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Chapter 3: About Sales Volume
The most basic indicator for measuring a market or a manager is sales volume, but we often say that sales volume is not everything, but without sales volume, nothing is possible!
- Various Types of Sales Volume
Drug sales: high volume, low price. Waste sales: low volume, low price. Defective sales: low volume, high price. Premium sales: high volume, high price.
For example, in many manufacturers' base markets, sales volume is high, but profit contribution is low; these are drug markets. The typical characteristic of these markets is that a single product supports more than half of the sales, unchanged for years or even decades, with both product and channel aging. Product aging is characterized by long existence, low price, and low profit. Channel aging is characterized by large customers sitting and selling, over-reliance on distribution, or overly flat channels with many small and weak customers.
Waste markets are mostly remote newly opened markets. If these markets cannot be developed with high-profile and high-impact strategies, it is better not to do them at all. Supplying low-priced products to distant new markets is not only a waste of effort but also a waste product. Even if the market is won, at best it becomes a drug market.
Defective sales mostly occur in remote areas, belonging to latent markets. Similar to lurking in enemy-occupied territory, the purpose of high-profile and high-impact strategies is to cultivate consumers and accumulate market presence, watch for competitors' weaknesses, and seek opportunities to attack. In these markets, maintain a top-down layout, avoid the misconception of small profits and quick turnover, accumulate market momentum to a certain level, gradually penetrate from points to lines to areas. Once a competitor shows a weakness, you can strike decisively, turning it into a base market and achieving premium sales.
Behind premium sales is an excellent base market. A base market is the company's stronghold, meant to provide supplies and blood transfusion for the company. If a base market cannot provide blood but only sucks blood, the company's end is near.
- How Does Sales Volume Come About?
How does sales volume come about? In many training courses, answers vary: some say sales are sold, promoted, or brand-driven...
1: Sales volume is often cruel!
For frontline salespeople, sales volume is "soaked" out. After blisters on feet, hands, and mouth, sales will surely come.
Visiting every household and shop, when effort is enough, feet get blisters.
In each store, arranging products and displays, moving things around, hands get blisters.
Explaining products, policies, and persuading each store owner repeatedly, mouth gets blisters.
For market managers, when sales have problems, they should be the first to "soak," then lead the sales team and customer team to collectively "blister." Promotional resources are important, but people are the foundation of sales. Over-reliance on promotions is like drinking poison to quench thirst. Strengthen the foundation; only when people move does sales become safe.
2: Sales Formulas
Sales Formula 1: Sales = Number of outlets.
This is a distribution rate formula. The more outlets, the greater the sales, a direct proportion. When sales have problems, self-check: Are sales concentrated in old outlets? Are old outlets lost? Is new outlet development slow? Unlimited, unplanned distribution rates are also terrible. When setting distribution target outlets, consider the brand support of the product. Placing Moutai in roadside shops not only fails to generate sales but also damages the brand. Appropriate outlet distribution rate control tests the marketing skill of a manager or even a company.
Sales Formula 2: Sales = Number of outlets * Turnover rate
The theory that sales is proportional to the number of outlets must be based on turnover. If a single store cannot turn over, the more distribution, the greater the loss, because expired and near-expiry products increase, just like eating without digesting!
So, how to solve the turnover problem?
The best way to drive turnover is "air force support." Advertising, buy-one-get-one, price reductions, free samples, and tastings can all be considered conventional air force methods. But regional managers are often just infantry officers; air force resources are not in their hands, so they must consider: how to solve turnover without air force support.
Facing this problem, many managers complain bitterly: lamenting the company's brand power and air combat capability. But they forget one thing: if there were enough air combat capability, infantry could be omitted entirely.
Solving turnover with infantry is a tough and tiring project. Like bloody street fighting, going door-to-door to sell, doing merchandising, suppressing competitors, persuading store owners to push your products, negotiating stock pressure stores, display stores, exclusive stores, and maintaining agreement stores according to standards.
Spring planting and autumn harvest are natural laws known to farmers; there is no myth of planting in the morning and harvesting in the afternoon. After sowing seeds (distribution), you need to water, weed, fertilize, catch insects, loosen soil, and a series of follow-up actions. The diligent farmer is rewarded by the land.
Sales Formula 3: Sales = Number of outlets * Turnover rate * Number of product varieties
When the number of outlets is solved and turnover rate is fine, the market tends to mature, and basic problems are solved; market managers can sleep soundly.
But often things go contrary to wishes: either chased by headquarters' sales targets, or walking on thin ice due to competitor pursuit. In such markets, while outlet count and turnover rate cannot have problems, increasing product variety is the only choice that is both offensive and defensive.
For a single store, a single product is weak in both sales contribution and defense. Adding new products on top of existing ones not only creates new sales but also effectively blocks and suppresses competitors.
The purpose of adding new products is to fill gaps, repairing price bands under brand planning and support, preventing blind spots and gaps.
The principle for adding new products is upward movement. Low-price attacks can hurt others but also yourself; harming others without benefiting yourself is a major taboo in marketing strategy. So when adding new products, consider filling gaps while following an upward price route, from terminal price, consumer pull, to channel profit, all should be a step above the old products.
Using product variety increases to drive sales is mostly applied in mature or semi-mature markets. Old products defend, new products attack, forming a wave-like rotation. Once this wild goose formation product line is formed, if the market manager masters the rhythm, it often becomes a "meat grinder" for competitors. In this formation, old products protect the market, new products launch wave after wave of attacks, and competitors are often at a loss.
But you must grasp the rhythm well, and also manage the channel and team. Management is about maintaining integrity, new products are about surprise. Only with integrity can surprise work; otherwise, too much surprise becomes abnormal and causes self-disruption.
3: Sales Monitoring
How to view sales?
Sales is a result! Only when sales are achieved do we see the numbers, so we consider sales a result indicator.
In marketing management, if you only stay at this level, you often fall into the helplessness of "autopsy after death."
Regional manager sales information self-check:
1: As of today, the monthly total, by region, by product, by customer sales achievement data, compared with the same period last year.
2: As of today, the annual total, by region, by product, by customer sales achievement data, compared with last year.
3: As of today, the current month's regional total, by region, by product, by customer sales achievement data. Compare these data with the overall headquarters data progress differences.
Doing sales clearly avoids losing battles in confusion. The success or failure of a market is not about winning or losing, but about clearly knowing the reasons for failure. The process of data tracking is an important part of market management. After obtaining these data, regional managers must have data analysis and perception capabilities, predict market changes through data analysis, and avoid the tragedy of autopsy after death.
4: Sales Traps
Sales are a treasure; bosses love managers who create premium sales, so the traditional practice of whipping the fast ox is often fully displayed. Thus, sales assessment takes up most of the weight.
Sales overdraft is a very dangerous game. Excessive sales pursuit is like killing the goose that lays the golden eggs. For sales (eggs), the market (goose) declines.
Let's look at some common unspoken rules that market managers use to achieve sales targets.
1: Pressuring customers. That is, pressing customers, eating tomorrow's food today. Overt pressure: near month-end, when sales are not meeting targets, give customers policy temptations to pay more for shipments, or even just place orders without picking up goods. Covert pressure: use guanxi and other tactics to ask customers to help a brother out.
2: Pressuring terminals. Use the excuse of "the wolf is coming" (competitors) to apply for promotions and press large quantities of stock to terminals, regardless of whether terminals will accept goods next month after large-scale stock pressure. The key is that long-term promotional stimulation causes terminal price confusion and slow response.
3: Cross-region dumping.
Etc.
How to avoid sales traps?
1: Have a clear understanding of various types of sales.
2: Monitor changes in outlet numbers and competitors, pay attention to outlet management quality, and master the richness and replacement of product varieties.
3: Establish a sales tracking and early warning system to detect and handle problems in advance.
4: Classify market management, with different assessment focuses for different markets.
5: Distinguish process indicators from result indicators, track assessments thoroughly, and avoid excessive pursuit of a single indicator and one-size-fits-all assessment.
Sales traps are mostly formed by lazy management that emphasizes results over process, sales over market. Excessive sales overdraft leads to increasingly tiring management. You should firmly believe in the principle that good process leads to good results, do every bit of market work well, practice the "basic skills" of marketing, start from the basics like horse stance, forget about sales and do the market, and sales traps will naturally disappear.