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Managing secondary distributors has always been a headache for companies and dealers, with many being dubbed "price killers," "brand killers," or "channel disruptors." Although many companies and dealers attempt to bypass secondary distributors to reach terminals directly, due to the special market environment in mainland China (geographical and transportation conditions), bypassing all secondary distributors is neither possible nor realistic. No company or dealer has the capability or financial resources to do so. In the end, most products still need to be distributed through secondary distributors. Since companies and dealers cannot avoid secondary distributors, they must find their "lifeline" and seize it.

In fact, the "lifeline" of secondary distributors is profit. Whether they earn through product price differences or use best-selling products to drive sales, their goal is clear: if you want them to cooperate, you must ensure their interests.

Once the "lifeline" is identified, companies and dealers must consider how to implement interest management for secondary distributors. All management activities should revolve around their interests.

How should companies and dealers implement interest management for secondary distributors?

Establish and stabilize a reasonable price system, which is an important prerequisite for ensuring the interests of secondary distributors. Many companies and dealers believe that as long as their prices are lower than competitors, secondary distributors can earn more profit. This is a misconception. Because if your price is low, everyone can sell at a lower price than competitors. Although the initial launch of new products may allow secondary distributors to earn higher margins due to price opacity, over time, prices will be pulled down, and secondary distributors may not necessarily earn more margin than selling competitors' products. Conversely, regardless of price level, as long as your prices are stable and secondary distributors' selling prices are stable, they will actively promote and sell your products if they can consistently earn a margin.

Use of sales accumulation cards in sales work. A sales accumulation card is a card issued by companies or dealers to secondary distributors to accumulate product sales. The card records the quantity and details of each purchase. After a certain period, companies or dealers provide a certain fuzzy incentive based on the sales volume and product mix. However, the card clearly states that secondary distributors must sell according to the recommended retail price. If they sell below the recommended price, they will not only lose the sales incentive but may also face supply suspension in severe cases.

The main functions of the sales accumulation card are:

  1. Since the card is in duplicate, it allows companies or dealers to monitor the sales trends of secondary distributors at any time.
  2. It serves as a long-term leverage over secondary distributors because they can only receive incentives through continuous sales. If they stop selling, they lose the incentive for previous sales.
  3. It reassures all secondary distributors, as often they cut prices out of fear that others will lower prices first, leading to customer loss. If this measure is implemented, as long as no one lowers prices prematurely, why would they forgo profits to cut prices?
  4. Because the incentive is fuzzy, secondary distributors cannot know the exact amount they will receive, so they are less likely to cut prices to reach a certain sales threshold. Moreover, if they cut prices, their previous sales may be voided, and they could face supply suspension.

In my previous work, I assisted a dealer in a certain area in managing secondary distributors using sales accumulation cards, and it proved effective. Despite our product prices being higher than competitors, our prices remained stable, and sales not only did not decline but steadily increased.

Creating more value for secondary distributors is also an important part of dealer interest management.

Provide excellent pre-sale, in-sale, and after-sale service. This is a key aspect of creating value for secondary distributors. On one hand, companies and dealers should actively guide secondary distributors on product sales, teaching them product features, selling points, and sales techniques. On the other hand, promptly resolve any issues during the sales process, such as replacing damaged cartons or defective products quickly.

Hold secondary distributor symposiums. Gather everyone to chat, have a drink, strengthen relationships, and discuss business strategies. These can be large meetings with all secondary distributors or small, flexible gatherings.

For example, a dealer surnamed Zhu in Anhui, during market visits, would invite secondary distributors from a township to a small restaurant for a meal. Through these conversations, he learned about market conditions and gathered their opinions. Over time, Zhu and these secondary distributors became close friends. When Zhu visited these markets, the secondary distributors would proactively accompany him on market visits, and the owners would invite him to their homes for meals. They would also actively report market conditions and offer various reasonable suggestions. If a dealer can build such relationships with secondary distributors, would they not actively promote his products or cut prices?

Launch new products quickly and timely. While building relationships is important, all products face aging. Once a product ages, sales decline, affecting secondary distributors' profits. Therefore, companies and dealers need to introduce new products promptly to stabilize secondary distributors' business and increase their profits.

Training. Many secondary distributors, despite doing well, want to expand their business scale but have limited time and channels for learning. They have a need for business skills and knowledge. Companies and dealers can meet this need by organizing training sessions through symposiums or providing learning materials. For instance, a dealer surnamed Gu in Jiangsu, after attending company training, would share what he learned with secondary distributors.

Just as dealers nurtured by a company show high loyalty, if companies and dealers can nurture secondary distributors, their loyalty will also be high.

Other ways to create value for secondary distributors include providing assistance within one's means. For example, a dealer surnamed Zhang in Henan noticed that many township secondary distributors wanted to send their children to school in the city. He used his connections in the education system to help coordinate and facilitate their children's enrollment. When these children encountered difficulties, he would also help solve them. Another dealer surnamed Li in Hebei would actively help secondary distributors when they faced issues such as being stopped by traffic police or fined, or when their vehicles were impounded.

In summary, when managing secondary distributors, companies and dealers must avoid the misconception that management means control. Instead, they should approach relationships with a mindset of mutual growth. Once you seize the "lifeline" of secondary distributors, why worry about managing them poorly?