A few days ago, a reader from Zhejiang Transfar Company sent me an email raising three questions about terminal management. I think they are quite representative, and many companies encounter these issues in sales. Here are my views.
Question 1: Who should develop and maintain terminals—should the manufacturer arrange its own staff or should the distributor's people do it?
In fact, every company has a different way of controlling terminals because resource allocation differs. It's hard to copy, but there are some commonalities. My view is that terminals should not be directly developed and maintained by the manufacturer. Doing so is costly, inefficient, and difficult to supervise. Resources controlled by salespeople are often abused because the business isn't theirs; human nature dictates this outcome. Also, distributors would think it's none of their business, leading to waste and lack of supervision. Initially, Coca-Cola insisted on manufacturer control of terminals. Despite having a complete monitoring system, Coca-Cola's share of the Chinese beverage market shrank from 30% in 1989 to 10% in 2008. Many scholars' research on Coca-Cola marketing is still stuck years behind.
I believe terminal development and maintenance should be delegated to distributors, with the company managing. The manufacturer can set policies, supervised by salespeople, and then honor policies based on the distributor's monthly execution. Never simply announce policies at the start of the month and honor them at the end. That way, monthly sales may rise, but without foundational work, policies tend to be discounted into prices, causing low-price dumping or channel conflict, leading to loss of price elasticity and long-term competitiveness. Although distributors may skim policies, it's still more efficient than the waste of direct manufacturer control. Some may ask: what if salespeople collude with distributors? Their interests often differ, and collusion will eventually be exposed, especially under prolonged sales pressure. This system provides mutual supervision and shares costs with distributors, making it more efficient. Currently, the fastest-growing FMCG companies in China, such as Wahaha, Wanglaoji, and Master Kong, all use this method. History proves it's highly efficient for terminal control.
Question 2: How should the salaries of terminal development and maintenance staff be designed and assessed? Should we check distribution rate or just look at sales?
Now, terminal staff are unstable if they earn less than 3000 yuan per month. You can set it a bit higher, but strengthen assessment standards. For example: staff presence, display, brand image, promotional resources in place, product completeness, etc. We call these the five elements to boost terminal sales. These five elements should be managed with standardized processes, so there are more deduction items. This controls income and improves efficiency, which is definitely worthwhile for the company.
Checking distribution rate is very important. Sales without distribution rate are dangerous; there may be a lot of "sales" still in the channel, not reaching terminals. At first glance, monthly sales are completed, but it's an illusion that will be exposed in the following months, likely requiring heavy promotions to solve inventory problems.
Distribution rate mainly solves the "can buy" problem, which is crucial.
Question 3: Should terminals be managed by the company headquarters, such as data entry?
I think for a large enterprise like Transfar, terminal data must be entered into the company system, and the company should have people analyze the data regularly. For example: single-store sales, per capita consumption, etc. Sales should be managed and adjusted through data. This helps identify gaps between regions, set good examples, and pressure underperforming areas. Only when the national market is good does the enterprise become competitive. Any local strong product or brand will eventually be eliminated or suppressed by competitors.
Data entry is very important and can also avoid rebuilding terminal files when salespeople leave. If the importance of data entry isn't evident now, it will be sooner or later. It is said that Wanglaoji has nearly 3 million terminals nationwide, a number many FMCG companies cannot achieve. That's why Wanglaoji always seems ubiquitous. With just a single product, it achieved annual sales of 12 billion yuan, surpassing Coca-Cola's can sales in China. It's truly a miracle. Wanglaoji places great emphasis on terminal data entry; in previous years, frontline salespeople's bonuses were tied to the number of terminals developed that month.
If there is one terminal selling competitors' products and only five selling yours, your sales will definitely be higher! That's one of Wanglaoji's success secrets.
And "expanding points" should be done through "expanding surfaces" to achieve twice the result with half the effort.
Take Wahaha as an example. In previous years, it focused on wholesale and grocery store channels. As sales targets increased, the traditional channel's 1.5 million terminals could no longer meet sales needs, so in 2008 they proposed the slogan of expanding points, surfaces, and varieties. From the data, areas that successfully expanded points in the past two years first succeeded in expanding surfaces in distribution channels. This broke the old framework; each new channel significantly increased retail terminal numbers, and sales soared.
Traditional sales only developed two channels: wholesale and grocery. In contrast, areas with rapid sales growth in recent years developed five channels: supermarkets, catering, nightlife, grocery, and special channels. Each additional channel brought substantial benefits.
Therefore, companies can manage terminal development goals through terminal data entry, which is one of the effective methods in terminal management.
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