---
title: "A Practical Model for Improving Distributor Internal Management"
description: "This article addresses common challenges distributors face in performance assessment and management, identifies eight typical problems with sales staff, outlines eight dimensions to evaluate distributor management capability, and proposes a five-point prevention plan and a four-stage management evolution model."
author: "方刚"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-11-01"
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---

# A Practical Model for Improving Distributor Internal Management

> This article addresses common challenges distributors face in performance assessment and management, identifies eight typical problems with sales staff, outlines eight dimensions to evaluate distributor management capability, and proposes a five-point prevention plan and a four-stage management evolution model.

**Friendly reminder: Click the blue text above, “FMCG Distributor Professional Consulting,” to learn more about marketing and distributor internal management.**

**I. Common Difficulties in Distributor Assessment and Management**
1. Sales staff are all veteran employees, managed with a humanistic approach, with few formal systems in place, making it difficult to enforce penalties.
2. Shortage of personnel during peak seasons.
3. No process-based KPI assessment; service distributor personnel lack business development skills (mainly just delivery). Direct-supply outlets are too few, below 10%; increase direct-supply ratio and cultivate staff quality.
4. The team currently serving secondary wholesalers is not assessed, lacks market development capability, and performs purely physical labor. We have long wanted to bring this team under assessment, but they resist, complain about hard work and low pay, and lack market development skills. We plan to replace them and improve staff capability.
5. Commission calculation is too simplistic, lacking incentives for promoting specific products, mainly because no new products have been introduced for a long time.
6. Imbalance across regions and outlets leads to income disparities among sales staff. Fines are hard to enforce, and staff turnover is high.
7. Delivery staff with 1-2 years of tenure change frequently due to the dirty and tiring nature of the work, which locals are unwilling to do. During this year's peak season, staff collectively resigned demanding pay raises; when raises were not granted, those willing to stay returned, while others left.
8. Unable to set specific assessment indicators; rewards are easy, but penalties are difficult. The product range is narrow, only high-end liquor, making it impossible to penetrate village-level terminals.
9. During peak season, staff take leave, and the workload becomes overwhelming.
10. Staff with 1-3 years of tenure become harder to manage over time; they have low business skills, poor discipline, and frequently take leave. A full-attendance bonus exists but is not attractive to employees.
11. Need to verify the feasibility of our ideas: high sales but low profits, high expenses, and no detailed breakdown of cost investment and flow.
12. Baijiu (white liquor) and beer staff earn similar salaries, but beer work is heavier, leading to high turnover. Currently, one team handles both beer in summer and baijiu in winter, but we cannot cultivate good salespeople.
13. Unable to solve the problem of layoffs; work efficiency is low, and service is poor.
14. Three years ago, we proposed stabilizing staff, but after stabilization, veteran employees exhibit many problems: 1) They skip difficult accounts (knowing terminals too well); 2) Service attitude declines (when products sell well); 3) They resist basic tasks (like setting up promotional materials, shelf restocking).
15. Wage and workload issues. People tend to choose jobs with lower workloads. Confusion: staff are lax, and systems are incomplete. We only subjectively assess whether employees work hard.
16. The "big pot" (egalitarian) management has been running for 6 years. Staff turnover has made delivery management difficult.

**II. Eight Common Problems with Distributor Sales Staff**
1. Playing hide-and-seek at work.
In the morning, after loading goods, sales staff and drivers leave with the vehicles, then gather to chat and play cards. Morning work is done in the afternoon, and half-day work takes all day.
2. Focusing on large accounts, neglecting small ones.
Large stores order large volumes and concentrate sales. Sales staff do not sweep every street but head directly to target stores based on experience or phone orders, ignoring potential outlets or those that have suddenly run out of stock.
3. Visiting fast-moving outlets, avoiding slow ones.
Fast-moving outlets have higher transaction probability and stable relationships, so sales staff prefer them. Slow-moving outlets have low order volumes, low transaction probability, and infrequent deliveries, leading to more rejections and unstable relationships, so staff simply pass by.
4. Skipping or missing stores.
Missing stores during visits is common in vehicle sales mode. Sales staff ride with the driver, but the driver controls the wheel; if the driver speeds up or the salesperson is distracted, target outlets are missed, and turning a large vehicle around is troublesome, costing sales opportunities.
5. Low efficiency, high cost.
While delivering in the east of the city, a call comes from the west for goods, so they drive dozens of kilometers to deliver, then return to the west, turning the delivery truck into a sightseeing bus.
6. Wide sowing, thin harvest.
During new product distribution, with manufacturer support and sales incentives, they successfully distribute to hundreds of stores. Two months later, only dozens remain active. Visiting stores, the initial products are either sold out (with store owners complaining) or gathering dust in warehouses.
7. Dependence on old products.
Distributors hold grand launch meetings for new products, with earnest appeals and vows, but results are often poor. Why? Because selling old products is simple, payment collection is easy, no persuasion is needed, and no door-to-door luck is required.
8. Doing private work, padding expenses, and diverting promotions.
Sales staff have endless tricks, and even if discovered, distributors often dare not speak up because they are key salespeople!

**III. Eight Dimensions to Assess Distributor Management Capability**
1. Look at delivery mode: vehicle sales mode vs. visit mode (separating sales and delivery, order-based delivery).
Most distributor combat units are 1+2 mode: one vehicle, two people—one driver and one salesperson. This is standard vehicle sales mode. Visit mode is 1+1: salespeople visit terminals alone on bikes to take orders, and drivers deliver according to orders. Vehicle sales mode is easy to manage and closes deals on the spot, but drawbacks include focusing on large stores, skipping small ones, missing stores, and low efficiency with high costs. Visit mode develops by area, operates delicately, covers all outlets, and delivers precisely at low cost, but managing the sales team is difficult, with constant cat-and-mouse games; if the team slacks, order output drops, and management problems arise.
2. Look at business processes.
Business processes refer to internal management processes, from warehousing and shipping to delivery and payment collection, to financial management. Many small and medium distributors operate as boss + wife, or boss + wife + wife's mother (mother-in-law or relative). Some bosses are "Monkey King" types, capable of anything—warehouse, finance, delivery, negotiation, even loading and unloading. Such distributors are mostly in the startup phase, often exhausting themselves, and even if they earn a hard-earned profit, it's "meat rotten in the pot"—they know they make or lose money but not where.
3. Look at salary structure.
Most distributor sales staff are paid base salary + commission. As long as attendance is sufficient, base salary is guaranteed. The key is the commission part. Many distributors calculate commission based on turnover: turnover × commission rate = salary. Initially, if the rate is set well and staff can see and earn the commission, it promotes sales. But over time, distributors find that staff only sell old bestsellers, ignore new or non-bestselling products, and may even manipulate price promotions or payment collection to achieve turnover.
4. Look at territory division.
Early distributor management is often "bandit-style": the boss waves his hand and says, "Brothers, beyond the mountain are wine and treasure—go!" Then the sales team scatters, fighting and grabbing. East and west are not distinguished, and after distribution, they fight among themselves over territories. Several vehicles fly around, and the money earned doesn't cover gas. With territory division, these problems are solved, and the key is that the distributor can let each subordinate show their skills, detect and fix local market issues promptly, and control resource allocation.
5. Look at assessment results.
At month-end, the distributor pays staff and asks, "Zhang San, how much did you earn?" Zhang San: "1860 yuan." "Do you know how this salary was calculated?" "No idea!" This reflects chaotic financial systems. If the distributor company can establish transparent financial systems and processes, this problem can be solved, making employees clear, stable, and focused. For example, Zhang San answers: "This month, my base salary is 900 yuan, plus sales commission of 360 yuan, plus 700 yuan for selling 2,000 units of new products, minus 100 yuan for exceeding the gas budget." That is the ideal state.
6. Look at commission orientation.
When the sales team is immature, commission-based management is common. Once management matures, distributors often adopt "contracting" (包干制), contracting vehicles and markets to subordinates, with the distributor only holding the warehouse and liaising with manufacturers. Under commission mode, small and medium distributors have overly simple management systems, with only a rough ledger, making data aggregation and information transfer difficult, and commission rates are set by experience. Assessment models often remain unchanged for years, leading to a situation where working more or less yields the same. Staff appear diligent in the warehouse but play hide-and-seek outside, even doing private work, visiting internet cafes, or playing mahjong, while the distributor is kept in the dark and listens to complaints: "The market is tough, harder than climbing to heaven!"
7. Look at peak/off-season wages.
A single commission rate all year leads to starvation in off-season and overfeeding in peak season. Staff come in peak season and leave in off-season, making retention impossible. So consider varying indicators by season and reserving off-season wages.
8. Look at driver and salesperson salary composition.
In the 1+2 mode, driver and salesperson are a combat unit, like two grasshoppers tied to one rope. Without coordinated action, efficiency drops and internal friction increases. When setting assessment indicators, consider the unit's integrity, clarify their superior-subordinate relationship, and link the driver's salary to the salesperson's salary—that is, the driver's pay depends on the salesperson's earnings.
Note: By evaluating a distributor through these eight dimensions, you can clearly see their management level and capability.
The eight phenomena of distributor sales staff + the eight dimensions to assess a distributor = a distributor's internal management health report!

**IV. Five Preventions to Avoid Going Astray**
1. Substitution (偷梁换柱).
The famous brand "Kangshifu" (Master Kong) earns less than the knockoff "Kangshiniang," so staff secretly sell the knockoff for extra income. The distributor's land was meant for grain, but tenants may secretly plant sorghum!
2. Mutual destruction (自相残杀).
Delivering goods into others' territories earns a bit more, but it doesn't stop there—they even dump goods at low prices into those areas.
3. Overdrawing resources (透支资源).
Contractors always prioritize profit maximization, not market sustainability. Diverting, transferring, altering promotions, raising prices on new products, or dumping are common tactics.
4. Setting up their own turf (自立山头).
After market contracting, terminal customer relationship maintenance transfers entirely to the contractor, tempting salespeople to become bosses. Once the opportunity matures, they may start their own brand while still working.
5. Eating away at reserves (坐吃山空).
Distributors can contract out because the market is already established, often supported by a bestselling product, which is why contractors dare to take over. But due to fragmented operations, price systems gradually collapse, outlets are lost, and competitors erode advantages until they are gone.
Implementing the five preventions is to avoid the distributor becoming an "absentee boss" and reaping beans when sowing melons.

**V. Four Stages of Distributor Management**
For distributors, improving internal management involves four stages. Alternatively, distributors can be classified into four types from a management perspective.

**Stage 1: The "Big Pot" (Egalitarian) Stage**
Characteristics:
- Working well or poorly yields the same; everyone gets a share whether they work or not.
- A specialty of mom-and-pop shops, micro-distributors, and family businesses.
Core problems:
- Sales staff are either unaffordable or cannot be retained.
Core contradictions:
- Distribution system, employment system.
Core tools:
- Financial system: chaotic accounts, or only a rough ledger; bookkeeping is not for management, some records even on tissue paper.
Self-check for "big pot" clients:
- Accounts: current sales, expenses, surplus.
- Bad debts: payment terms (reasons for growth or decline).
Advice: Profit or loss is not scary; the fear is not knowing where profits come from or where losses occur!
First step for "big pot" clients to change: commission system!

**Stage 2: Commission System Stage**
Commission system: base salary + commission.
Characteristics: More work, more pay.
Two sub-stages:
- High base salary: 1) initial implementation; 2) new employee probation.
- Low base salary, high commission: 1) mature business; 2) mature personnel.
Territories should be fixed; indicators can be tested through simulation before rollout (to prevent excessive income fluctuation and instability).
Consider peak/off-season indicators or commission reserves.
Commission methods:
1. Sales commission (based on collection amount)—note: may lead to dependence on old products.
2. Per-product commission—by product type and tier.
All income from commission. Prerequisites: stable brand, fixed territory, mature indicators, stable team.
Key core of commission system:
1) Financial support. 2) Indicator setting. 3) Territory division. 4) Brand stability.

**Stage 3: Contracting System (包干制)**
Small-scale contracting: people, vehicles, expenses.
Key point: indicators.
Large-scale contracting: people, vehicles, expenses, market.
People, vehicles, expenses, market + brand.
Key point: sovereignty.
Warning: prevent loss of sovereignty, substitution, and a mess!

**Stage 4: Business Unit (事业部)**
Definition:
Business unit system divides departments according to business, including by product, region, or customer (market), establishing several business units. Also called subsidiaries.
**Four supports:**
- Mature management tools, mature management systems, stable team structure, stable profit model.
**Three elements:**
- Relatively independent market; relatively independent interests; relatively independent autonomy.

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