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Lazy 'Mercenaries'
Playing hide-and-seek with work. In the morning, after loading goods, salespeople and drivers head out with their vehicles, but several vehicles gather to chat and play cards. Morning tasks are postponed to the afternoon, and half-day tasks take all day!
Prioritizing large stores over small ones. Large stores order large quantities and provide concentrated sales volume. Salespeople do not visit stores street by street; instead, based on experience or phone orders, they head directly to target stores, ignoring potential outlets that need development or outlets that have suddenly run out of stock.
Favoring fast-moving stores over slow-moving ones. Stores with fast turnover have higher chances of closing sales and stable customer relationships, so salespeople prefer visiting them. Slow-moving stores order less, have lower closing rates, and require less frequent deliveries, leading to more rejections and unstable relationships. Salespeople simply pass by these stores without stopping.
Skipping stores. Missing stores during visits is common in vehicle-based sales. Salespeople ride along, but the driver controls the wheel. If the driver speeds up or the salesperson is distracted, target stores are passed by. Turning around a large vehicle is troublesome, causing missed sales opportunities.
Low efficiency and high costs. While delivering in the east of the city, a store in the west calls to order. The salesperson drives dozens of kilometers to deliver, then returns to the west for other deliveries, wasting fuel and time. Delivery vehicles become sightseeing buses.
Wide sowing, thin harvest. During new product distribution, with manufacturer support and salesperson commissions, hundreds of stores are stocked. 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.
Dependence on old products. Distributors hold grand meetings to promote new products, with earnest pleas and promises, but results are often poor. Why? Because delivering old products is simple, payment collection is easy, no persuasion is needed, and there is no need to try luck door-to-door.
Doing private work, padding expenses, and intercepting promotions. Salespeople have endless tricks, and even if distributors discover them, they often dare not speak up because these are key salespeople!
Commission System: The Root Cause and Reform
The main cause of the above problems is the common commission system: base salary accounts for over half of income, so as long as attendance is sufficient, basic pay is guaranteed; commissions on best-selling products account for the other half. With guaranteed best-sellers, everyone earns similar wages regardless of effort, so working more or less makes no difference.
For distributors, improving the situation is not difficult. First, use assessment as a "baton."
Initial commission model: Base salary + sales commission. This is the most common method when building a sales team, so no need to elaborate.
Intermediate commission model: Base salary + category commission + new product project. Once the team is stable, if base salary is too high, it breeds laziness and dependence on old products. Distributors should introduce category-based commissions, increase commission rates for new products, and guide salespeople to focus on new product promotion.
For new product promotion, commissions are usually paid at month-end. Distributors can consider adding a "new product project + weekly (or daily) category commission" payment method, such as calculating each salesperson's weekly or daily new product achievements, converting them into bonuses, and paying them publicly that week or day.
- Advanced commission model: Sales commission + category commission + performance improvement bonus. At this stage, commissions should form the majority of income. Distributors should set annual growth bonuses, e.g., 1,000 yuan for the top monthly improvers, 2,000 yuan for the top semi-annual improvers, etc. With diverse methods and clear rewards, motivate salespeople and encourage daily assessment so everyone strives for improvement.
In vehicle-based sales, the driver and salesperson form a combat unit. Without coordination, efficiency drops and internal friction increases. When setting assessment indicators, consider the unit's integrity, e.g., clarify the superior-subordinate relationship, link the driver's salary to the salesperson's salary, so the driver's pay depends on the salesperson's earnings.
From Commission to Contract System
However, even after reaching the advanced commission model, not all initial problems are solved, such as fuel waste and low efficiency.
Once management matures, distributors can introduce a "contract system" (包干制), where vehicles and markets are contracted to subordinates for independent accounting. The distributor only manages the warehouse, liaises with manufacturers, and collects "rent."
This avoids the mentality of "spending grandfather's money without feeling pain." Contractors understand that "the land is productive if people are diligent" and that effort brings rewards!
But the premise is that distributors must firmly control sovereignty, not delegate all market rights, and not turn salespeople into "mountain kings." Strengthen management of contractors.
Therefore, to implement the contract system, three preparations are needed, and five precautions must be taken long-term:
Three Preparations:
- A mature financial information system that can accurately and timely classify daily and monthly data.
A mature financial system means calculating detailed accounts. But many small and medium distributors are like "Monkey King"—capable of anything, handling warehouse, finance, delivery, negotiation, and even loading themselves! They work hard for a meager profit, but "the meat is rotten in the pot"—they only know if they make or lose money, not where. They may not even know annual vehicle costs, let alone provide timely support for internal management!
- Strict regional division.
Initial management is often "bandit-style": a wave of the hand sends salespeople in all directions, with no distinction between east and west. After initial distribution, they fight each other for territory, several vehicles fly around, and earnings don't cover fuel costs!
After regional division, not only are these problems solved, but salespeople can each show their talents.
- Focus not only on product commissions but also on service assessment.
For example, in the beer industry, bottle recycling is crucial. If distributors don't emphasize bottle return, it becomes a "one-off deal": terminals accept goods, but bottles are either unwanted or sold as scrap. If bottle return commissions are set improperly, salespeople may only deliver and not collect bottles, leading to increasing terminal complaints, loss of outlets, and declining sales.
Five Precautions:
Substitution (偷梁换柱). Selling genuine "Master Kong" earns less than counterfeit "Master Kang's Wife," so salespeople secretly sell counterfeit products for extra income. The distributor's land was meant for grain, but tenants may secretly plant sorghum!
Mutual destruction (自相残杀). Delivering goods to others' territories earns more money, but it doesn't stop there—they may even dump goods at low prices into other regions.
Overdrawing resources (透支资源). Contractors always seek maximum profit, not market sustainability. Intercepting, diverting, changing promotions, raising prices on new products, or clearance sales are common tactics.
Setting up independent kingdoms (自立山头). After contracting, terminal customer relationships are transferred to contractors, who may be tempted to become bosses themselves. Once the opportunity arises, they may start their own brand while still working.
Eating away at reserves (坐吃山空). Distributors can contract out because the market is already established, often supported by a best-selling product. Contractors dare to take over because of this. But due to fragmented operations, price systems gradually collapse, outlets are lost, and competitors erode advantages until they are gone.
Taking these five precautions prevents distributors from becoming "absentee bosses" and reaping beans when they planted melons.
Text: Originally published in Sales & Marketing (《销售与市场》)
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