Distributors understand the principle that the customer can bully the supplier. Having a single dominant brand or staking everything on one brand is not good news for experienced distributors. Therefore, in their ideal scenario, distributors need a 'whetstone' brand to keep the primary brand in check without letting the secondary brand take over, lest they incur the primary brand's displeasure and harm their own interests.

This is the common challenge we encounter in distributor management: the industry's second-largest brand often can't outperform the leader, yet they have to share the same distributor. The industry leader is in its prime and can dominate distributors, while the second-largest brand, though attractive, has a weaker parent company and often faces exclusion and harassment from the leader.

Is this situation common? It should be quite common. Many large durable consumer goods companies, through various informal channels, explicitly prohibit their distributors from carrying major competitors' products. For distributors who don't comply, they may find excuses to make an example of them. Why do distributors still introduce new competing brands at every opportunity despite such pressure? First, manufacturers at least don't dare to act blatantly; if things escalate, distributors have the upper hand. Second, distributors need spare tires; in the unpredictable business world, you never know which product will be the one that pays off.

Because of this, the second-tier brand, living under someone else's roof, rarely gets a chance to shine and is often used as a bargaining chip to keep the leader in check. With influential distributors, sales volumes won't be too embarrassing, but significant breakthroughs are unlikely. When you ask for sales commitments or even sign contracts, they make excuses. Even if they sign, they may not fulfill them, and what can you do? Cut off the distributor and find another? That would waste another year in that market.

For brands with some foundation but treated as spare tires, how can you motivate distributors to actively promote your brand and move from behind the scenes to the forefront? Fundamentally, you need to convince distributors that your product not only offers profit margins but also has the potential to become a dark horse. In practice, I break this down into seven steps:

Step 1: Don't Grant Exclusive Distribution

The worst mistake for a second-tier brand entering a new market is exclusive distribution. You'd be hanging from a single tree. For building materials and engineering products, many project resources are concentrated in a few specific distributors, so you need to win them over. However, when you first enter a new market, the more resourceful and larger distributors are, the more they'll try to intimidate you into granting exclusivity, making you think your brand won't succeed otherwise. If you fall for it and sign an exclusive deal, you'll be disappointed. The next year, when you try to recruit new distributors, the old one won't object, and you'll realize exclusivity wasn't necessary.

For a second-tier brand entering a new market, granting exclusive distribution is the biggest risk, especially if the distributor also carries the main competitor. Regardless of their local strength or promises, they may have no intention of meeting sales targets. Even if they sign a high sales contract, it's just a piece of paper.

So, the first major strategy is to avoid exclusivity. Don't rely on signed contracts; instead, approach multiple distributors. Since you're a spare tire to them, you should also have multiple spare tires among distributors. After all, you're still the second-largest brand, not completely undesirable.

Step 2: Identify the Leader's Weaknesses and Attack from the Flank

Next, analyze the differences between you and the 'primary' brand. Typically, the industry leader's channel profits are transparent, but their systems are robust, making them easy to promote. The second-tier brand offers better channel profits but may lack sales support, making promotion harder. So, while everyone sells the leader's brand, few make much money. Many think they can compete on price, but that's a mistake because once the leader wakes up, you might not withstand their counterattack. Instead, find the leader's most unsatisfactory aspect and attack from the flank. For example, you can consider pricing strategies, but not a full-blown price war.

Step 3: Select a 'Primary' Distributor

Since you've signed multiple distributors, they may all be watching and treating you as a spare tire. Distributors need spare tires, especially a second-tier brand, as it gives them an advantage. But what they fear most is that the spare tire becomes a dark horse, and they weren't the one who bet on it.

You can't treat all distributors as spare tires; you need to choose one as your 'primary' distributor. This distributor should have two characteristics: first, the competitor's sales proportion in their total sales is relatively small compared to other distributors; second, among those meeting the first condition, their sales volume is moderate. It's also beneficial if they have some minor conflicts with the main competitor. Choosing the right distributor can double your results; choosing poorly could backfire if you reveal your hand too early.

Step 4: Create a Contrast in Visit Frequency

The first thing you should do is visit this chosen distributor with the highest frequency, much higher than others, and make sure other distributors see and hear about it. Ideally, they'll ask, "Why are you always at Old Zhao's place?"

At that point, say something memorable: "Oh, nothing much! I made a bet with Old Zhao that if he promotes our products this year, his monthly sales will be at least half of Brand X's, and his profits will increase significantly. If he meets the target, I'll work for him for free next year! I'm checking his inventory every day!"

Other distributors will think, "Why aren't you visiting me more often?" People tend to gravitate toward benefits and avoid problems. Next time you visit them, they'll be less annoyed.

Step 5: Implement Incentives and Relative Share Rewards

After creating this contrast, you must help the supported distributor increase sales. For all distributors, set up promotion incentives. For retail, use 'mystery shopper' checks; for engineering, use design drawing verification. Reward based on effort, not just results, to give them motivation and increase market visibility.

Since you don't have the leader's deep pockets, concentrate resources on one customer to create a local advantage. Higher market visibility also boosts the supported customer's confidence. Next, set up a relative share reward exclusively for the supported customer. What is a relative share reward? In durable consumer goods, recommendations are crucial. If the customer sold 10 million of the main competitor last year, set a base percentage, say 50%. If this year, whether monthly, quarterly, or annually, your sales exceed 50% of the competitor's actual sales, you'll calculate the reward based on the higher of half of last year's competitor sales or your actual shipments, and give double rewards. The higher the share, the bigger the reward (depending on company resources). This compresses the competitor's space and compensates the distributor for any loss in competitor sales, providing a safety net. Since your channel profits are already better than the leader's, the distributor will naturally push your product to increase your share.

This policy is only for the typical customer. If they leak it to others, it becomes void (to deter dishonesty). This ensures the typical customer values the policy, prevents other distributors from demanding similar terms, and avoids targeted retaliation from competitors. During normal market operations, prices remain stable, and competitors can't easily discover the true bottom price because the reward is settled at year-end, allowing for high public prices but flexible actual prices for the selected customer.

Step 6: Share Comparative Data

Create a table showing the monthly sales share comparison between your product and the competitor for the typical customer and other customers, and send it to all customers regularly. This lets everyone see the significant changes in the customer you visit frequently. Remember, only include share percentages, not specific sales figures, to protect distributor privacy. After a year, these comparisons will be ingrained in their minds, creating opportunities for your brand.

Some might worry about data manipulation. Distributors might inflate or deflate numbers. To mitigate this, ask them to prove last year's sales data, as it's needed for rebate calculations. Also, before asking, mention you're looking for a distributor with the smallest competitor sales for special support. If they're interested, they'll likely provide lower but more accurate figures. As for the supported distributor falsifying relative share data to get more rebates, they might, but your goal is to use them as a model to convince others. They'll keep it secret and likely increase your sales to justify the rewards, even suppressing competitors.

Step 7: Continuously Stir the Pot

So, what's step six? Continuously visit all distributors and spread the word: "Old Zhao's relative share increased by 5 points last month!" "I heard Old Zhao landed another big project!" Create an impression that Old Zhao's sales are booming.

Step 7: Eliminate and Refresh

After all this, maybe 5 out of 10 distributors are interested, 3 are still watching, and 2 remain indifferent. What should you do? Should you try to win over those two? My view is that in sales, nothing is absolutely necessary; you can only do your best and leave the rest to fate. The next step is to eliminate those unwilling to participate and bring in new distributors. Through successive rounds of elimination, retain suitable distributors and cultivate a culture of active promotion.

Sales is a tough job, and many companies don't give salespeople much time. For a second-tier brand to move from spare tire to primary, timing and opportunity are crucial. If you only focus on sales targets, like demanding 20 million in the first half from 3 million last year, you're forcing salespeople to channel goods and stuff the channel, which is another topic for later.

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