This article is excerpted from Mr. Fang Gang's book "What FMCG Veterans Do: Regional Manager Playbook". To purchase this book, please click "Read Original".
Terminal Sales Management Model and Action Breakdown
Sales = Number of Terminals × Turnover Rate × Number of SKUs.
The more terminal coverage, the faster single-product turnover, and the richer the product mix, the easier it is to achieve terminal sales. However, it is often easier said than done. Currently, difficult sales and slow-moving products have become headaches for companies and distributors. Without sales, there is no profit.
To achieve terminal sales, the market must be meticulously cultivated. Doing market work means getting people moving and terminals active; otherwise, it's just a warehouse. Products piling up in warehouses naturally won't generate sales. How do sales come about? The effect of product coverage in one terminal versus ten thousand terminals is vastly different. However, with terminal coverage, distributors also need to control terminals and accurately measure product turnover rates. After solving terminal control and turnover rates, the next step is to promote multi-variety and multi-SKU, which is a gradual process. So, what factors actually affect terminal sales?
I. Three Major Factors Affecting Terminal Sales
The three key factors affecting sales are occupancy rate, control rate, and visit rate.
Occupancy rate is usually calculated by region; a brand's occupancy rate is the ratio of its sales to the regional category market capacity. The higher the occupancy and control rates, the easier it is to move products. Among these three factors, the visit rate is the most important. Even in the hot summer, salespeople prefer to work in a cool and comfortable environment, but after product distribution, maintenance is needed. In such cases, distributors need to implement process management and incentive measures for salespeople.
Because salespeople neglect terminal visits, their products are inevitably suppressed or covered by competitors. When you're not looking, competitors' salespeople have already damaged your displays, posters, store signs, POP, and other terminal images, curbing product sales. Without these visual merchandising displays, moving products becomes even harder. Visiting customers and maintaining relationships requires being at the terminal, but using new media tools to connect and maintain relationships is also necessary. Implementing all three factors is not easy, but if they all reach above 80%, the sales problem will surely be solved.
"Our product is more expensive than competitors, has no advertising, and fewer market policies, so terminal owners don't want it." When a product faces sales difficulties, distributors often hear their salespeople complain like this. This is exactly when strong push from salespeople is needed, and they must adhere to four principles.
II. Four Principles to Stick to for Sales
The first principle is the "point-line-plane" principle. First, do well in one terminal store or image store, then expand to a street, then radiate to a region, and finally build a national brand.
The second is the 80/20 principle. We often think that 80% of sales come from 20% of outlets, but in reality, large supermarkets emphasize pull, while mom-and-pop stores emphasize push. These 20% of outlets only serve to radiate the business circle, influencing 80% of sales and profits.
The third is the matching principle. Channel layout should match product positioning. High-end products should appear in high-end venues to showcase their identity. Evergrande Spring's sales problems arose because it was distributed in circulation and convenience store channels. Additionally, Kunlun Mountain, using JDB herbal tea channels, also lost its "high-end identity."
The fourth is the "mushroom strategy" principle. All strong brands have followed this principle: first choose and occupy the most attractive target regional markets, then choose and occupy less attractive regional markets, and finally gradually radiate nationwide. Wahaha, Master Kong, and Wanglaoji all developed along the route from advantageous markets to balanced markets to disadvantageous markets. Distributors should do the same for distribution and sales: first do well in their strong coverage areas, then gradually expand business scope.
III. Five Countermeasures to Solve Sales Difficulties
Many factors affect product sales, and distributors need to address issues such as terminal control, terminal management, soon-to-expire products, and distribution timing.
Countermeasure 1: Terminal Evolution, Push First.
Distributors' control over terminals is a gradual evolution process.
First, convert blank stores where products haven't entered into target stores where products want to enter. Visit terminal owners frequently to build relationships and maintain goodwill. The more familiar you are with the owner, the stronger the relationship, and the better for product turnover.
At this point, target stores become relationship stores, also called loyal stores. Simply distributing products to terminals doesn't guarantee sales; sales often occur in stores with good relationships. In this process, the push from terminal owners is far greater than consumer pull. Then, in stores with good relationships, choose good positions such as front shelves, counters, and other prominent spots to place your products, and pay the terminal owner some fees, which greatly benefits sales. After distribution, consider how to occupy the terminal owner's inventory, manage the proportion of your product in stock, and ensure backup support for terminal sales.
Once inventory is in place, think about how to move products. At this point, discuss with the terminal owner to push your products, and based on monthly sales, give the owner rewards like TVs, microphones, or other incentives to ensure terminal push. After the relationship between the distributor and terminal owner becomes closer and you occupy a large portion of their warehouse and favorable display positions, leverage their push to develop the terminal into a distributor's exclusive store, and sales will surely follow.
Countermeasure 2: Terminal Management, Salesperson Responsibility.
Who is responsible for the terminal? Generally, salespeople are directly responsible for terminal stores. At this point, clarify and detail each salesperson's responsible terminal locations, and specify visit frequency, visit standards, and visit performance.
Normal visit frequency should be maintained at once a day or once every three days; long-term failure to visit terminals can easily lead to switching allegiances. Visit standards require terminal visual merchandising to build product image. Additionally, salespeople should go deep into terminals, communicate face-to-face with owners, not just stop outside the store and expect to reach cooperation intentions. In this process, a terminal inspection system must be established.
Distributors can use WeChat check-ins, GPS positioning to confirm whether salespeople enter stores, what they do inside, the standard effect of their visual merchandising, and their daily goals. This system should be linked to salespeople's salary standards, not just basic salary plus commission, but multi-dimensional assessment criteria. For example, reward for opening new terminal stores, penalize for losing terminal stores; reward for visual merchandising according to standards, penalize for non-compliance. These require systematic management; simply assessing employees by sales volume may bring quick results but also quick failure.
Countermeasure 3: Properly Handle Soon-to-Expire Products.
Management of soon-to-expire products is also important. Product expiration is neither the manufacturer's fault nor due to poor sales, but caused by distributor management. At this point, transfer near-expiry products from slow-moving locations to fast-moving locations for promotions, such as supermarkets and community convenience stores. If expired products are not handled promptly, it leads to returns and exchanges, increasing costs.
Countermeasure 4: Master the Best Distribution Timing.
By convention, most distributors choose to distribute in the off-season, which indeed captures the peak sales node. However, off-season distribution requires withstanding the pressure of slow sales, preparing for stock transfers, exchanges, and related services. Therefore, distribution should differentiate between peak and off-seasons; distributing in the middle period between peak and off-seasons can both prepare sufficient stock for peak season marketing and avoid missing opportunities.
Countermeasure 5: The 3-6 Rule for Distribution Rate.
The survival line distribution rate is 30%, and the brand line distribution rate is 60%. If a distributor's distribution and control rates reach 30%, survival is not a problem. But such a distribution rate inevitably increases inventory pressure, and over time, a large number of near-expiry products will appear. Only when distribution and control rates reach 60% in all business coverage areas such as cities, counties, and townships, will sales be relatively smooth, and the distributor's and company's reputation will be established.
Credit sales are also an important factor affecting sales. Credit sales occupy a large amount of distributor funds, preventing them from maintaining customer relationships well and reducing terminal push. Additionally, product placement, display, and product mix affect terminal owners' enthusiasm for recommendation. Terminal owners placing products at the entrance, in prominent positions, within easy reach of consumers, and bundling multiple SKUs, are more conducive to sales. Implementing new product listing scripts and building the distributor's influence at terminals are also important factors for promoting sales.
IV. Six Key Points to Remember for Terminal Sales
What is the most objective and effective way to look at terminal sales? Simply put, there are six key points.
First, look at distribution rate. Besides understanding your own product's distribution, it's also necessary to check competitors' single-store variety and inventory, and record competitors' price bands to adjust your prices timely.
Second, look at your product's visual merchandising. Distributors should have salespeople record the elements of creating product visual merchandising and use visual merchandising scoring tools to assess employees.
Third, look at shelf age. Check production dates, whether FIFO is followed, whether there are near-expiry or expired defective products, whether inventory is reasonable, and whether there are stockouts or overstocking.
Fourth, look at customer relationships. Whether terminal owners know the salesperson's name and visit cycle, whether there are complaints or grievances about the salesperson, and which of the four stages the relationship is in: no communication, formal talk, normal communication, or open conversation.
Fifth, look at service quality. Whether terminal owners know the delivery person's phone number, product delivery time, promotion tiers, and whether promotional items are withheld.
Sixth, look at the distributor's terminal influence. Whether terminal owners know the customer's name or company name.
When people move, products sell. The problems behind product stagnation are what distributors should pay more attention to. Sales is a system and hard work; there are no shortcuts or standard answers. After distributing products, continuous follow-up visits, maintenance, and follow-through are needed to sustain sales.
If you find this article helpful and want to communicate with the author, please long-press the QR code below to add Teacher Fang Gang on WeChat, and reply with: Learning
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