Regardless of the period, region, market conditions, or products being handled, salespeople are the foundation of sales work. Therefore, motivating sales staff while ensuring the implementation of senior leadership's strategic intentions has become a critical issue for manufacturers and distributors to solve. Among various solutions, adjusting the salary structure of sales personnel is the most direct and effective method. This article provides a detailed explanation of how to build a salary system for sales staff, hoping to assist corporate managers and distributor partners.

To clarify the salary system, three aspects must be addressed:

  1. Components of the salary system: Simply put, what constitutes a salesperson's income, i.e., "what money is paid."
  2. Target elements of the salary system: Factors that affect salespeople's salary levels, or more directly, "why money is paid."
  3. The method of linking salary components with target elements: How a certain part of a salesperson's salary fluctuates due to certain factors, such as increasing fixed amounts, deducting by percentage, or multiplying by a coefficient, i.e., "how money is paid."

I. Components of the Salary System: Generally, the salary system for sales personnel is divided into the following eight aspects, with basic salary and sales commission being the most widely used, while other items vary according to the actual situation of each manufacturer and distributor.

  1. Basic salary: Ensures the basic living needs of sales personnel.
  2. Sales commission: Rewards the sales performance of sales personnel.
  3. Performance-based salary: Extracts key indicators to assess the work process and results of sales personnel.
  4. Seniority pay: Rewards the loyalty of sales personnel.
  5. Position allowance: Subsidies for personnel in positions with special work needs.
  6. Employee benefits: Insurance, leave, and other hidden benefits, which are important factors in enhancing employees' sense of belonging and maintaining stability.
  7. Special bonuses: Special rewards for special events or contributions.
  8. Year-end bonus: Year-end reward for sales personnel, serving as an overall review and evaluation of their annual work.

II. Objectives of Building the Salary System

  1. Compensation for job responsibilities
  2. Rewards and penalties based on work results and effectiveness
    1. Sales volume: Actual sales volume of the salesperson.
    2. Overall task completion: The extent to which the salesperson has completed their tasks.
    3. Proportion of leading product sales: The proportion of leading products in the salesperson's sales results.
    4. Expense usage: The quantity, quality, and effectiveness of expense usage.
    5. Profit level: The profit contribution of the employee to the company.
    6. Team management results: The performance of management functions by management-level employees.
    7. Market/customer feedback: Customer satisfaction feedback.
  3. Work process control:
    1. Achievement of work process standards: The extent to which key indicators are met during the work process.
    2. Subjective judgment factors: Subjective assessments of sales personnel's initiative, responsibility, etc.
  4. Team stability
    1. Loyalty
    2. Fairness
    3. Team spirit
  5. Special contributions/incidents rewards and penalties: Certain special contributions or losses.

III. Methods of Linking Relevant Elements with Salary

  1. Linear method: For each additional XX, salary increases by X yuan. A typical example is piece-rate commission: for each additional item sold, the salesperson earns an additional XX yuan; seniority pay: for each additional year of service, monthly salary increases by XX yuan. For sales personnel, this is a stable income, relatively fair and reasonable, but it provides less motivation and lacks clear strategic direction.
  2. Tiered method: Similar to the linear method but introduces tiered rewards, i.e., when a work result reaches XX-XX (value), salary is paid according to XX standard. A typical example is task commission: within the task, the commission rate is X%, and for the excess portion, the rate is X%. This method sets a goal for sales personnel, indirectly applying pressure, but the degree of pressure requires leadership wisdom; appropriate pressure is beneficial, while too much or too little can cause adverse reactions in the team.
  3. Coefficient method: When a work result reaches XX or above, the coefficient is X; when another work result reaches YY, the salary base is Y; the final salary is X × Y. A typical example: The task completion rate (e.g., 150%) serves as the commission coefficient; if the task is not completed, the coefficient is 50%, with a cap of 200%; the piece-rate commission (e.g., 2000 yuan) serves as the base; the final commission paid is the coefficient × base (150% × 2000 = 3000 yuan). Of course, the coefficient method itself is a comprehensive approach, where the coefficient and base can be set using linear or tiered methods. For sales personnel, the coefficient method is a dual stimulus: they must complete basic sales to obtain a higher commission base, and also exceed targets to achieve a higher coefficient. The multiplication of the two in calculating final commission can drive salespeople to work harder. However, while this method is a powerful motivator, if not properly operated or monitored, it can easily cause imbalance among sales personnel, leading to dissatisfaction and harming team morale and stability.

Common Methods for Building a Salary System Table In summary, the salary system is essentially a calculation system where salary components and related elements fluctuate through specific linking methods. When formulating a salary system, we follow these steps: 1. Determine the company's current primary tasks. Whether it's sales volume first or market stability first, ensuring payment collection or reducing costs, promoting new products or maintaining old ones—these require leaders to have a clear understanding and judgment of the market and the company's development stage. 2. Based on the company's development goals, clarify the work objectives that salespeople need to achieve. 3. Based on actual conditions, consider which core links need to be incentivized for salespeople to achieve these objectives, and which parts of the salary system are suitable for incentives. 4. Select the salary components for sales personnel. Generally, basic salary, commission, and employee benefits are essential; performance-based salary, seniority pay, and year-end bonus are added based on strategic goals; subsidies are more about formal fairness than amount; and special bonus rules reflect the company's values. 5. Considering the team situation, company goals, and strength, determine the method of linking salespeople's salaries with objectives. The salary system is a systematic plan that considers factors such as company and market conditions, development strategic goals, team business level, and internal organizational ecology. However, I believe that as long as one element is firmly grasped, there will be no directional issues: that is, grasping the work direction and goals that sales personnel need to accomplish at this stage. As long as you clearly understand the work goals of frontline salespeople, grasp the degree, and come up with clever details, the entire salary system will surely radiate new vitality.

Expert Advice Teacher Fang Gang mentioned that distributor commissions have three improvement stages: 1. Initial commission model: Basic salary + turnover commission. This is the most common method when a distributor's sales team is first established, so no further elaboration. 2. Intermediate commission model: Basic salary + category commission + new product special project. When the distributor's personnel are stable, if the basic salary proportion is high, it will inevitably breed laziness, encourage free-riding, and create dependence on old products. At this point, distributors should promptly introduce category-based commissions, increase the commission rate for new products, and guide salespeople to focus on new product promotion. In new product promotion, commissions are usually reflected in wages at the end of the month. Distributors can consider adding a "new product special project + weekly (daily) category commission" payment method, such as calculating each salesperson's weekly or daily new product achievements, converting them into bonuses, and publicly cashing them out this week or day. 3. Advanced commission model: Turnover commission + category commission + performance improvement reward. At this stage, the commission portion is sufficient to support the main income of sales personnel. Subsequently, distributors need to establish annual performance growth commissions for salespeople, add a 1000 yuan bonus for the top few with the fastest monthly performance improvement, add a 2000 yuan reward for the top few with the fastest half-year performance improvement... Various methods, with rewards in place, first mobilize the enthusiasm of salespeople, clarify reward standards, assess daily, and give everyone the desire to strive for progress. In the distributor's vehicle sales model, the driver and salesperson are a combat unit. Without unified coordination, efficiency is low and internal friction increases. When setting assessment indicators, distributors should consider the integrity of this combat unit, such as clarifying the superior-subordinate relationship between the two, linking the driver's salary to the salesperson's salary, where the driver's salary depends on the salesperson's salary.

From Commission System to Contract System However, after reaching the advanced commission model, distributors have not fully solved the initial problems, such as fuel waste and low efficiency. Once distributor management matures, the "contract system" can be introduced, which means contracting the vehicle and market to subordinates for independent accounting. The distributor only owns the warehouse, is responsible for liaising with manufacturers, and collects "rent." This avoids the mentality of "spending grandfather's money without feeling pain," and they understand that "the diligent farmer is not lazy" and that rewards come from hard work! But the premise is that distributors must firmly hold the sovereignty, not delegate all market rights, and not turn salespeople into "mountain kings," strengthening management of the contractor. Therefore, to implement the contract system, three preparations are needed, and five preventions must be maintained long-term:

Three Major Preparations:

  1. Have a mature financial information system that can accurately and timely reflect daily and monthly data by category. A mature financial information system means calculating detailed accounts. However, many small and medium distributors are often "Sun Wukong-type," capable of doing everything—warehouse management, finance, delivery, negotiation, and even loading and unloading themselves! They work hard for a meager profit, but the result is "meat rotten in the pot," only knowing whether they made or lost money, but not where the profit or loss occurred! They may not even know the annual vehicle costs, let alone provide timely and accurate support for internal management!
  2. Have strict regional division. Early distributor management is often "bandit-style," with a wave of the hand, salespeople scatter, with no distinction between east and west of the city. After the initial distribution, it's a fight among themselves, competing for territory, with several vehicles flying around, and the money earned isn't even enough for gas! After regional division, not only are these problems solved, but the key is that distributors can let their subordinates show their talents.
  3. Not only focus on product commissions but also pay attention to service-related assessments. For example, in the beer industry, bottle recycling occupies an important position in the business process. If distributors do not pay attention to the bottle return link, there will be "one-shot deals," where terminals accept the goods, but the bottles are either unwanted or sold as scrap glass. If distributors set improper bottle return commissions for salespeople, there will be problems where salespeople only deliver goods but do not return bottles, leading to increasing terminal complaints, gradual loss of outlets, and inevitably declining sales.

Five Preventions:

  1. Substitution. The famous "Kangshifu" brand earns less than the counterfeit "Kangshiniang," so they secretly sell "Kangshiniang" to make extra money. The distributor's land was originally for growing grain, but tenants may secretly plant sorghum!
  2. Mutual destruction. Delivering goods to someone else's territory will certainly earn more money. But that's not all; they might even dump goods at low prices into others' areas.
  3. Overdrawing resources. The contractor always considers profit maximization; sustainable market development is not their primary concern. Intercepting, diverting, changing promotions, adding prices to new products, or selling off are common tactics used by salespeople.
  4. Establishing their own turf. After market contracting, terminal network customer relationship maintenance is fully transferred to the contractor. Salespeople inevitably face the temptation of becoming bosses. Once the opportunity matures, they will look for a brand to become a boss themselves.
  5. Eating away at resources. The reason distributors can successfully contract out is often because the market has already been established, and there is a best-selling product supporting it, which is why contractors dare to take it on. However, due to fighting separately, price systems gradually become chaotic, outlets are lost one by one, and with competitor encroachment, advantages will be completely lost. Implementing the five preventions is to avoid distributors falling into the trap of being "hands-off bosses" and reaping beans when they planted melons.

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