Jack Ma once said that the era of Li Ka-shing is over, and now is the era of the Internet. In fact, distributors still play a leading role in the market economy. The pattern of 'channel is king, winning at the terminal' still dominates. How can modern distributors remain invincible in the economic tide? The current relationship between enterprises and distributors is not satisfactory due to differences in interests and goals, and inefficient communication and management. The relationship mainly manifests in the following types:
Confrontational type: Disagreements on goals, resource support, and profit distribution, low mutual trust, leading to various conflicts, poor coordination, and tense relations. This type may break down at any time, fragmenting the channel system.
Master-servant type: This is an unequal relationship where one party depends on the other. It mainly takes two forms: one is when the enterprise has good brands and high profits but imposes harsh conditions on distributors, who have to obey to make money. Their loyalty is only for profit, not emotional; once a better brand appears, they may break with the enterprise. The other is when the enterprise's brand and profits are at a disadvantage, while the distributor is powerful and controls the market, forcing the enterprise to submit to the distributor and be led by the nose.
Loose type: The number of distributors exceeds the enterprise's management capability, weak awareness of distributor relationship management, and insufficient management. There is a lack of effective communication and management between manufacturers and distributors, especially insufficient depth in communicating with and managing second-tier and terminal distributors. Information transmission and feedback are not smooth, customer relations are poor, and loyalty is low.
Win-win type: The biggest feature is that manufacturers and distributors are no longer in a mutually exploitative buying and selling relationship, but rather a strategic partnership where they complement and share resources, jointly develop and cultivate target markets, share risks and benefits. This greatly enhances trust and loyalty between them; for common interests, they cannot do without each other, relying on and cooperating with each other.
Methods for Distributor Operational Innovation What is innovation? 'Innovation' literally means breaking the old and establishing the new, pushing out the old and bringing in the new. In a general cultural sense, innovation refers to creation, creativity, and insight. The term 'innovation' has existed in Chinese for a long time, but its widespread popularity in recent years stems from the introduction of the concept of 'innovation' in economics. What we advocate and encourage is precisely this economic innovation. I believe innovation is the act of updating ideas and practical models through invention, learning from others' advanced experiences, and thereby improving productivity. Therefore, true innovation must be premised on enhancing productivity; otherwise, innovation is meaningless.
Innovation in Concepts and Thinking Thinking determines the way out; strategy determines destiny. Many distributors' business performance stagnates and development is slow mainly because of backward concepts and unclear thinking. Therefore, innovation in concepts and thinking should be the premise and foundation for distributors' operational innovation. Distributors should abandon outdated ideas and establish the following new thoughts:
Actively participate in competition and establish the idea of becoming stronger and bigger.
Shift from being a 'sitting merchant' to a 'traveling merchant'.
Shift from short-term awareness to strategic awareness.
Shift from a sales concept to a marketing concept.
Shift from doing business to doing market and building brands.
Enhance terminal marketing awareness.
Establish the concept that service creates value.
Establish the concept of win-win between manufacturers and distributors, and between distributors.
No investment, no return; big investment brings big returns.
Establish the concept that 'ten parts operation, seven parts marketing'; without marketing, there is no long-term profit.
Innovation in Operational Measures (1) Operational Planning Most distributors do not have long-term plans; they take one step at a time and never become strong or big. Facing increasingly fierce market competition, only those distributors who stand high and see far, plan for the long term, and set clear business goals and plans can stay at the forefront and continue to develop. To conduct scientific operational planning, distributors must start from the following aspects:
Analyze their own current situation and evaluate their strengths and weaknesses. Are they satisfied with their current situation? What advantageous resources do they have, including capital, network, social relations, reputation, brand competitiveness and vitality, business thinking, and management capabilities? Also analyze where their weaknesses lie.
Analyze market opportunities and seek development opportunities. Analyze market capacity and prospects, competitors' strength and trends, what products or brands to operate to fully leverage and enhance their advantages, and where their market opportunities and development opportunities are.
Set clear planning goals and feasible measures. After clarifying strengths and weaknesses and identifying development opportunities, formulate a detailed development plan. The plan need not be as detailed and grand as an enterprise's development plan, but it should have clear thinking, clear goals, and feasible measures.
Implement seriously, with sufficient investment and management in place. The purpose of planning is to guide and enhance distributors' operational capabilities and performance. No matter how good the plan, without execution it is like a blank sheet of paper; it must be seriously implemented according to the detailed rules.
To this end, two things must be in place: investment in place and management in place. Also, note that the internal and external market environment is dynamic, so the plan must be adjusted according to changes in the external environment; the plan is not static.
(2) The 'Four Ones' Project Construction for Distributors
Choose a good brand. 'Good goods sell half' illustrates the importance of a distributor operating a good brand. A good brand is the greatest selling power. Operating a good brand is the primary condition for a distributor's success. A good brand has five conditions: (1) Good product quality: Quality is the foundation and life of a brand. Good quality not only refers to intrinsic quality and packaging quality but also includes product functional differentiation and variety differentiation. (2) Meet consumer needs: Only products that meet consumer needs can be readily accepted by consumers and sold. It is necessary to deeply analyze whether the product suits the local market's consumption level and psychology. (3) Good profit space: The fundamental purpose of distributors selling products is to make money. Even if consumers like a product, if it doesn't make money, distributors are unwilling to distribute it. But often 'good-selling products don't make money, and money-making products don't sell well.' For example, some famous brand products are good but have high price transparency and low profits, while some non-famous brand products have low consumer awareness but large profit margins. We all know: Profit = Total Sales Volume × Unit Profit. Only by finding products with relatively satisfactory total sales volume and unit profit can profit maximization be achieved. (4) Brand awareness and reputation. To gain broad and lasting consumer loyalty, a product must have good brand awareness and reputation. The length of time a brand has been on the market and the intensity of advertising determine the size of brand awareness; brand reputation is the satisfaction of the brand image in consumers' minds. Only brands with good product quality, thoughtful service, business integrity, and good development momentum have good reputation and strong brand loyalty. (5) Enterprise support. When we talk about enterprise support, we always think of manufacturer support in price, promotion, advertising, etc. As market competition intensifies, although enterprises will give distributors some support in these areas, this support is limited and always differs from distributors' requirements. Moreover, such support is often short-term; once support is reduced or stopped, distributors' business performance may decline. So what kind of support is the best? There is a saying in the Harvard Management Collection: 'Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.' Therefore, the most important and long-term support from enterprises is to help distributors enhance their operational capabilities and their ability to extract profits from the market. To this end, the best support is for enterprises to provide thoughtful marketing services, business training and guidance, market development and management. So a good manufacturer is not one that hands over products to distributors to sell but one that helps distributors sell well. A manufacturer that visits is not necessarily a good one; a manufacturer with favorable policies is not necessarily a good one; a manufacturer that gives you market methods is a good one.
Build a good network. A marketing network is like a farmer's field; it is the most valuable resource for distributors. However, distributors face challenges in network construction: (1) The sales network chain is too long, and logistics speed is low; (2) The sales network is not sound, with small coverage and many blank spots; (3) The relationship between distributors and network members is not solid; (4) Distributors' terminal operation capability is weak, lacking the ability, strategy, and talent to deal with super terminals. Distributors must attach importance to the development and management of marketing networks and build a sound and stable network system. Currently, the main network structures for distributors are as follows: (1) Traditional model: General distributor – second (third) tier wholesaler – terminal retailer (2) Direct sales model: General distributor – terminal retailer (3) Composite model: A mix of the above two models The traditional model has a long network chain, slow logistics, insufficient communication among network members, low profits, poor loyalty, and weak control over the terminal market, but it can quickly maximize market coverage. The direct sales model improves logistics speed, terminal control, and intermediate profits, but it directly faces terminals, requiring high human resources, transportation, promotion, and service, leading to higher marketing costs. Since distributors have limited capabilities, most cannot operate a large direct sales network. Moreover, the limited market coverage of direct sales cannot adapt to the vastness of the market and cannot control the market in the fastest time. The composite model combines the advantages of both traditional and direct sales models. Distributors can leverage the advantages of the traditional model while developing direct sales to directly develop the terminal market and enhance control over it. To fully leverage the advantages of the mixed model, on one hand, the traditional model must be reformed, that is, shorten the network chain as much as possible, eliminate third-tier wholesalers (most distributors have basically achieved this), and cultivate professional (specializing in a single brand, with strong terminal development and management capabilities) quality-oriented second-tier wholesalers. On the other hand, through the direct sales model, develop and manage quality-oriented (large scale, good business, good reputation) terminals, and use the advantage of direct sales facing terminals to strengthen marketing services, enhance communication with terminals, strengthen brand communication, and enhance terminal and consumer brand loyalty. Also, distributors must prevent conflicts with their second-tier wholesalers in the terminal market, such as price conflicts, promotion conflicts, and target terminal conflicts, ensuring harmonious development between second-tier direct-controlled terminals and their own direct-controlled terminals.
Cultivate a group of good downstream distributors. Good downstream distributors are those with advanced thinking, high enthusiasm, strong operational capabilities, large sales volume, and high loyalty. Only by cultivating a group of good downstream distributors can both parties establish a lasting, mutually trusting, win-win relationship with great commercial and personal value, and achieve super control over the market. So how to establish a win-win distributor relationship? (1) Factors affecting channel member loyalty: ▲ Satisfaction of member needs; ▲ Initiative in cooperation among members; ▲ Willingness to become repeat buyers; ▲ Willingness to recommend the company to others; ▲ Resistance to switching to competitors. (2) Five key points to maintain channel member loyalty: ★ Quality ★ Price ★ Brand ★ Service ★ Value ★ Profit (3) Development and management of second-tier distributors: ★ Principles for developing second-tier distributors: exclusive specialization, professionalization, and quality orientation. ★ Management of second-tier distributors: includes management of products, prices, regions, promotions, etc., aimed at maintaining good market order. ★ Services for second-tier distributors: profit guarantee, long-term cooperation, intellectual and material support, deep communication, emotional investment, tiered rewards, assistance in terminal development. (4) Terminal development and management: ◇ Terminal selection: Prioritize quality-oriented terminals with good business and reputation. Terminals are not necessarily better if larger; terminals with satisfactory sales volume are good terminals. ◇ Terminal development: Terminal development should not be blind; more terminals are not necessarily better. Terminal development must shift from quantity-oriented to quality-oriented, ensuring that each developed terminal is successful. ◇ Terminal management: Avoid the practice of emphasizing development over management. Strengthen terminal management, including variety management, price management, promotion management, and account management. Especially, put effort into how to increase sales in part-time stores, achieving a relatively low-cost transition from part-time stores to exclusive terminals. ◇ Terminal service: Service is an important way to create competitive differentiation, enhance brand reputation, improve customer relations, and increase terminal loyalty. The core of customer relations is integrity and profit. Terminal service should be based on integrity, centered on maximizing terminal operating profit, and shift from single service to composite service, combining physical and intellectual service, material and spiritual service, providing terminals with thoughtful and complete services such as product delivery, packaging recycling, publicity and promotion, and personnel training. (5) ★ Channel incentives. The purpose of incentives is to continuously improve the enthusiasm and loyalty of channel members, increase channel stability, and enhance overall competitiveness. Methods for distributor incentives: ★ Quantity and variety awards ★ Shelf display awards ★ Channel maintenance awards ★ Price and credit awards ★ Reasonable inventory awards ★ No credit awards (6) Strengthen customer relations and deepen mutual feelings. Although product quality, function, price, and other support are important factors attracting distributors to distribute products, emotion is also an important factor in maintaining stable distributor relationships. Specific methods include: holding social gatherings, holiday greetings, daily visits, thoughtful daily service, and evaluation of excellent distributors.
Cultivate a good team. Management must be people-oriented; a good team is the foundation for a distributor's success. As distributors continue to grow, first-tier distributors of the 'mom-and-pop store' type are becoming fewer, with functions increasingly subdivided and personnel increasing, forming their own sales teams. How to cultivate a high-quality sales team is a concern for many distributors. First, operators must continuously learn, recharge, improve their own quality, broaden their horizons, enhance confidence, clarify thinking and goals, and improve management capabilities. Second, they should fully utilize the advantageous resources of partner enterprises, using enterprise support in training, planning, and management to improve the quality of their own teams. To cultivate a marketing team that can do sales with 'five hearts': ★ Use perseverance to achieve results ★ Use enthusiasm to engage in sales ★ Keep confidence for yourself ★ Give love to customers ★ Dedicate loyalty to the enterprise Let your marketing team do the 'five roles': ★ Propagandist: promote product, brand quality, service, and profit advantages; ★ Information officer: collect terminal opinions and suggestions; competitor information; ★ Service provider: diligent in hands, mouth, legs, eyes, and brain; ★ Instructor: consultative sales, providing intellectual help to terminals; ★ Administrator: variety management, price management, and vividness management.
Establish an efficient operating mechanism. Internal management and incentive mechanisms (1) ■ Innovation in operating system. Actively move towards corporatized operation to enhance distributors' operational capabilities. So-called corporatized operation does not mean just changing the name to a company, but managing in a corporate manner, mainly reflected in the diversification of distributor functions, efficient management and service, and maximized and sustained benefits. (2) ■ Innovation in internal management and incentive mechanisms. From appointing people by favoritism to appointing people by merit. Treat employees equally, whether relatives or friends, and promote based on talent. ■ From human-relations management to humanistic management. Shift from face-saving, loose management to management full of care and warmth, enhancing employees' sense of responsibility, belonging, and achievement, and improving their self-management capabilities. ■ From 'big pot rice' (equal distribution) to distribution according to contribution. Shift from fixed salary to dynamic salary, distributing compensation based on performance evaluation. Performance evaluation should not only include sales volume but also terminal development, management, and service. Evaluation indicators should be set in advance and quantified.
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