How to Increase Marginality in Independent Retailers?
The imminent death of non-chain retail was predicted 10 years ago. But the shops near home still are still living and giving good profitability from a number of categories, including alcohol. We know a few success stories of manufacturers growing due to "tradition", but most companies do not see growth potential in the channel — especially those whose production is already 100% loaded. Therefore, the leading route-to-market strategy in non-chain retail is to increase marginality by reducing costs.
The obvious cost-cutting part is field employees: they take the lion's share of budgets. Let's talk about how to optimize sales force and not lose territory.
Cost optimization
Against the background of the pandemic, distributors and outlets have grown loyalty to remote communication tools. Therefore, leading FMCG manufacturers are launching teleselling and applications (portals) for placing orders.
By implementing these tools, companies reduce or retrain some of their sales agents.
By implementing these tools, companies reduce or retrain some of their sales agents.
1. Teleselling
How it works: the manufacturer forms hybrid sales teams from sales representatives and telesellers. Some of the expensive personal visits are replaced by cheap phone calls.
Cost reduction: on average, channel maintenance costs are reduced by 1/3 while maintaining sales.
Cost reduction: on average, channel maintenance costs are reduced by 1/3 while maintaining sales.
2. Portal for sales points
How it works: the sales points themselves place orders in the application / on the portal, organized according to the principle of the marketplace. Some of the sales representatives are being retrained into brand ambassadors. They promote the product on the territory and help the points to connect the application / portal.
Cost reduction: sales teams are significantly reduced, only brand ambassadors remain on the territory.
Cost reduction: sales teams are significantly reduced, only brand ambassadors remain on the territory.
Amortization of staff reductions
By bringing out exclusive trading teams, the manufacturer gives the distributor the levers of territory management. And the distributor turns from a logistics provider into a full-fledged trading partner with its own goals, objectives and interests. Most likely, the team of the general price list will not serve the territory as well as the exclusive trading team. In order to offset the decline in the level of service, we need tools for more effective interaction between the manufacturer and distributors. Successful FMCGs actively use the OTIF methodology and connect distributors to portals.
1. OTIF: everything and on time
OTIF is an abbreviation of key service quality assessment indicators: on-time - timely delivery, in-full - completeness of delivery.
How it works: The DMS system automatically compares the data on the distributor's orders/shipments and evaluates the timeliness of delivery. The manufacturer receives an analysis of the flagging indicator of problem chains, distributors, responsible persons and goods. This allows you to quickly monitor the maintenance of the territory.
Result: OTIF helps to neutralize the consequences of the withdrawal of ETC, maintain sales and the level of service. A pleasant benefit — the manufacturer can include OTIF in the KPI of a distributor and charge a bonus based on the quality of work with the territory.
2. Portal for distributors
How it works: distributors / trading partners of the manufacturer independently place orders in the 24 x 7 x 365 mode and control their KPIs.
Result: the distributor and the manufacturer work in a common information field. A pleasant benefit is that the operating costs of the manufacturer for processing orders and preparing reports are reduced.
Result: the distributor and the manufacturer work in a common information field. A pleasant benefit is that the operating costs of the manufacturer for processing orders and preparing reports are reduced.
Another important tool for increasing marginality in non-chain retail is working with Data Quality on an active customer base. According to the experience of a number of FMCG companies, clearing and harmonizing data of sales points helps to control the territory without sales force.
Conclusion:
Recipes for reducing the cost of servicing non-chain retail are still being developed. But there are already ready-made solutions: manufacturers include in-full and on-time indicators in the distributors' motivation system, deploy B2B portals and work out teleselling processes. Whatever RTM strategy the manufacturer chooses, we are ready to ensure the digitalization of these processes both separately and within the framework of an integrated ecosystem.
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