Every Entrepreneur and Sales Head we work with asks the same question: “How can your Distribution Management System (DMS) help us push more product through the chain?”
Most companies obsess over Primary Sales (Company –> Distributor) because that is where their immediate revenue comes from. However, the real health of your business lies in Secondary Sales (Distributor –> Retailer) and Tertiary Sales (Retailer –> Consumer).
If you don’t track secondary sales, you are driving your business blindfolded. Leveraging secondary inventory data is the key to unlocking growth. Here are 6 compelling reasons why you need to master this data.
1. Smarter Production Planning (Beating the Bullwhip Effect)
We often see top-performing brands facing stockouts during peak seasons (like the Diwali rush) or holding dead stock when the season ends. Why does this happen?
It is due to the “Bullwhip Effect.” A small fluctuation in demand at the retail shop (Kirana store) creates a larger fluctuation at the distributor level, and a massive panic at the manufacturing level. This is a supply chain nightmare.
By tracking secondary sales data, you see the actual demand at the retail level. This allows you to forecast accurately, avoiding the twin disasters of stockouts (lost revenue) and overstocking (expired goods).
2. Launch of new product
Launching the recently developed product shares resemblance with contribution in a startup. Irrespective of the expectation of possessing a potential blockbuster, the truth is that a remarkable quantity of product launches leads to failure. Considering the fate of a product is tedious and demanding, and determining when sales growth takes place and starts deteriorating tends to have an even much larger problem. Mostly,depending on qualitative analysis and management perceptions prevails over accessing the historic sales information to forecast the product cycle, a less information-driven approach.
While complete removal of uncertainty at the time of a product launch may not be successful through analytics, it can definitely be minimized. By demonstrating correlations among products resembling product life-cycle (PLC) curves, a Machine Learning algorithm has the strength to improve predictions and significantly reduce Mean Absolute Error. Such reduction in mistakes can translate to noteworthy expense savings.
Read More – 8 Ways To Improve Distributor Sales Performance
3. Optimization of Sales Push
In a competitive market, achieving even a 5% increase in sales can be challenging. Many Sales Managers make the mistake of focusing only on their “Star Outlets.”
Our experts recommend a different strategy: The “Bottom 10” Campaign. Instead of focusing on top accounts, use secondary sales data to identify the neglected accounts—those with the lowest sales-to-store-area ratios.
By directing your distributors, merchandisers, and sales executives to focus on these underperforming outlets, you can unlock hidden potential. We have seen companies improve overall sales by 4% in just a few weeks simply by fixing the weak links.
4. Distributor and sales team evaluation
Hiring a sales team and appointing distributors is expensive. Retaining them is even harder. But how do you evaluate their performance fairly?
If you rely on subjective opinions, your team will feel distressed and demotivated. You need data.
SalesBabu DMS solves this by providing a “Balanced Scorecard” for every partner and employee. This score captures objectives from both marketing and sales based on real field data. When you evaluate a sales rep based on numbers they can see, like secondary sales growth or outlet coverage, they feel empowered to improve their strategies.
Read More – Advantages Of Using A Cloud Distribution Management System
5. Marketing planning
Investing more in Trade or Consumer Marketing is a question that can easily create a war between the Sales & Marketing departments. Promoters from both sides can have long-time arguments on the cost and efficacy of them both. The number of factors on which the sales number depends would easily be in 3 -4 digits. So how do we come to know if it is an issue of trade marketing (PUSH) or consumer marketing (PULL)?
With one of our clients, our team deciphered this seemingly unsolvable puzzle by a simple metric, ‘Ds – days of stock in a retail outlet’. If the number Ds was greater than the benchmark, it needed more Pull (consumer marketing). If the number Ds was less than the benchmark, it needed more Push (Trade marketing).
SalesBabu aggregated these numbers and the company had a readymade strategy for everyone including the territory, region, and team.
6. Inventory optimization
All agree to inventory optimization, as long as it involves stocking more products at the distributor and retailer ends. This load-the-market psychology is driven by two key thoughts: First, the more quantity of stocks are loaded on the channel partner, they are more likely to push that product further down: and second, the individual KRA’s of the sales team is determined by sales numbers alone.
While the sales role push in a competitive market cannot be null, there is a cost associated with having old stocks on shelves, returns, expiry and associated retailer anxiety. Thus, particularly for a mature and demanded brand, it is critical that inventory is optimized at each level and outlet. And with many brands and retailers and both numbers changing rapidly, there is no ideal number that can be pre-decided.
Conclusion
Tracking Primary Sales pays the bills today, but tracking Secondary Sales builds the business for tomorrow.
By implementing a robust Distribution Management System (DMS), you gain visibility into the ground reality. This allows you to plan production better, launch products successfully, and keep your distributors and sales team aligned with your goals.
Ready to gain visibility into your secondary sales? Equip your business with SalesBabu DMS and turn data into revenue.
