Tips for the supplier: failed and successful development schemes in the regions

There are at least six schemes for the development of wholesale sales in the regions, three of which are effective, and three are popular and failing. A well-known business coach and specialist in big sales, Konstantin Baksht, helps to understand what are the advantages and disadvantages of each of the six schemes.

Konstantin Baksht - Owner and CEO of Capital Consulting. 23 of the year has been engaged in sales, 19 of the year has been conducting its own business, has thirteen years of experience as a business consultant and business trainer. His specialization is the construction of turnkey corporate sales systems (more than 300 of implemented projects in Moscow and various regions of Russia and the CIS). Author of the books “Building a Sales Department”, “Combat Sales Teams”, “How to Ruin Your Own Business: Bad Advice to Russian Entrepreneurs”, “Big Contracts”, “Strengthening Sales”, “Taste of Life: How to Achieve Success, Financial Freedom and Manage Your Fate” ”,“ Building a business of services ”,“ Sales and production: enemies or partners? ”(Publishing house“ Peter ”, 2005 – 2013, circulation over 200 000 copies)

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Three vicious schemes

The most popular regional sales development schemes are remote sales, work with individual regional representatives and the organization of sales offices based on foreign business. These schemes are most often used by companies. Although in reality they are the most harmful, ineffective and problematic.

Remote sales. Often companies say: “We have a vast geography of customers, how can we personally contact them?” And they build relationships by phone and email, at best, via Skype. Yes, if the transaction amounts are small, and the transactions themselves are one-time, there is no other option. But when it comes to cooperation in large amounts, personal contact is simply necessary. Especially if the potential partner is far away. Otherwise, the client will easily succumb to the temptation to switch to competitors. And he can be understood in this: it’s scary to give your money to people you are not familiar with, but only saw a site on the Internet. And a couple of times I heard voices in the handset. And it’s a completely different matter when a company that wants to get you as a client didn’t spare time and money to come, get to know each other personally and communicate.

Phone business is like phone sex: it can be either a prelude or a perversion, and there are no children from it. Therefore, remember that the basics of big sales are personal contact and personal connections. Driving big sales with remote sales is a huge mistake. In addition, such tactics are disadvantageous to the company itself. Indeed, in order to keep the client, she has to reduce the price and constantly go towards the client on the terms of payment. However, there is no guarantee that the customer will always be yours: a competitor who is not too lazy to build personal relationships can take it away at any time. And then the company working remotely will be forced all his life just to pick up on the market what is bad. Agree, this is by no means an attractive strategy.

Individual regional representative. Many small and even large, but indecisive companies think that for a wide coverage of the regions and simultaneous savings, they can hire an individual representative. They reason like this: since the employee is alone, then he can work from home. And since at the same time the company gets rid of office expenses, a representative can be motivated by a large salary and interest. Through a recruitment agency, the company finds an employee. And he believes that he will work hard in the sweat of the face for the good of the company. But how can one be so naive? What kind of representative loyalty can we talk about if he often has never even appeared in the central office of the company? In fact, the work of an individual regional representative looks completely different than the company imagines. He works not for one, but for three companies at once. It works only three days a week - a day for the employer. He receives three considerable salaries and writes beautiful meeting reports. I think that this is not what the employer dreams of. But, unfortunately, this is usually the case. Development with the help of individual regional representatives is fundamentally a vicious scheme. Because these employees work as interesting to them. Without proper control, their interests will not coincide with the interests of the company. I only once saw a successful example of this scheme: the company managed to build a system of 15 representatives and 7 curators who regularly visited representatives, spending two-thirds of working days on check-outs. But this method is no less perverse than the scheme itself.

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Organization of sales offices based on foreign business. Often third-party firms come to manufacturing companies with a proposal to organize a sales office in their hometown. The condition is most often one: "You, most importantly, ship products to the warehouse to us." It would seem that the normal scheme is work in another region through representation. But still there is a big difference between when this representation belongs to you, and when to free, especially far-off entrepreneurs. Do not forget that these entrepreneurs organize the representation of your company solely in their interests. And with a high degree of probability one day their personal interests will outweigh their loyalty to you. Talking about loyalty is pointless, because these are not your people. They have never been and never will be yours. The main root of the evil of this scheme lies in the fact that your products are located in a non-resident warehouse, but you do not control them. Abuse of trust, parasitism, banal robbery - all this often happens with such a scheme of cooperation. Stealing goods from a warehouse or simulating a fire is the favorite entertainment of remote "partners". Therefore, deliver products under a contract in which the moment of transfer of ownership of the goods is recorded. Do not depict remote “representations” where everything can be reduced to ordinary deliveries on a contract basis on a prepaid or consigned basis.

Three successful schemes

We talked about vicious schemes that are often used despite their inefficiency. But there are three other, really working schemes for organizing inter-regional sales. Each of them may or may not suit the company, depending on the specifics of the work. Therefore, the choice of the scheme must be done based on your own financial capabilities, the number of customers in the region and the level of sales organization in the company. In addition, there is always the possibility of combining circuits. To successfully combine these schemes with each other, there is a simple rule: never use two different schemes in the same region!

Distributor Network

This scheme is relevant for companies that have the ability to control the market through the brand. In this case, for the development of regional sales, it makes sense to build a distribution network. There is a strong brand, money invested in advertising, distributors are interested in such a partnership. Also, a distribution network is needed when it comes to large amounts of transactions and long-term cooperation. I recommend looking for partners not among market leaders, but among mid-sized companies or young and ambitious companies. And work with them on an exclusive representation. Remember that working with distributors can be a powerful source of income for a company, as well as a constant headache. After all, building a network of distributors requires a fairly rigid system of cooperation and its strict adherence. But in this scheme, it is especially good that all the costs of organizing an office and staff in remote regions will fall on the shoulders of distributors.

Own sales offices

The scheme of own sales offices is suitable for companies whose products are not exclusive and are not protected by the brand. This means that there is no way to control partner companies. In this case, it is useless to build a distribution network, because it is unlikely that partners can be tied to themselves, and it is difficult to follow their actions. In addition to the situation with non-exclusive products, the scheme of its own sales offices makes sense in the case when a company in the region has many customers - both large and small. An own sales office with an office, a warehouse and a team of sellers in regional cities will cost the company less than in the capital. And the effect will be more tangible. Indeed, this way the company will be able to build and maintain personal relationships with customers.

Traveling crew system useful when a company wants to cover many regions, but in each region there are few potential customers: 3 - 4 large and a couple of dozen small. Under such conditions, there is no point in either a sales representative or distribution building.

In the system of traveling teams, work comes from the head office. The employees of the regional sales department regularly travel to other cities in groups of 2-3 people and personally monitor the work of customers. At the same time, each employee can hold 2-4 (and even 6) meetings a day and demonstrate fairly high performance. In order to keep sellers in good shape and maintain system efficiency, the team should work in the office for one week, and on the move for the next week or two. Since each region must be visited once every few weeks, it may be wise to rent corporate apartments in key regions to save money.