Whether for FMCG companies or distributors, products are ultimately sold by frontline sales staff. FMCG companies face the national market, while distributors deal with retail outlets scattered across various regions. With dozens or even hundreds of salespeople, most of whom are not under the boss's direct supervision and spend their days in the market, it is impossible to monitor their performance in real time. At this point, how to achieve set work goals through incentives becomes particularly critical. This article explores incentive methods for frontline sales staff from the perspectives of FMCG companies and distributors. Effective incentives can stimulate employees' enthusiasm for work. Conversely, if incentive design has problems, it can lead to a situation where you lose both the bait and the fish (i.e., suffer double losses). Generally speaking, we can divide incentives into three parts based on time: short-term, long-term, and additional incentives. Additional incentives can be understood as periodic or special-time-node incentives. -01- Short-term Incentives: Both Goal-Based and Process-Based Approaches Must Be Emphasized Before explaining specific short-term incentive methods, let me first explain: What are goal-based and process-based approaches? In simple terms: Goal-based means I don't care what you do; as long as you sell the goods and collect the payment, you get the corresponding commission or incentive. It doesn't look at what the salesperson specifically did. Process-based means: I want to manage the specific work you do in the market; if you do it, even if business is not good, you still get a reward. For example, placing a freezer may not yield immediate results, but as long as you complete the action of placing the freezer, you get the corresponding reward. In the past, many FMCG companies used goal-based incentives, where 80% of frontline salespeople's income came from sales performance assessments. But now, we see that many FMCG companies have changed from a single goal-based incentive approach to a dual incentive of goal-based + process-based. In some cases, the proportion of process incentive income is greater than that of result incentive income. Why is this? Shouldn't salespeople be judged by their performance? Let's do a simple analysis. First, in the past environment, market competition was not as intense, the environment was not as complex, and products were not as abundant. As long as the product was acceptable, a salesperson could achieve business through personal effort. In addition, past corporate management had certain limitations, especially when facing the national market, where the physical radius was too large. There were also no corresponding tools, so only result assessments could be done. Assessing processes was a distant dream. With economic development, products gradually became abundant, with numerous SKUs. In such a harsh and complex competitive environment, relying on individual salespeople to fight alone in the market is not competitive. Companies must operate systematically, and team combat is the only way to win. Team combat tests not the ability of one person, but the collaborative ability of all. The best way to test collaborative ability is for everyone to execute according to set steps, similar to team combat in the military, where you don't even need to consider what others are doing; just follow the steps arranged by the company. When everyone follows the set steps, the collaborative effect is optimal. The specific steps are designed by managers, and the design logic is to break down the goals to each person based on the existing team's capabilities, so that everyone knows what to do. If you only focus on results, everyone looks out for themselves, and the final outcome is chaos. With the widespread application of mobile internet and the iterative upgrade of enterprise management, there are enough tools to establish a refined collaborative combat system. For example, for frontline salespeople, smartphones can be used to collect each person's daily work trajectory and standardize every action. Previously, salespeople were asked to visit 35 terminal outlets daily, and upon return, they would tell the boss, "I visited them all, but the boss wasn't there, the store was closed, so I couldn't do anything..." Salespeople would slack off in various ways. Now, through location positioning, password photos, and even sensors on freezers, various means are used to standardize salespeople's visit actions. With advanced technology, it is possible to manage every action of salespeople. Managers believe that through team collaboration, they can definitely win the market, so they are not worried about poor results. As long as the overall deployment and strategies are correct, just control each step. Therefore, both goal-based and process-based approaches must be emphasized! So how to design them specifically? 1. Design of Goal-Based Incentives For frontline salespeople, some have targets set at 50,000, others at 80,000. Although it is known that the quality of each route differs, how to set scientific and reasonable targets? Refer to two pieces of data: first, year-on-year comparison; second, recent period-on-period comparison. For example, target amount = 60% of the same period last year + 40% of the recent average (6 months or 3 months). This considers both the same period last year and recent business conditions. When setting targets, the most appropriate principle is to make the salesperson "jump a little to reach it," putting in 110% effort to achieve the set goal. Of course, the above 60% or 40% is not fixed. For example, for township markets with obvious off-peak and peak seasons, the ratio should be adjusted appropriately, such as 80% from the same period last year and 20% from recent levels. But for normal periods, my suggestion is to focus on trends, because in business, momentum is important. Goal-based incentives, also known as target achievement rate, are basically for incentivizing existing best-selling products. This portion of income can account for about 30% of total incentives. 2. Design of Process-Based Incentives Process-based incentive design is based on the recent work priorities of enterprise managers or distributors, or the annual work plan. This portion of income can account for about 50% of total incentives. For example, for the development of special channel outlets, process assessments are designed. In a relatively mature market, easily developed outlets have already become effective outlets, and the rest are "hard-to-crack" customers. At this point, the development of special channel outlets can be broken down into three actions. The first action is to obtain customer information for the required outlets. For example, registering information for 30 outlets in the company's customer database counts as completing a process indicator, and a corresponding incentive is given. The second action is to enter substantive negotiations. Submitting a customer proposal, quotation, or customer reply (in the form of a WeChat screenshot) counts as completing a process indicator, and a corresponding incentive is given. The third action is to reach an agreement with the customer, where the customer places an order and becomes an effective outlet, completing a process indicator, and a corresponding incentive is given. The key is that all indicators are assessed based on process, and each process is considered valuable by default. In addition, the specific incentive ratio can be designed based on the salesperson's seniority. For example, for new salespeople, completing the "obtain customer information" process indicator may have a larger incentive ratio; for senior salespeople, completing the final transaction may have a larger incentive ratio. Of course, process-based incentives can also include placing freezers, product distribution rate, active account count, product stacking quantity, special channel development, etc. From result management to process management, an individual's ability can never be greater than the company's ability. If a company's business of several hundred million is tied to the lowest-level employees, it is obviously unrealistic and poses risks to the company. By breaking it down into standard process actions, even new hires can quickly follow the steps. 3. Design of Per-Box Product Incentives In addition to goal-based and process-based incentives accounting for 80%, I suggest the remaining 20% of incentives be placed on non-best-selling products or new products. Although new products sell slowly, they have long-term value and relatively high gross margins. This is the "per-box incentive" for salespeople. The design of per-box incentives is to increase salespeople's attention to certain products. Here, three points need attention: First, cap the incentive amount The purpose of capping is not to limit salespeople's rewards, but to avoid psychological gaps due to excessively high or low amounts. For example, if a salesperson happens to encounter a "big customer" who takes 2,000 boxes of a new product, at 2 yuan per box, they would immediately receive 4,000 yuan. If there is no reward next month, it could easily cause a psychological gap. Second, tie it to monthly achievement When designing per-box incentives, it must be tied to the monthly revenue achievement. For example, if revenue achievement is less than 100%, the per-box incentive is discounted by 20%. The purpose is to prevent frontline salespeople from over-focusing on new product sales while neglecting basic work and basic indicators. Third, plan profit distribution well Whether for managers or distributors, plan the per-box incentive amount in advance, such as taking a certain percentage from profits as rewards for salespeople and middle-level managers. First ensure the company is profitable, then reserve a reasonable portion. -02- Long-term Incentives: Promotion, Salary Increase, or Year-End Bonus Distribution Long-term incentives can also be called annual assessments. They mainly provide data basis for salespeople's promotion, salary increases, or year-end bonus distribution. The items and their corresponding score ratios in the annual assessment can be set based on the annual work focus, generally including five core aspects:
1) Overall sales revenue; 2) Number of active outlets; 3) New product sales targets; 4) Number of newly developed outlets; 5) Other daily work, etc. The above five indicators mainly revolve around overall sales volume, core customers, new product promotion, daily work, and customer development, corresponding to the sales job responsibilities of frontline salespeople. -03- Additional Incentives: Peak Season PK or Promoting Additional Projects Additional incentives are also periodic special stimulus rewards. For example, as the summer beverage peak season approaches, PK competitions are held to drive sales. Using a branch office or representative office as a unit, two groups compete against each other, with achievement based on target achievement rate. To ensure the PK achieves the expected results, the following three points need attention: 1. Create Atmosphere and Ensure PK Quality PK is often not entirely about the bonus amount, but about "pride"—not wanting to be worse than the other. So creating atmosphere is very important, especially the sense of ceremony before the PK competition. For example, at a sales meeting held in a hotel, set up a "boxing ring" specifically, arrange for the top salespeople from the two groups to go on stage to read slogans, pull banners, and even wear boxing gloves. Other non-competitors can also place "off-site bets" to make the entire company pay unprecedented attention to the PK. During the one-month PK process, publish the progress of both sides weekly in real time to maintain the heat of the PK. 2. Regional Differences, Achievement Rate as the Standard As a manager, fully consider the differences in regions or routes between the two groups, and it is best to use target achievement as the unified standard. In addition, PK competitions should not be held too frequently, or other dimensions can be used, such as individual vs. individual PK. Other methods like outlet development or agreement customer achievement rates can also be used for PK. 3. Management Should Actively Participate Although PK can mobilize team enthusiasm and atmosphere and stimulate business potential, it also has downsides, such as the person pushed onto the stage may feel like they are being "made a fool of." Therefore, managers cannot completely let go during PK. During the PK process, managers should participate, pay attention to and coach the participants, and give the team a sense of belonging. Managers must clearly understand that the purpose of PK is not to eliminate a team, but through PK, both participating teams can surpass themselves. For the company, PK is also to let the team surpass itself, not to defeat others. In this way, even the losing side can feel gratified, having not only surpassed themselves but also completed the target; this PK is just a narrow defeat. Managers should continuously pay attention to them, coach them, and help them surpass themselves. Regarding promoting additional projects, it depends on market conditions. For example, if competitors' actions are obvious recently, temporary special projects can be set up with rewards to counter competitors; or for developing special hotel channels, development incentives can be established. About the author: Pan Lihua, Sales Operations Manager at Swire Coca-Cola, a student of the Zero Period of Dedao University. With over 15 years of sales management experience at Coca-Cola, he is familiar with FMCG market layout, strategy formulation, and team management. He is skilled in market insight and team motivation. Tips will be paid 400-2000 yuan once adopted.