Recently, while visiting the market with a company's marketing team, I observed some common minor issues. After in-depth discussions with company personnel, it became clear that these issues stem from incomplete small closed loops in marketing processes.
For a business model to operate smoothly, if the closed loops at each node are not realized, overall operations will be greatly compromised. To achieve sales and profit growth, a company must ensure the stable operation of small closed loops within the larger operational model.
Let me illustrate with a few examples from my market visits.
Closed Loop for Blank Outlets
When it comes to blank outlets (unserved retail points), we need to ask ourselves several questions.
1. What are the reasons store owners don't take goods? Slow turnover, lack of after-sales support, insufficient profit, previous unpleasant cooperation, poor service, lack of interest in the product, etc.
2. What are the reasons related to frontline staff? After several rejected visits, they stop going; too many outlets on the route to care; previous conflicts with customers; historical issues; cost disputes leading to loss of goodwill; low sales volume at the store not worth visiting, etc.
3. What are the reasons related to distributors? Lack of attention, insufficient focus, high delivery costs for small orders, previous unpleasant experiences, conflicts of interest, etc.
4. What are the reasons related to market competition? Competitors buying exclusivity, competitors offering high margins, competitors providing better service, etc.
Everyone agrees that "no outlets, no sales," but in reality, the number of blank outlets is not decreasing; it's increasing. This is a typical problem with the outlet loop not being closed.
Let's distill the above reasons:
1. Distilled as: Customer relations & Profit; 2. Distilled as: Customer relations & Visits; 3. Distilled as: Customer relations & Delivery; 4. Distilled as: Customer relations & Competition.
In doing business in China, the entire supply chain cannot ignore customer relations. This is why many online brands or new retail models fail to take root. Good distributors not only meet profit needs at every link but also never slacken in emotional connection investment.
Returning to the blank outlet loop: To solve the profit issue, special entry policies can be implemented for blank outlets (e.g., cumulative order rewards, first-order entry rewards, special display rewards).
To solve the visit issue, process rewards (e.g., 0.5 yuan per visit) or result rewards (e.g., points per visit, redeemable based on first order or monthly transaction amount) can be used.
To solve the delivery issue, delivery subsidies can be offered (e.g., 5 yuan per order for the first 5 orders to new stores).
To solve the competition issue, build customer relations first and wait for the right moment to break through (e.g., when a competitor's exclusivity contract is about to end, intensify visits to secure your own exclusivity deal).
Then establish inspection and review mechanisms to complete the small loop.
To summarize the solution loop for blank outlets: Customer relations—Profit—Competition—Visits—Delivery—Incentives—Inspection—Review.
Let's also discuss: What defines a blank outlet? Is it an outlet that has never cooperated? One that hasn't ordered for six months? A newly opened store after a transfer? An outlet that hasn't ordered a specific SKU?
Thus, the definition of a blank outlet is not static. Before executing the loop, clearly define blank outlets based on actual needs to avoid disputes later.
Closed Loop for Sales Momentum
Why don't products sell? What factors affect sales momentum? Many attribute it to new products, weak brand power, high prices, etc. These are objective reasons, but what subjective changes do we need to make in the current environment?
Example: Years ago, on a winter morning, I was waiting at a train station. I hadn't had breakfast, so I went to the convenience store. I saw the owner heating several cans of Six Walnuts (a walnut milk beverage) in an electric rice cooker with water.
It turned out the owner had been hospitalized a few days earlier, and relatives brought over a dozen boxes of Six Walnuts. Unable to consume them all, he brought them to the store to sell individually, selling one or two boxes a day. In my impression, Six Walnuts was a gift pack product with almost no single-can sales.
Analyzing the example: As a consumer, I had a clear need—no breakfast, wanting something warm. That's the "person" need. The convenience store offered many options, but few were warm and could serve as a meal replacement. That's the "product" need. The steaming rice cooker attracted my attention, making me walk over and buy without even asking the price. That's the "place" need. For a product to sell successfully, the needs of person, product, and place must all be met simultaneously—that's a closed loop.
Conversely, regarding the issue of products not selling: Is the target consumer segment accurately defined? Does the distribution meet consumer needs? Does the scene setup accelerate purchase desire?
Translated into execution: Define outlet attributes, set display standards, confirm staff incentives, and establish inspection and review mechanisms—completing the small loop based on person, product, and place.
To summarize the solution loop for product sales momentum: Outlet attributes—Display standards—Incentive confirmation—Inspection mechanism—Review mechanism.
Let's discuss another point: Can you sell ice-cold beer in winter? From personal experience, absolutely. Once, I had a hot pot meal with friends. When the fire was lit, the room temperature rose quickly, and soon we were down to our undershirts. The owner brought a case of ice-cold beer—it was incredibly refreshing, and I still remember it.
So, the same "person" and "product" can have vastly different consumption needs in different "places."
Many companies excel at gift box products. After reaching a large volume, they want to sell individual items. Can they simply take the product out of the box and put it on the shelf?
Closed Loop for Expense Implementation
How to implement expenses has always been a headache for companies and software providers. FMCG operations inherently involve a process where sales and expenses complement each other. Many propose online expense solutions, but the essence remains the implementation of the expense loop.
Marketing personnel commonly deal with market expenses and channel expenses. The purpose of market expenses is to accelerate product sales momentum; the purpose of channel expenses is to accelerate product distribution. Whether these purposes are achieved is a key criterion for evaluating expense implementation.
Take market expenses as an example: Salesperson A serves two outlets. One outlet sells 20 cases per month and is entitled to 2 case-display supports (2 cases of free goods). The store owner is not sensitive to expenses and doesn't nitpick. The other outlet sells 5 cases per month and is entitled to 1 case-display support (1 case of free goods), but the owner is very strict about expenses. The salesperson then misapplies the expenses, swapping them between outlets. It seems to pass smoothly, but there's a hidden danger—walls have ears. If the store owners find out, it becomes a big problem.
This directly affects the credibility of the company, distributor, and salesperson, causing more harm than good. Yet such situations happen frequently and are a major cause of legacy issues. This is a typical problem in expense implementation.
With the deepening of digitalization and refined management, the link between per-store market expense input and output is tightening. The expense loop should include the following:
1. Expense Budget: Estimate total expense budget based on overall sales forecasts for regions, stages, products, and organizations; 2. Expense Application: Based on the total budget, set upper and lower limits for different outlet tiers (usually by monthly sales volume); 3. Expense Execution: Take photos as evidence, collect distribution and outbound data; 4. Expense Inspection and Verification: Strictly follow regulations (phone and on-site spot checks); 5. Expense Review and Analysis: Evaluate the overall effectiveness of expense usage.
To summarize the solution loop for expense implementation: Expense budget—Expense application—Expense execution—Expense inspection & verification—Expense review and analysis.
Let's discuss another point: What are the consequences if expenses are not closed?
I once saw a distributor who lacked a closed loop in channel expense control. He implemented a policy of buy 3 get 1 free, buy 5 get 2 free. He thought that as long as products were distributed to outlets, he didn't need to worry about the salespeople's tricks; a little expense fraud was acceptable.
However, over time, salespeople realized that defrauding expenses was faster than earning sales commissions, and they began to scheme. Eventually, customer complaints increased, forcing the distributor to punish some salespeople, leading to resignations and team instability. This is a classic case of business failure due to incomplete expense loop implementation.
Final Thoughts:
During market visits, it's easy to find high-quality blank outlets, products that don't sell due to display issues or person-product-place mismatches, market expenses being siphoned off at various levels, and other common problems.
But often, a single success masks many failures. As long as sales are good, other issues are only lightly touched upon. However, that's not the case. A thousand-mile embankment can collapse from an ant hole. In market visits, we must see through the surface to the essence. Every phenomenon reflects a missing small closed loop. Without perfect small loops, the company's overall marketing model is just a castle in the air. This indeed requires continuous thinking and improvement by frontline personnel.