not denying the value of distribution. Distribution is eternal; it is the ability to respond to user needs and fulfill them. Deep distribution, on the other hand, is an incremental channel behavior carried out through distribution. Deep distribution can no longer squeeze out sales. The essence of deep distribution is not targeting consumers, but primarily targeting terminals, squeezing out more sales from terminals. Deep distribution has seven major actions: relationship building, distribution, shelf management, inventory pressure, display and end-cap displays, promotion, and in-store demonstration. In these seven actions, manufacturers (manufacturers and distributors, hereinafter) are basically the active party, and terminals are the passive party. Let's analyze these actions: What benefits do manufacturers gain? What benefits do terminals gain? Finally, determine who is the beneficiary and who is the enabler. Below is an analysis of the benefits for each party in the seven major actions of deep distribution. From the analysis conclusions, they can be roughly divided into three categories: First category: Actions where both parties benefit: display and end-cap displays, and promotion. In the short term, for display and end-cap displays, manufacturers provide resources (costs), and terminals gain benefits, essentially an equivalent exchange. For promotions, both parties see increased sales. In the long term, manufacturers are the beneficiaries. The current supermarket renovations have basically eliminated brand displays, end-cap displays, and promotions, which is exactly this. Second category: Actions where manufacturers benefit more than terminals: inventory pressure. Manufacturers use policies to pressure inventory, and terminals consequently stock more. On the surface, both parties benefit. Manufacturers see increased sales, and terminals effectively lower their purchase prices. In the long term, channel prices become chaotic, and terminal profit margins decrease. Third category: Actions where manufacturers benefit: relationship building, distribution, and shelf management. The analysis of the seven major actions of deep distribution concludes: Sales are squeezed out of terminals, and it is the result of terminals tilting toward a certain brand. Teacher Fang Gang was once a deep distribution expert in the beer industry. He gave a vivid description of deep distribution: bribery marketing behavior towards terminals. This bribery marketing behavior may involve spending time and smiling, or buying terminal resources. In short, it makes consumers who have already entered the store buy more of your products. Correspondingly, competitors' product sales or shares will decline slightly. Because the number of consumers entering the terminal does not change due to deep distribution actions. In the past incremental environment, through bribery deep distribution actions, it was indeed possible to gain benefits from tilting toward a certain brand when terminal total traffic was relatively fixed. After entering the stock era, it has entered terminal resource exchange. Relationship building no longer works. However, now no matter how many actions are taken, sales cannot be squeezed out, and it is even harder to exchange relationships for sales. Re-examine the sources of growth. In all actions of deep distribution, manufacturers are the absolute or main beneficiaries. Or rather, deep distribution originally had terminals empowering manufacturers, tilting terminal total traffic toward a certain brand. So why have these deep distribution actions been effective for over 20 years, and terminals are still so willing? First, during the peak of deep distribution, the FMCG industry was in a growth period, terminal sales were growing, the pie was increasing, and terminals were willing to share the pie with manufacturers who had relationships and resource exchange. After entering the stock and shrinkage era, deep distribution encountered difficulties, and the two are actually synchronized. Second, even actions without resource investment, such as relationship building, distribution, and shelf management, are based on manufacturers being willing to put in effort and smile, showing respect for terminals. This is also a psychological benefit for terminals. After entering the shrinkage era, spending time smiling is purely a waste of time. Salespeople and terminal owners know this well, but KPIs still reinforce check-in behaviors. Excessive inventory pressure and promotions on terminals lead to price chaos, which in turn affects distributor profits. It can be said that current deep distribution has been alienated, no longer generating growth, but instead causing some leading brands to be unable to find distributors to take over. At this point, strengthening past deep distribution actions has no substantive meaning. It either becomes staged check-in relationship building or actions that pressure inventory and disrupt prices, which do not help generate growth. In the overall shrinkage environment of FMCG, where does growth come from? Wherever growth is, design salesperson actions accordingly. My judgment is: The shrinkage of mass products is irreversible; however, segmented and niche products are growing rapidly. Take a few industries as examples:

  • Beer industry: Industrial beer is shrinking, but craft beer is growing.
  • Instant food industry: Instant noodles are shrinking, but the large instant food category is growing rapidly. Luosifen, hot and sour noodles, self-heating hot pot, self-heating rice, instant pasta, instant vermicelli/rice noodles, instant porridge/soup, noodles with vegetables and eggs, board noodles, sour soup noodle leaves, etc. Each category is not large, but a significant portion of the instant food share has been divided by emerging categories.
  • Dairy industry: The dairy duopoly is declining, but small and medium-sized dairy enterprises are quite active. In the past, small and medium-sized enterprises that disappeared are now active in segmented and niche fields. In the past, small enterprises meant low-end, but now segmented and niche occupy the high end of the contempt chain. In the past, industry giants wanted to grow by creating big single products. Now the era of creating big single products is over; growth is in segmented and niche markets. After entering the shrinkage era, the category landscape has changed. Industry shrinkage is not universal but structural. Originally, the long tail of the industry was in small and medium-sized enterprises; now the long tail is in segmented and niche markets. Some small enterprises that used to do low-end have found survival space in segmented and niche fields and are living comfortably. Wherever growth is, focus is there, and marketing actions are there. The traditional deep distribution KPIs, which overly focus on relationship actions and big single product growth actions, can no longer adapt to the new growth logic. Distribution cannot be abandoned, but deep distribution should be abandoned in time. Re-examine channel value. The forms of Chinese channels and retail terminals have changed dramatically compared to the early days of deep distribution. When discussing channels, we cannot limit ourselves to traditional channels; we must consider new channels and retail factors such as e-commerce, instant retail, supermarket renovations, and snack collection stores. I will discuss from three levels: high, middle, and low. First level: High-level channel layout - potential energy channels and kinetic energy channels. This is the view of Ms. Lu Xiuqiong, former CMO of Coca-Cola and now senior global expert partner at Bain. As shown in the figure below. Potential energy channels plant seeds - forming brand/IP influence; kinetic energy channels monetize - converting to sales. The two complement each other. The traditional dual-wheel drive of brand-driven and channel-driven must now form a new dual driving force. Second level: Middle-level channel matching: channel value and product resource allocation. In the mass product era, big single products filled the shelves, and it was natural to assess shelf coverage rate. Now for segmented and niche products, how to assess shelf coverage rate? Only terminal matching rate can be assessed. Coca-Cola's OBPPC is well-known in the FMCG industry. Ms. Lu Xiuqiong has now developed it into a new OBCPP, which is more suitable for the current environment. See the figure below. In the past, Coca-Cola's OBPPC could only be admired from afar and was hard to learn. Now we must learn it. In the shrinkage era, we must achieve the best match between channels and brand resources. Terminal matching rate means precisely matching the right products and resources to the right terminals. Lu Xiuqiong calls it the scenario growth methodology. Third level: Scenario breakthrough and monetization: potential energy scenarios and mainline scenarios. The Scenario Marketing Research Institute has proposed two important concepts: potential energy scenarios and mainline scenarios. What is a potential energy scenario? If a scenario has high-potential-energy people (KOLs), or high-perception scenarios, or complex scenario roles (such as banquet scenarios), or star-level users, it can have a diffusion effect on scenario effects. Such scenarios are high-potential-energy scenarios. High-potential-energy scenarios can generate huge influence on the channel and user sides, creating spillover effects. For example, Mingren Soda Water's strategy in the "Fire Dragon" scenario (hot pot, barbecue, crayfish) is: Do a store well, light up a street, move a city. Because the Fire Dragon scenario is a typical potential energy scenario. The spillover effect of potential energy scenarios is the core of the entire operation. It spills over from one scenario to more scenarios, from consumption scenarios to distribution channels. What is a mainline scenario? It is a scenario with large sales. However, the largest sales may only be the result, because the scenario with the largest sales may not be accessible. When the value of potential energy scenarios is tapped, sales in mainline scenarios are generated. Liberate salespeople, re-arm salespeople. The previous sorting of channel resources has raised a new question: It seems that salespeople do not exist in the channel. Yes. In developed countries like Europe, America, and Japan, there are no 2b salespeople and no 2C salespeople. The term "salesperson" does not exist in European and American marketing textbooks. Underdeveloped countries do not have deep distribution. Developed countries also do not have deep distribution. The future battlefield for salespeople is not in 2B and 2b channels, but in bC integrated scenarios, especially potential energy scenarios. Potential energy scenarios break through, mainline scenarios harvest. Channel distribution only undertakes user response or fulfillment capabilities. Potential energy scenarios generate consumer awareness and create demand through scenarios. Online and offline channels convert awareness and fulfill. In the deep distribution era, a 2b salesperson covers 20-40 terminals with regular visits. This position must be defended. If you don't defend it, others will take advantage and occupy it. The KPI assessment of deep distribution is also based on this thinking. Future growth lies in potential energy scenarios. Only through bC integration can we enter consumption scenarios; otherwise, we are insulated from the C-end. Deep distribution has already established relationships with terminals (b-end). Using b-end relationships, we can enter scenarios, reach C-end, and empower terminals. This is exactly the advantage salespeople already have. Liberating salespeople does not mean liberating all salespeople from deep distribution actions, but we must first liberate some and re-arm some. For example, many companies' "flying teams" now undertake the role of scenario breakthrough. So, what should re-armed salespeople do? First, according to channel (terminal) value and product resources, follow the OBCPP logic to complete product matching. In the past, we assessed shelf coverage rate; now we must assess the match between channels and products. This is the premise for scenario breakthrough. Second, find potential energy scenarios and activate them. Draw a scenario roadmap, and according to the roadmap, activate more scenarios. Activating scenarios activates demand; after activating demand, delivery and fulfillment can be done by any third party. When the actions of activating scenarios are optimized, they can become new KPIs. Salespeople armed with new KPIs - in the future, there may no longer be the title of "salesperson" - do not need to cover channels, only need to add the finishing touch. The KPIs of deep distribution are uniform across the FMCG industry and have remained unchanged for a long time. People are used to them, even to the point of muscle memory. However, new KPIs will be phased. Because activating scenarios is itself a phased task. Different scenarios have different KPIs. For example, Mingren Soda Water no longer supports distributors' 2b salespeople, but instead supports 2C user operation personnel in scenarios. City managers, scenario specialists, and communication officers form the iron triangle of scenario operation. According to the scenario roadmap and standard actions, activate scenarios one by one. Once a scenario is activated, move to the next scenario on the roadmap.