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Developing new markets and new customers is a top priority for sales personnel. Based on my practical experience in the FMCG sector, I have summarized some tips, initially named the "7531" rule. Here is an introduction for readers:
I. The "7" refers to the two key time periods: 7 AM and 7 PM.
Around 7 AM, dealers are typically preparing stock and getting ready to depart. Visiting the wholesale market at this time allows you to effectively understand the actual situation of wholesale market merchants:
- (1) Dealer's product portfolio: Which product lines do they carry? Are there competing products? Can their product mix align with our company's products for the same distribution channels?
- (2) Dealer's vehicle situation: How many vehicles do they have? What types?
- (3) Dealer's personnel situation: How many helpers? What is their quality?
- (4) Dealer's operational status: How early do they open? How busy are their staff?
- (5) Dealer's contact information: This can be gathered from store signs, vehicle advertisements, shipping documents, etc. Register potential cooperative dealers in the wholesale market for further steps.
Around 7 PM, dealers are returning from deliveries. Visit the wholesale market again, and if possible, tour some dealers' warehouses to verify their actual situation. More importantly, drive around the county to see if any dealers have been missed. This can be done indirectly by asking retailers or by observing parked delivery vehicles (note: there are many large customers with warehouses but no storefronts—don't overlook them!). Record any unregistered dealers who might be potential partners.
II. The "5" refers to the five essential elements a dealer should possess.
If a dealer is interested in our products, or even strongly desires to sell them, they often make grand promises to us, vowing to sell our products well or guaranteeing that our products will be their priority. Emphasizing the five elements is to prevent dealers from being "willing but unable" or "able but unwilling":
Good network and social relationships.
- (1) Network relationships are reflected in: township second-tier distributors; county supermarkets, retail stores, closed venues (such as schools, large factory mines, detention centers), and terminal consumption places (restaurants, bars, internet cafes).
- (2) Emphasizing social relationships has two purposes: first, broad social connections can drive group purchase demand; second, they can reduce interference from functional departments, safeguarding the manufacturer's interests.
Sufficient working capital.
- For new product introductions, it's unlikely to avoid credit sales entirely; products won't be reordered only when inventory reaches zero; and products have seasonal peaks and troughs. Insufficient working capital will severely hinder healthy market development.
Necessary personnel and vehicles.
- In actual distribution, there are two approaches: one is dedicated personnel, vehicles, and areas; the other is dedicated personnel, vehicles, and products. Regardless of the approach, the allocation of personnel and vehicles must meet market demands.
- (1) Personnel: Check if the dealer has enough staff, their business acumen, and work attitude.
- (2) Vehicles: Are there enough vehicles to simultaneously serve both urban and rural markets? Are the vehicles suitable? For long-distance rural deliveries, except for beer products, box trucks are best; for urban deliveries, vans, small delivery trucks, electric bikes, or motorized tricycles are suitable.
Appropriate warehousing conditions.
- Safety, convenience, and ample storage are basic requirements for warehouses.
- (1) Safety: While human sabotage is beyond the manufacturer's control, I emphasize whether the warehouse's preservation conditions suit the product's characteristics. For example, for flour-based products, does the warehouse have ventilation, shade, and waterproofing/moisture-proofing? Additionally, if the dealer's product lines include items with severe physical or chemical conflicts in packaging, dedicated warehouses or storage areas may be needed to prevent cross-contamination, packaging damage, or spoilage—does the dealer have such facilities?
- (2) Convenience: I stress whether the manufacturer's delivery vehicles can easily access the dealer's warehouse. This is based on a painful lesson. I once had a instant noodle customer in a county in Zhumadian whose home and warehouse were in a township. The company used return vehicles over 10 meters long for delivery, but due to the poor warehouse location, the vehicles couldn't reach the warehouse, causing significant friction between the company and the dealer.
- (3) Ample storage: Relative to our products, does the dealer allocate enough storage space to accommodate varying inventory needs across seasons?
The company's products should hold a dominant position in the dealer's mind.
- In today's dealer landscape, exclusive dealers are rare; most carry multiple product lines and brands. I believe it's better for our product (like our daughter) to be the "first lady" of a second- or third-tier customer than to be the "mistress" (second, third, or nth) of a major customer. When assessing a customer's strength, consider both absolute and relative measures; what matters most is how much the customer will truly invest in our product in the future. We must prevent dealers from being "willing but unable" and, more importantly, "able but unwilling." As a manufacturer, you can judge this by:
- (1) Whether the dealer's product categories include competing brands (though if products are complementary despite brand competition, such dealers may still be viable);
- (2) Whether there are higher-margin product lines that would compete for the same resources;
- (3) Whether the product launch timing conflicts with the dealer's peak season for high-margin, resource-intensive products.
III. The "3" has two meanings: first, conduct surveys in more than three townships; second, identify about three prospective dealers (i.e., potential customers).
Select more than three townships for market surveys:
- (1) Investigate local cultural environment, economic conditions, consumption habits, etc.
- (2) Investigate the competitive landscape, such as leading brands, main specifications, second-tier pricing, promotional policies, etc.
- (3) Investigate the dealer's "public opinion"—listen to township second-tier distributors' evaluations of the dealer's resources, operations, credibility, and connections (focus on potential customers).
Identify about three prospective dealers.
- Based on market survey findings and different reactions during negotiations, combined with our product characteristics, initially select about three potential customers.
- The number should be around three—not too many to avoid hampering efficiency, nor too few to avoid being single-threaded and vulnerable to unexpected situations.
IV. The "1" refers to determining the ideal dealer.
No customer is perfect; we can only choose relatively ideal ones. Based on our surveys and analysis, rank the prospective dealers by their level of ideality, then proceed with negotiations, signing contracts, making payments, and stocking goods. The first one to pay and stock is our ideal dealer.
In summary, the "7531" rule is: "7 AM, 7 PM"; "5 elements"; "3 prospective dealers"; "1 dealer." I hope these insights can be useful to colleagues on the front lines of sales—that would be a great pleasure.