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Introduction: Mr. Jiang has long been a key contributor to a beer company (and he considers himself a meritorious veteran). During the company's expansion, he established the entire sales network in the Hengshui area of Hebei, and sales have been under his control. However, because he also deals in baijiu (white spirits), which typically covers a larger sales area than beer, he treated the beer sales area as an extension of his baijiu territory. As a result, he saw cross-regional selling (diversion) and price undercutting as his right. The beer company, since surrounding areas were not yet developed, tolerated this behavior, viewing it as market penetration and circulation, and did not penalize him.

But as the company's sales grew rapidly, it began seeking new distributors to jointly operate the Hengshui market with Mr. Jiang, with no intention of granting him exclusive agency rights. Feeling his contributions were not respected, Mr. Jiang escalated his cross-regional selling and price undercutting, and even began allying with distributors from other regions to oppose the company. After market research and careful consideration, General Manager Li decided to revoke Mr. Jiang's distribution rights—what we commonly call "cutting" the distributor.

However, after being cut, Mr. Jiang was furious. During a joint ordering meeting organized by the new distributor selected by General Manager Li, he gathered a group of distributors to cause a disturbance. He brought a bottle of beer that he had tampered with, claiming it had quality issues and that selling the company's products would harm consumers, urging distributors not to carry the company's products. The event ended in chaos, with both parties parting on bad terms.

When a company "cuts" a distributor, similar situations of broken relationships and mutual damage can occur, sometimes even leading to media exposure or legal action. The above is just one example. How should we properly handle the termination of a major distributor to ensure a peaceful separation?

This is a very tricky issue with no absolute perfect solution. However, thorough communication, thoughtful planning, and, when necessary, putting yourself in the other's shoes to consider mutual benefits are crucial and necessary.

Since some distributors lack growth and development concepts and are no longer suited to a company's market expansion and reforms, there was a successful case in a certain region of Liaoning where a company effectively cut off a problematic distributor. Let's look at how the regional manager approached and executed it:

1. Forecast sales in advance and prepare temporary backup from surrounding regions

When you mentally prepare to cut a problematic distributor, you should start looking for surrounding distributors as replacements. Often, the distributor may not notice because the "encirclement" action occurs in surrounding markets, avoiding major conflicts before the action begins, thus preventing the plan from stalling. Even if the distributor notices, they have no grounds to complain, though they may become more cautious. Therefore, developing new markets and distributors in surrounding areas is one of the best preliminary steps before revoking a distributor's rights.

Reforms always come with pain, but channel reforms and distributor selection cannot afford a decline in sales. So, forecast sales in advance, fully estimate the potential loss from cutting a major distributor, and ensure other distributors can compensate for it. The regional manager bears the responsibility of finding a backup team to keep the market unaffected, prevent competitors from seizing opportunities, and maintain strong sales. Thus, the regional manager must be thoroughly prepared in advance.

2. Use company resources to dismantle the distributor's terminal base

Why are concepts like "reverse channel building," "terminal orientation," "deep distribution," and "terminal service" so popular now? Companies chase these ideas because they align with the principle of better serving consumers. By capturing terminals, you get closer to consumers and gain core competitiveness, and doing it first creates differentiation.

This same thinking can be applied when revoking a distributor's rights: Before deciding to revoke, the company should, under various pretexts (such as improving distribution rates or enhancing visual merchandising), strengthen terminal services in the distributor's area. Conduct terminal visits or surveys to gather data on store locations, sales, product mix, foot traffic, etc. Gradually undermine the distributor's foundation.

Of course, if the distributor to be revoked is a pure wholesaler or sedentary merchant who never pays attention to terminals, it's even easier—they lack a solid foundation and cannot maintain long-term distribution status in the market.

3. Re-divide sales areas and select new customers within the region to replace the old distributor

Distributors won't easily let the company "destroy" them. Once they sense any change, they will likely cause trouble. While surrounding distributors temporarily fill in, the company must also study the situation carefully and prepare multiple contingency plans. Besides calmly negotiating, be prepared for the distributor to act out because they feel "suddenly killed." At this point, since the first step has been taken, you must follow through without hesitation!

New customers can be promoted from the old distributor's better second-tier wholesalers or selected based on new distributor selection principles. At this time, it's best to choose only suitable candidates—those who can seriously work the market and have certain market and distribution capabilities. Don't stick to the old method of only considering strength without considering consequences.

"Only choose the suitable, not the biggest or strongest" is now the most popular distributor selection principle.

4. Increase terminal promotions to stabilize sales

As the new distributor quickly integrates, consider terminal promotions during the transition period to help the new distributor quickly stock shelves and fill the gap left by the old distributor. Additionally, promotional policies may prevent the old distributor from using their remaining stock to cause trouble, or at least minimize the damage, and help terminal stores accept the new distributor faster.

If you want the new distributor to quickly establish a position and expand influence, the company can also invest some resources to co-host product ordering meetings with the new distributor to attract attention, maximize their network and market impact in a short time, thereby meeting sales requirements.

5. Invest appropriately in consumer promotions

Consumer promotions are another "double insurance" measure, similar to terminal promotions, that regional managers use to mitigate sales impact. They also help expand the new distributor's influence through various channels.

The above are the usual steps and methods we adopt after revoking a distributor's rights. If we extend this, we can also consider the following deeper measures to resolve the situation more satisfactorily:

1. If conditions allow, temporarily set up a company office or liaison station to coordinate business

If we don't want the new distributor to become too large or deliberately elevate their status, we can enter the market ourselves and jointly operate in the early stages. This is a lesson from the past, allowing the company to penetrate market management from the start and maintain control. Establishing offices, liaison stations, or deploying more salespeople to manage channels, terminals, and even promotions can basically eliminate any chance for the old distributor to stage a comeback or cause trouble.

This method essentially changes the traditional wholesale model, allowing the company to enter the market and assist distributors in managing it. This is also a result of companies transforming and gaining deeper understanding of channels as markets evolve.

2. If possible, transform the old distributor's role

Often, a company revokes a distributor's rights because the distributor no longer adapts to market development in certain aspects. However, any distributor still has cooperative value. We can conduct detailed analysis to find an area for continued cooperation, which is also a form of revoking distribution rights. For example, let the distributor continue as a delivery provider (becoming a distributor rather than a dealer), or revoke the rights first and then negotiate to become a distributor for a single brand (lay off first, then rehire).

"Goodbye can still be friends." If we can truly give the "cut" old distributor a rebirth and new cooperation, that's the best outcome. This minimizes the negative impact of the "cut."

3. "Air-drop" the distributor to new markets or regions

Every company has strategic key sales regions, strategic key market share regions, and possibly strategic key development markets or key profit markets. If the old distributor is no longer suitable for key sales regions, we can "air-drop" them to other markets, such as key development markets (these revoked distributors are often masters at market development) or key market share regions, where they can continue to contribute.

If the company doesn't have such divisions, the regional manager can place them in adjacent regions, allowing them to become "new veterans" in expanding territory.

Generally, companies nowadays don't favor revoking distributors; they prefer transforming them. So, we should use company philosophy to communicate with distributors, helping them progress. Mutual progress is the fastest way to achieve goals. This also encourages distributors to understand that "reality is reality"—don't try to stop the tide of market progress or stay stagnant. If they don't progress, they will eventually be abandoned by the market. We should remind distributor friends that in the end, it won't be the company that eliminates you; the market will ruthlessly weed you out!

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