Click 'Read Original' for details. Enterprises of a certain scale typically have a marketing department, which bears the important task of verifying various promotional expenses in the market. The fundamental purpose is to supervise the execution and use of market promotion expenses, ensuring that every penny of the enterprise is used in the market and preventing waste of resources. The original intention and hope of the enterprise are good, but in actual operation, because each enterprise's marketing department uses different standards and methods when verifying market promotion expenses, it is inevitable that various problems will arise.
Phenomenon 1: Overly loose expense verification. The verification work is simple and formalistic; as long as the submitted expense documents are complete and the numbers are correct, it passes smoothly.
Phenomenon 2: Overly strict expense verification. The marketing department's inspectors are eagle-eyed, not letting any trace go unnoticed. Once they find any doubt in the submitted expense materials, they immediately penalize the reported promotional expenses without distinguishing right from wrong.
Scenario 1 Xiao Li is responsible for sales management in Market A, and the distributor's execution capability is strong. A few days ago, Xiao Li compiled and sent back to the company the reimbursement documents for the distributor's trade promotion (buy X get Y free) expenses from last month. One day, Xiao Li suddenly received a call from the company saying: "There is a problem with the distributor's trade promotion expenses in Market A. After verification, only 50% of the expenses are considered real. The distributor should be penalized, and only half of the expenses can be reimbursed!" Xiao Li was very nervous upon hearing this. If only half of the expenses are reimbursed, how can he face the distributor, and how can he cooperate with the distributor in the future? Xiao Li was very confident about this expense. Before the activity, he had in-depth communication with the distributor. During the activity, Xiao Li checked the distributor's delivery orders and warehouse shipments every day, and the secondary wholesalers signed on the orders after receiving goods and gifts. Xiao Li adjusted his mindset, calmly called the company to explain the situation, and asked how the marketing department's inspectors verified the expenses. After understanding, Xiao Li finally realized that the inspectors verified the expenses by phone. The problems were: a. Market A is a southern city, while the company headquarters is in the north. Language barriers caused poor communication between the secondary wholesalers and the inspectors; b. When customers receive such survey calls, they are wary. If you say you are from a certain company, who knows? Maybe it's someone trying to spy on their business secrets, so they refuse to answer; c. The person answering the phone might not be the person involved, but other staff in the store, and they would say they don't know; d. A long time has passed, and customers handle many brands. At that time, who can remember whether it was buy 10 get 1 free or buy 20 get 1 free, or the exact details.
So when Xiao Li learned this, he immediately wrote a situation explanation and faxed it to the company, signing and promising that if the expenses were fraudulent, he would accept personal punishment. He also had the distributor sign and stamp a commitment that if there was any falsehood, the expenses would not be reimbursed at all. The company's marketing department had nothing to say when they saw this. Thus, Xiao Li resolved an unnecessary misunderstanding with facts and integrity.
Scenario 2 Xiao Gao is a regional manager for a well-known brand. The distributor in Market M is among the top three in the local industry. Recently, the company launched a new product, and the supermarket listing work has been completed; the new product is on the shelves as scheduled. The reimbursement documents for the new product's listing fees have been sent back to the company. Xiao Gao estimated that the expense should be recorded in the company's finance, so he called to ask about the review status. The company said: "The expense was deducted by 1,200 yuan." Xiao Gao asked why. The company said: "The marketing department inspector went to a supermarket and didn't see the new product on the shelf, so 1,200 yuan was deducted." Xiao Gao was stunned and quickly investigated. It turned out that when the inspector went to the supermarket, the product was out of stock, so the new product was not on the shelf. But no matter how Xiao Gao explained to the company, it was useless. In total, more than 50 supermarkets were applied for listing, with the company bearing a total cost of 12,000 yuan. The inspector randomly checked 10 supermarkets, and because one was not true, they extrapolated that 10% of the total was false, so they deducted 1,200 yuan from the distributor based on 10% of the total expense.
The distributor was furious and said angrily: "First, the marketing department should respect the facts. If they didn't see the new product, they should ask the supermarket staff why there was no new product. Second, even if that supermarket is not counted as listed, they should only deduct 200 yuan for the listing fee of one store, not 1,200 yuan. That's unreasonable!" Xiao Gao could only say nice words, with no other choice. This created a conflict between the manufacturer and the distributor.
Scenario 3 Lao Zhang is a veteran salesperson at a company, knowing everything about the company and having good relationships with everyone. The company has always been flexible and lenient in verifying market expenses. Lao Zhang applied for 8,000 yuan for ten floor displays for a distributor. Because the distributor had good relations with the supermarket, only 2,000 yuan was actually used, and some displays were free. Lao Zhang still collected and submitted the reimbursement documents to the company. Soon, the 8,000 yuan was approved. The distributor secretly laughed, and Lao Zhang was also secretly pleased.
From the above scenarios, overly loose expense verification is not good; it easily allows distributors and company sales personnel to exploit loopholes, causing the company's resources to be lost easily. But being overly strict is also not good; going from one extreme to another can hurt customers, hinder market sales personnel, or even intensify conflicts between manufacturers and distributors, potentially ruining customers or even the market, endangering the company's reputation, and not worth the loss.
On the other hand, most manufacturers conduct post-hoc verification, which invisibly increases the error rate and inaccuracy of verification. The above scenarios are all post-hoc verification, so errors and misunderstandings are not surprising. If post-hoc verification could be changed to real-time verification, such errors would not occur.
Xiao Yu is the office director of a well-known company. As the Mid-Autumn Festival approached, Xiao Yu applied for floor displays or end-cap displays in more than 20 supermarkets. After countless rounds of negotiations, he finally secured the lowest prices for these displays. Now the promotional activities have started in major supermarkets, and all promotional staff are on duty. One day, a supermarket promoter called: "A young man just came and asked me some product knowledge questions. It seems he is from the company headquarters." Soon, another supermarket promoter called to say that someone from the headquarters came to inspect. At this point, Xiao Yu called every supermarket salesperson to ask about the special display situation and the attendance of promotional staff, fearing any mistakes. But even the most careful plan can have a flaw. Fifteen days later, the marketing department reported on the execution of the Mid-Autumn promotional activities and paid terminal displays in various markets. Xiao Yu was fined 1,000 yuan because one supermarket's actual floor display did not match the applied display requirements; the applied display area was 2 square meters, but the actual display area was 1.2 square meters. So Xiao Yu had no objection to the company's penalty; facing the facts, he was convinced.
Therefore, real-time verification is the most scientific; it is timely and can reduce unnecessary errors and conflicts. Some enterprises may think that real-time verification is difficult to achieve or too costly, as it would require sending many personnel to markets nationwide. If real-time verification is truly impossible and only post-hoc verification can be done, then the marketing department's grasp of standards and methods is crucial. Combining the practices of some famous enterprises, the main methods are as follows:
1. Sales Completion Rate Verification Method
Set monthly sales tasks for distributors. If the distributor completes the monthly sales task, the verification of market promotion expenses for that month can be appropriately lenient. If the monthly sales target is not met, the expenses are verified proportionally. For example, if sales completion is 60% to 80%, 80% of the expenses are reimbursed; if below 60%, half of the expenses are reimbursed; if above 80%, 100% of the expenses are reimbursed.
2. Sales Point Verification Method
Reimburse monthly market expenses according to a percentage point, such as a certain percentage of monthly sales (e.g., 10 points or 7 points). This provides a controllable range; as long as the specified point is not exceeded, promotional expenses are basically reimbursed.
3. Post-hoc Field Spot-Check Verification Method
After the promotional activity ends, based on the expense materials submitted by sales personnel, the marketing department sends inspectors to conduct spot checks on each expense. If problems are found, the market sales personnel are immediately notified and asked for a reasonable explanation. If they cannot explain clearly, the reported expenses are deducted, and the sales personnel are also penalized for poor execution.
The above three expense verification methods each have pros and cons:
The first method puts too much pressure on distributors but is beneficial for the manufacturer's management of the market and distributors. To get 100% of expenses reimbursed, distributors must strive to complete the monthly sales target; otherwise, they suffer losses. This approach can only be done by big brands; general brands cannot do it.
The second method is easy for manufacturers to control the scope of market expenses, but how much of the expenses actually goes to the market is beyond the manufacturer's control. For distributors, they get expenses based on the points for the sales they complete, and how to use them is their business. This approach is beneficial to distributors and can motivate them, but it is only suitable for mature products. If new products are done this way, most distributors are unwilling.
The third method, although it is "after the event," still plays a very important role in monitoring market expenses. At least distributors and sales personnel dare not easily falsify, as once discovered, they will be penalized. However, this method has serious drawbacks: because it is post-hoc verification, if a mistake is made, sales personnel and distributors may be wrongly accused, which is not conducive to the healthy development of the market. Additionally, it is prone to corruption; if sales personnel bribe the inspectors, the verification work becomes complicated.
Therefore, the verification of market expenses is becoming increasingly important, and each enterprise has its own control methods. How to correctly and effectively use the standards and methods for verifying market promotion expenses is an important means to help a brand develop long-term, healthily, and stably in the market.
Source: Food Board (ID: tyjspb)
October 23-24, during the Autumn Sugar and Wine Fair, the '2018 China FMCG City Distribution Logistics Conference' hosted by New Distribution will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed to unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, hoping to bring you different inspiration and thinking!
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