Many sales managers often complain that distributors are difficult to manage and tricky. They give so many policies, but at the end of the month, when it's time to pay, they still hesitate. Distributors bombard the manufacturer's sales manager with complaints as soon as they meet. Sales managers both fear and hate distributors. In fact, distributor management can be easy if you find the right methods. Based on my years of experience in distributor management, I offer three tricks to troubled sales managers.
Trick 1: Help Distributors Make Money Distributors open their doors to make money. As a sales manager, as long as you keep this in mind and convince people with 'profit', you'll get along well with distributors. Of course, this profit must be legitimate and not at the expense of the manufacturer's interests.
As a manufacturer's representative, you naturally know the manufacturer's policies better than distributors, and you have some flexibility to allocate promotional resources among different distributors. Only by using this authority well can you make distributors understand that you are their stakeholder, that you can help them secure better policies and earn more profit, and thus they will respect you. But sales managers must maintain a balance between 'supporting' and 'suppressing' the same distributor. You cannot blindly support one distributor, to prevent other distributors from turning against you and that distributor from becoming too powerful. Similarly, you cannot blindly suppress one distributor, to prevent that distributor from terminating cooperation with the manufacturer, leading to stagnation or even collapse of that market.
There are also techniques for 'supporting'. Don't give distributors all the manufacturer's policies at once; leave some room for flexibility. For example, if the manufacturer offers 10 free for every 10 ordered, you can tell the distributor it's 15 free for every 10, and say, 'If you order more than 1,000 pieces, I'll try to get you even better policies.' This way, the distributor helps you meet sales targets and is grateful that you helped secure better support.
Once goods arrive at the distributor's warehouse, the sales manager must guide and help the distributor sell them. Don't be a manager who 'does one thing and ignores three others' (ignoring slow-moving goods, ignoring inventory, ignoring returns and exchanges, only focusing on collecting payments). Once, a distributor I was responsible for often mentioned a sales manager from a certain cosmetics brand who visited only once a month, and when he came, he just asked for payment. As soon as the distributor agreed to pay, the sales manager would leave for the hotel before the distributor even returned from the bank. After that, he was nowhere to be seen, only calling on the phone. The distributor complained to the company several times, and that manager eventually packed up and went home.
As a sales manager, you should know the gross profit distributors earn from your products, know the company's key promotional products, and know the high-margin products. (Many companies calculate sales managers' commissions/bonuses by category.) For personal and company interests, guide distributors to categorize products and help them develop a series of promotional policies. How to promote high-margin products, how to drive sales with bestsellers. Develop different channel policies for different product categories and price points. Guide distributors to create bundles, combining channel policies for high-margin products, bestsellers, new products, and current key promotional products into one package. Offer buy-one-get-one, cumulative discounts, or free gifts. For different customer tiers, create different bundle types. There are large bundles of 5,000-10,000, small bundles of 800-1,000, long-term packages for a quarter, or short-term packages for half a month. Flexible policies give channel customers a sense of novelty, and prices for different categories become less transparent. This not only helps promote new products but also stabilizes market prices for bestsellers, achieving both volume and profit. KFC and McDonald's are real examples. Customers order quickly and easily, and the average transaction amount is much higher than a la carte.
By managing your products well and earning the distributor's trust, you can also leverage other brands' resources to promote your products. Create a channel bundle with your product and other products the distributor carries. This saves promotional costs for the manufacturer and also 'hitches a ride' with a 'big shot', boosting your product's status and sales.
Only when your products help distributors earn more profit and account for a larger share of their business will they respect you and 'obediently' follow your management.
Trick 2: Help Distributors 'Spend' Money Nowadays, the most common complaint from distributors is that operating costs are too high and money is getting harder to earn. Indeed, for distributors whose management skills lag behind, as their business grows, they work harder but earn less. Making money requires not only increasing revenue but also cutting costs. As professionals, sales managers should give distributors reasonable advice to help them cut costs and use funds more effectively.
A. Inventory Management To assess a distributor's business ability, first look at their warehouse. I have visited many county-level cities and counties, calling on local distributors. The warehouse is just a big storage room. When goods arrive, they have the loader stack them and count. Then they lock the door and go back to the store. When shipping, they suddenly discover, 'Oh, there's a pile of last year's goods,' or 'Oh, the packaging is broken and has dirtied the others.' ...
They don't plan the warehouse by brand or category, and they don't stack inventory by arrival date. When shipping, they don't follow first-in, first-out. When the business was small and turnover fast, problems rarely occurred. But as the business grows and inventory increases, warehouse management becomes crucial. At this point, a professional sales manager who offers advice will surely earn the distributor's gratitude.
B. Account Management Currently, most distributors still keep manual running accounts. After a day of deliveries, they collect money, note who owes money, stuff the receipts in a drawer, and jot down in a notebook. Later, they flip through to see which accounts need collecting. If the notebook is lost, the accounts are in chaos. They can't collect what's due, there's no money in the account, and naturally they can't pay the manufacturer. Or the payment that should go to your company is snatched by another brand. A shrewd sales manager will help the distributor plan their accounts, buy a folder for the boss's wife, and teach her how to organize receipts and keep records. This way, you know when the distributor collects payments and when they have cash. When they have money, you discuss payments, and you'll get paid smoothly.
C. Sales Staff Management Every manufacturer basically provides sales representatives to distributors. They draw salaries from the manufacturer but work for the distributor. Sales managers can't manage them all, and distributors want to manage them but can't. How to use these reps effectively and maximize their efficiency is often a headache for both distributors and sales managers. Some distributors also hire their own reps, but they manage them 'sheep-herding' style. They invest in manpower but get little return. A professional sales manager should guide distributors to establish form-based management systems, entrust distributors to manage the manufacturer's reps, and also help manage other reps. Using the distributor's reps well means the manufacturer spends for one person but achieves the effect of several or even a dozen. It's a win-win for both, so why not?
D. Modern Channel Planning and Management Many traditional distributors still insist on traditional channels and don't do modern channels, either because they don't know how or because they don't want to. First, modern channels require high investment and tie up capital; second, they don't know how to operate, so returns are limited, and there's even risk of loss. I once saw a distributor operating in a large supermarket. After three months, the first order's payment couldn't cover the costs. Sales were terrible, and they were put on the supplier blacklist and asked to remove their products. Another distributor delivered goods to a supermarket one day, and the next day the supermarket owner closed up and ran off with the money. Such incidents are common for distributors. They work hard, don't make money, and even lose. No one wants that in business. Therefore, many distributors are unwilling to operate modern channels. But with industry development, modern channels are taking a larger share of business. They not only quickly achieve final sales but also showcase the brand and enhance its image. So manufacturers require distributors to do modern channels, but distributors don't want to. What to do?
At this point, the sales manager should provide professional guidance. From the type of store, to the categories to enter, to the gross profit of each category, to the promotional costs, to half-year or even annual promotional activities, give distributors a series of professional opinions, guiding them on how to invest the least and earn more profit.
An excellent sales manager is definitely a consultant-type sales manager. The relationship with distributors is a business partnership, not a 'meat-and-wine' brotherhood. Provide professional intellectual support, help distributors plan their business, and support them to grow. Don't just scheme against distributors, 'fatten their belly, take your bonus, and move on to a new place.' Only by being professional and helpful, even if you can't drink or socialize, will distributors respect you and follow your advice.
Trick 3: 'Fall in Love' with Distributors The best relationship between people is that of confidants. As the saying goes, 'A gentleman dies for his confidant; a woman adorns herself for the one who pleases her.' Only by becoming bosom friends with distributors can you achieve the highest level of management. Pay attention to their business, care about their lives, and exchange heart for heart. When distributors have troubles, they'll come to you; when they have business ideas, they'll think of you first and call or meet to discuss. They'll treat you as their chief of staff, their 'beloved'. Although you're not the boss, you can help them make decisions. At this level, what's difficult about managing distributors? What's tricky about them?
As a sales manager, you gain an important client in your career and a friend in life. Isn't that great? I once managed a distributor who would call me for advice every time he wanted to take on a new brand, even though I had long left the company I worked for. Our relationship is still very 'solid'.
Everything has a method. As long as you find the right method and do it with heart, you can succeed. Managing distributors is the same.
On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the '2018 FMCG City Distribution Logistics Conference'. We 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. We hope it will bring you different inspiration and thinking!
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