---
title: "When the Market Is Tough, Distributors Must Do a Better Job of Customer Relationship Management—Here Are 5 Tips to Take Away!"
description: "In 2015, the domestic economy slowed down, and the current overall macro environment is highly challenging. Manufacturers are having a hard time, and distributors are also struggling. In this new competitive landscape, not only is the pace of industry reshuffling accelerating, but it also represents a life-and-death test for distributors. So, how can distributors survive the winter and still develop under the pressure of \"survival of the fittest\" and \"survival of the remaining\"? In a sluggish market, customer resources will be even more fiercely contested. To outmaneuver competitors and win a new round of victory, distributors must, under the guidance of manufacturers—or even on their own initiative—proactively and consciously manage customer relationships."
author: "崔自三"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-01-21"
language: "en"
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# When the Market Is Tough, Distributors Must Do a Better Job of Customer Relationship Management—Here Are 5 Tips to Take Away!

> In 2015, the domestic economy slowed down, and the current overall macro environment is highly challenging. Manufacturers are having a hard time, and distributors are also struggling. In this new competitive landscape, not only is the pace of industry reshuffling accelerating, but it also represents a life-and-death test for distributors. So, how can distributors survive the winter and still develop under the pressure of "survival of the fittest" and "survival of the remaining"? In a sluggish market, customer resources will be even more fiercely contested. To outmaneuver competitors and win a new round of victory, distributors must, under the guidance of manufacturers—or even on their own initiative—proactively and consciously manage customer relationships.

In 2015, the domestic economy slowed down, and the current overall macro environment is highly challenging. Manufacturers are having a hard time, and distributors are also struggling. In this new competitive landscape, not only is the pace of industry reshuffling accelerating, but it also represents a life-and-death test for distributors.
So, how can distributors survive the winter and still develop under the pressure of "survival of the fittest" and "survival of the remaining"? In a sluggish market, customer resources will be even more fiercely contested. To outmaneuver competitors and win a new round of victory, distributors must, under the guidance of manufacturers—or even on their own initiative—proactively and consciously manage customer relationships.
**What is Customer Relationship Management?**
In essence, customer relationship management (CRM) is a business strategy. It organizes enterprise resources effectively according to customer segmentation (A, B, C classification: core, key, and ordinary customers), cultivates customer-centric business behaviors, and implements customer-centric business processes. This serves as a means to improve the company's profitability, revenue, and customer satisfaction. So, how can distributors better manage customer relationships?
**1. Establish the Concept of a Broad Customer Base**
For distributors, customers are divided into two categories: external and internal. External customers mainly refer to downstream customers and consumers, while internal customers refer to the company's employees. Are employees customers? The answer is yes. Distributors must establish the concept of a broad customer base. They should not only treat downstream customers well but also treat employees well, regarding employees as their "first customers." Only when distributors treat employees well can employees provide better and more satisfactory service to downstream customers. When customer satisfaction is high, customers will be loyal to the distributor, allowing the distributor to generate continuous profits and achieve greater development.
How to treat employees well:
First, **do not easily lay off employees during the economic winter.** In a sluggish market, by providing job opportunities, distributors can move and inspire employees, making them work diligently and better fulfill their duties.
Second, **do not arbitrarily cut salaries.** When the economy is good, it may not matter much, but when the economy is poor, it is even more important not to cut salaries arbitrarily. Not cutting salaries is a respect for employee value and a guarantee of being able to get through the winter together and welcome the spring.
Third, **continuously improve employee skills.** Distributors should enhance employees' operational skills and corporate competitiveness through mentoring, coaching, hands-on teaching, and providing external learning opportunities.
Fourth, **continuous improvement.** Distributors should also use continuous improvement to build a nest to attract phoenixes—attracting outstanding talent to join—so as to better serve the downstream channels.
**2. Establish Detailed Customer Files**
Distributors should establish two types of customer files: one is the file for downstream distributors, which must be fully established as the foundation for market development. The other is the file for terminal customers. We are now in an era where terminals reign supreme. Whoever controls the terminals holds the initiative and voice in the market. So, how to do it? Start with details and do a good job of filing terminals.
Design a complete and effective file form. A complete customer file form should include the following:
First, the customer's sales region, province, city, and county.
Second, market conditions: market size, including city/market size, product varieties, specifications, and selling prices.
Third, customer information: name, address, phone, fax, person in charge, person in charge's phone and mobile, contact person's phone and mobile, main product brands distributed, specifications, sales volume, and whether there is internal or external advertising.
Fourth, the distributor's human, financial, and material resources, including personnel, vehicles, premises, warehouses, and capital.
Fifth, customer personal information, including hobbies, preferences, personality, family, background, education, background, and birthday.
Many distributors often do well from the first to the fourth items, but the fifth item is the most important, especially during economic downturns. By establishing customer files, we can understand and gain insight into customers, discover and grasp customer needs. Only then can distributors act with a clear goal, capture customers' hearts, form channel alliances, and jointly strengthen and expand the market.
**3. Segment Downstream Customers**
One of the most important purposes of establishing customer files is to classify and manage downstream customers based on sales volume, profitability, and growth. In economics, there is the 80:20 rule, which also applies to the classification management of downstream customers. The 20% of large customers create 80% of market sales, while the remaining 80% of customers create only about 20% of sales. Therefore, distributors must prioritize their management of downstream customers. Specifically, based on cumulative sales, customers who create 80% of sales (roughly 20% of customers) are classified as A-class customers; customers who create 80%–95% of sales are classified as B-class customers; the rest are C-class customers. However, distributors should note that these three categories can be mutually converted. Distributors should, through assisting downstream customers in deep distribution and joint sales, and through terminal displays and promotions, systematically promote the conversion of B-class customers to A-class, and C-class to B-class. Stabilize A-class customers, upgrade B and C-class customers, continuously penetrate the market, and expand market coverage and share.
**4. Different Management for Different Customers**
Different customers have different contributions to the distributor's business. Therefore, distributors must not adopt "egalitarianism" or "share equally" in resource allocation. Instead, they should implement management with different focuses based on customer classification. Specifically, for A-class customers, who are the foundation of the distributor's survival and foothold, resources must be focused and attention given. This can be done by appropriately expanding sales areas, providing consultative sales, and even encouraging monopoly of certain categories. Give them special care. In terms of resource allocation, promotional expenses for their support should be passed down to terminals and consumers, and never give rebates that they can pocket as profits. For A-class customers, provide intellectual and management support, but less material support. However, for the benefit of the entire market, strictly control the sales scope and price order for these large customers, and strictly prohibit cross-region sales, dumping, or low-price selling. For B and C-class customers, based on their historical, year-on-year, and monthly sales growth, conduct horizontal and vertical comparisons. For effective customers with high loyalty and positive growth, provide distribution support and promotional pull support. For example, for promising large second-tier distributors in townships, distributors can assign salespeople to assist them in deep distribution in rural areas. For terminal supermarkets with high foot traffic, radiation, and influence, provide display beautification, buy-one-get-one, and lucky draws as pull support. For B and C-class terminals, besides intellectual support, provide material support as much as possible, because terminals are the "last mile" in the battle for customers. Good steel must be used on the blade.
**5. Standardize, Institutionalize, and Make It Replicable**
The core principle for distributors to do well in customer relationship management is to standardize, institutionalize, and make it replicable. Standardization and institutionalization mean that the content of CRM should be quantified and detailed wherever possible. Only then can it be better executed and assessed, leading to continuous improvement. For example, logistics and distribution should be completed within a specified time frame through relevant management and assessment regulations. Customer service personnel should provide clear answers and solutions to downstream customers' objections within a specified time. Walmart, the world's top 500 company, has the "three-meter smile principle," which requires employees to smile when a customer is within three meters, showing eight teeth. This is a standardized and institutionalized practice that enhances the company's image. Distributors can compile the above content into a manual, making these standardized and institutionalized practices replicable. Only what is replicable can be passed on and sustained.
In summary, under economic downturn conditions, distributors must strengthen customer relationship management to survive the winter. If distributors only maintain a "customer" relationship with downstream customers, that relationship is not solid. One day, these customers may defect to competitors. Distributors must build a "customer + friend" relationship. That is, through CRM, carry out relationship marketing, continuously provide customers with maximum added value, enhance customer satisfaction, and ultimately improve customer loyalty. This will form a strategic alliance of interests, walk through the winter together, and strengthen and expand the market.
Source: Cui Zisan Marketing Perspective
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