Introduction: Cao Jun, CEO of Molihutong. With a 4A background and 20 years of practical marketing experience, he has been committed to continuously improving corporate performance. Since 2008, he has creatively integrated marketing expertise with sales channel management through information technology. Companies he has served include: Uni-President, China Mobile, Motorola, AMD, Mengniu, Zhuyeqing, Pizza Hut, Danone, CDPF Foundation, China Merchants Group, etc. He was responsible for the annual national marketing planning of 13 brands under Uni-President Beverages. He completed the 2008 Beijing Olympic bid project for China Mobile. He helped Jinmailang achieve digitalization of sales channel management and sustained counter-trend growth.
The core of solving channel digitalization is not implementing systems or capturing data, but finding ways to let salespeople and distributors earn more money.
Are your distributors willing to share data with you? Are your distributors willing to adopt the system? 99% are unwilling. Then, are employees willing? 99% are also unwilling. So the first point I want to make: digitalization is not the answer! We all talk about digitalization, but true digitalization should use digital tools to transform the business model.
Many times we talk about digitalization, but we often lose sight of the original intention of performance improvement. Digitalization should revolve around performance improvement, using technological means to think differently about business operations.
The value of technology is to enable this unique business model to be realized! So the core issue is whether, once we have technological means, we change our management logic. Can we see things that were previously unclear? Now that you have the system and can see clearly, can you create new management methods? So, the core is transformation, and the issue of transformation lies in a unique business model. Technology is what truly implements this unique distribution model, and these management models ultimately achieve performance improvement.
Innovation often lies not at the heights, but at the origin.
Musk recently talked about the "first principles" thinking. The so-called first principles mean that the existence of anything and the occurrence of any phenomenon are not without reason; there must be an essential cause behind them. This principle was proposed by Aristotle. The core of first principles is to trace back to the essence of things and rethink how to do things.
So, first, let's talk about what a system really is.
Past systems were built on processes. The FMCG process is a sales-centric process. Can sales be solidified? Sales itself is a process where opinions vary.
Currently, all systems on the market are designed according to processes. The so-called sales management systems are actually sales process systems and sales monitoring systems. But sales itself is flexible, which creates a contradiction, making it difficult to support your performance. Of course, some things do not change, such as the logic of how sales are achieved. When building your system, you should first think about what the performance improvement logic is in your industry, and then look at the system.
What exactly is an "FMCG"?
OPPO and vivo have great sales. Where does their performance come from? Channel sinking and deep cultivation! Mobile phones may not seem like FMCG, but they actually exhibit FMCG characteristics.
The first characteristic of FMCG is "homogeneity"! Whether it's Mengniu Deluxe Milk or Yili Jindian, ignoring packaging and brand, there is no difference for consumers. Homogeneity is an unavoidable precondition for manufacturers and distributors. Homogeneity is the first problem we face in sales. Consumers can buy from you or from them. Homogeneity leads to "substitutability" in purchases, which is why brands exist.
What is the second characteristic of FMCG? Low involvement! Have you noticed that for FMCG purchases, compared to high-involvement products like cars, consumers do not research before buying. Low involvement prompts consumer behavior to be "action first," that is, buy first, then feel or learn. So, we need to make consumers see and buy our products. Because of the substitutability of FMCG, we also need to clearly communicate our product's differentiated value, whether it's price or a specific consumption reason.
Under the characteristics of homogeneity and low involvement, your orders are "snatched"!
Because of substitutability, do outlets have to stock your products? Because of low involvement, do consumers have to buy your products? No! So, "snatching" orders is the core! Today there is B2B and new retail. A platform waiting for outlets to place orders is like Jiang Taigong fishing—those who are willing to bite will bite. But it's hard to catch fish that way. Since we know orders are "snatched," who is snatching orders for us? It's the frontline employees. Many companies' digitalization fails because they put systems in place to monitor employees. Would employees be happy? "I made all your performance, and then you put a system in place, like a noose around my neck." So no employee likes the system.
Why do both manufacturers and distributors like to have systems?
The core of outlets is competition in convenience and display. Display must highlight competitiveness. When doing display, precision is not about making things detailed, but about hitting valuable points—how should my display be done so that consumers choose me when purchasing?
Many companies require visits. 6.8 million outlets are 6.8 million positions. Today it's yours, but tomorrow it may not be. Rent is getting more expensive. 7-Eleven restocks the same shelf position three times a day, pursuing maximum sales per square foot. So, all logic is not for regularity's sake, but how to hold the position and bring benefits to the outlet.
Finally, I want to mention a reality: sometimes implementing a system is a strange thing. No data is better than fake data, but many employees, forced by the system, fabricate a lot of fake data for you. So, if the system has just a 0.001% loophole, the boss will see 100% fake data.
As the old Chinese saying goes, rewards and punishments must be clear. If you do well, I reward you; if you do wrong, I punish you. To make a lot of data real, what is my biggest feeling? Only in a real environment can your enterprise have a future and positive energy.
We have a piece of data in our system: before implementing the system, basically every company's salesperson worked about 1.92 hours a day, but you pay a full day's salary. This is also the original intention of the boss to implement the system. After using our system, in about 6 months, working hours reached more than 6 hours, and after 1 year, reached 8 hours.
There was a saying: what the boss wants, you assess. But the central idea behind implementing a system is: what the boss wants, you incentivize.
No outlets, no sales. No vehicles, no outlets. So you need to open outlets and compete for outlets.
We do this every year, but we never do it well. Where is the problem? In all our management logic, we only have goals and slogans, lacking methods. How to turn slogans into methods? You need to see problems from the market, opportunities from users, and threats from competition.
If you don't do these three things well, you have no methods, only slogans, and your system is still useless. Once you have performance goals, you set management indicators. Originally it was 1.92 hours, now with the system you must work 8 hours, and each store must be worked for a certain number of hours. Think about it: with systems or eight-step processes, how many can actually improve performance? Does an employee at an outlet necessarily generate performance? No! Where is the problem? You have methods, but you must convert them into execution standards. Only with execution standards can you have incentive standards, then frontline execution, then management checks, then management standards, and then performance.
I have summarized eight characters: outlets, display, visits, and sell-through. This is process management. Sell-through actually consists of two logics: orders and inventory. Orders happen to be the starting point of our process management.
Many distributors have implemented systems. Are your accounts accurate? Are your data accurate? For example, originally when goods go out, they should be settled, but finance usually doesn't handle it; they wait until the delivery person returns and then settle. When the salesperson brings back the order form three days later, they settle, to avoid having to make red-ink reversals if there are discrepancies. Therefore, after implementing the system, all accounts are still unclear.
Implementing a system requires standards, truth, checks, and incentives. Management systems should not manage; they should turn management into incentives. The true realm of a management system is not management but incentive.
Companies hope distributors will "all in" because products are homogeneous and there is competition, requiring distributors to go all out to help the company sell. But does the company sign a century-long contract with distributors? No! Distributors are making wedding dresses for the company. Whether they sell well or not, they may be "PASSed" by the company.
Distributors and companies are in a game of strategy. The game is one of mutual balance. Companies respect distributors, and distributors respect companies. I believe traditional big brands have suffered from KA (Key Accounts), and you certainly don't want to suffer from internet giants' new retail. If you don't respect this fact, the logic is wrong, and the company will only get a pile of fake data. The core of solving channel digitalization is not implementing systems or capturing data, but finding ways to let salespeople and distributors earn more money.
Finally, what I want to say is: whether it's internal information systems or external information systems, the most important thing is that IT doesn't understand business, and business doesn't understand IT. We used to say IT supports business. Only when you understand the business better than the enterprise can you use IT to lead business.
Tips will be paid 400-2000 yuan once adopted.
China FMCG + Internet Professional New Media
Committed to FMCG manufacturer and distributor transformation and channel digitalization solutions