Introduction: Operating a business is about managing people; besides objective factors like timing and location, harmony among people is even more critical.
Author | Hai You Review | Gou Gou Layout | He Wen
Every distributor must go through a process of growth from small to large, from weak to strong. With the increase in brands, expansion of channels, and growth of the team, the distributor's business organizational structure must also be adjusted in a timely manner to effectively reduce operating costs, maximize sales and profit contributions, and continuously improve operational scale benefits.
In the first half of the year, I provided channel operation consulting to two brand owners. It took 2 months to survey 15 regional markets and conduct in-depth communication with about 20+ distributor owners and their professional managers. I gained many insights. Today, let's first discuss how distributors can build a matching organizational structure based on their current business status.
Dimensions for Considering Organizational Structure
First, it must be emphasized that a distributor's organizational structure cannot be established from a single dimension. This is why many distributor owners cannot implement what they learn after going out to study. Business cannot be understood by looking at one spot; you must see the whole picture. It must be implemented in every practical project.
After visiting and summarizing, I provide the following dimensions for consideration:
1. Business Scale Dimension: Business scale is the determining factor for the number of members
Distributors need to control the per capita contribution rate. For general FMCG products, achieving annual sales of 1.5 million to 2 million yuan can directly allocate one market operations personnel. According to this standard, distributors can calculate a reasonable number of employees. For example: control within 6 people for a scale of 10 million; within 13 people for 20 million; within 20 people for 30 million. As the business scale expands, the team will also grow, and management personnel can be appropriately allocated. The ratio of management to grassroots is generally 1:(6-9). Here, it is necessary to consider that if the gross profit of the products is high, management personnel can be fully non-operational (pure management work, ratio 1:9). If the gross profit is low, management personnel can also serve as salespersons (management work + area visits, ratio 1:6).
2. Market Service Dimension: Number of outlets and visit frequency are the determining factors for quantity
Service coverage first requires outlet calculation. The enterprise calculates the average outlet demand to achieve sales based on its current situation, then establishes the relationship between population and outlet count per capita annual consumption, and finally makes staffing calculations. For example: a region with a population of 1 million, calculated outlet density is 1,000 people per outlet, resulting in 1,000 outlets. If one person can visit a maximum of 150 outlets based on frequency needs, then 1,000/150 = 6-7 positions are needed. It must be emphasized that different regions have different outlet coverage requirements, different visit frequencies, and different numbers of outlets served per person. Conclusions must be made after research, not by guessing.
3. Operation Model Dimension: Exclusive operation, exclusive sales, mixed sales
Let me explain these three models: Exclusive operation means the distributor invests main energy in one brand, operating only one brand or the main brand accounts for over 90% of business; exclusive sales means the distributor operates products from different brands simultaneously, and each brand's business scale is important to the distributor, but each brand has an independent team, similar to a branch company; mixed sales means the distributor's business scale is not large, relying on multi-brand joint operation for survival, with the sales team selling multi-brand products simultaneously.
For exclusive operation distributors, the organizational structure divides the market by region, with all products and channels managed uniformly by area salespersons.
For exclusive sales distributors, the organizational structure divides the sales team by brand. Brand managers are responsible for the overall operation of the brand, then commercial supermarket and general trade supervisors are responsible for channel sales and promotion, and finally, salespersons in each region and system implement execution. The organizational structure of exclusive sales distributors is often relatively large, solving the problem of scale and large-scale operation of trading companies, but the corresponding management organization also needs to match.
For mixed sales distributors, salespersons sell multiple brands. If multi-channel sales are added, operational efficiency will significantly decline. In this case, it is recommended to divide the sales team by channel type, such as one group for supermarkets, one for general trade, and one for group purchases. All products and related matters are handled by one salesperson, with strong channel control and improved personnel efficiency.
4. Brand Owner Demand Dimension: Dedicated personnel for dedicated tasks, special docking
There are many specific matters between FMCG manufacturers and distributors that require high-frequency interaction. If the distributor's business scale is large, a separate organization needs to be established to dock with the brand owner, and this cannot be part-time. For example: daily payment and shipment docking, display fee verification and reimbursement docking, special fee application docking, etc. Establishing a separate department can improve work efficiency on one hand and allow professionals to focus on their work on the other.
Summary: The distributor's organizational structure should first consider the number of team members from the dimensions of business scale and market service. Scale and service matching: This derives four situations: a. Scale satisfied, service satisfied: This is the best configuration, but be careful about waste of human resources; b. Scale satisfied, service not satisfied: At this time, it is best for the enterprise to supplement personnel or expenses; c. Scale not satisfied, service satisfied: At this time, the distributor needs to recruit personnel and negotiate the method of bearing labor costs; d. Neither satisfied: At this time, the market foundation is weak, and it is necessary to focus manpower on key regions, channels, and outlets for breakthroughs.
Secondly, it is necessary to combine one's own business operation model. Different models have different starting points for team organizational structure. Many distributors have long-term low personnel efficiency mainly due to this.
Finally, it is necessary to combine the specific docking needs of the brand owner. Personnel allocation here is mostly mandatory; otherwise, problems like expense verification will arise. But distributors should also evaluate personnel cost-effectiveness and appropriately feedback personnel value to upstream enterprises.
Organizational Efficiency Improvement Cannot Be Separated from Compensation and Performance
1. First, explain process assessment and result assessment
Process assessment logic: If the implementation work is done well, the assessment salary should be obtained. The assessment content focuses on subjective willingness, meaning that if the salesperson is willing to do it, they can do it well. For example: requiring product cleanliness is a subjective willingness issue, belonging to process assessment; requiring product sales volume is related to many non-subjective control factors such as brand power, competitive landscape, and consumer awareness of the product, belonging to result assessment.
Result assessment logic: For example, the regional manager/minister must pay for their own business results. The main responsibility of this position is to deploy troops and allocate market resources, with authority and responsibility given by the position. Process items cannot be assessed, because the process indicators are usually set by them; they cannot be both referee and athlete. The inspection must verify the final business results: whether sales are achieved? Whether profits are achieved? Whether the team and market competitive landscape have improved? Whether distributor cooperation (profitability) is stable? etc.
2. Secondly, the salary logic for mature and non-mature markets is also different.
a. In mature markets, income is determined by sales volume, with a goal-result orientation. After completing basic market requirements, as long as the goods are sold and payments are collected, there is corresponding income.
Salary design: guaranteed base salary + sales commission + year-end bonus.
Guaranteed base salary, also called responsibility base salary, is assumed to be 2,000 yuan, with the requirement that sales cannot decline compared to the same period. This 2,000 yuan is equivalent to labor fees; as long as there is no decline, the 2,000 yuan is paid. If there is a decline, it is calculated by percentage. For example, if it declines by 10%, the base salary is only 2,000*90%=1,800 yuan.
Commission salary is calculated based on the portion exceeding last year's sales. Assume the salesperson exceeds last year's sales by less than 100,000 yuan, commission is 3%; exceeding 200,000 yuan, commission is 5%; exceeding 300,000 yuan, commission is 8%.
Year-end bonus design: For example, if there is an excess, calculate the excess portion quarterly at 3%; at the end of the year, calculate the specific excess amount. For example, if the year-end calculation should be uniformly at 5%, then at the end of the year, make up or deduct accordingly.
b. In non-mature markets, income is determined by market construction content, with a goal-process orientation. I want to manage the specific work you do in the market. If you do it, even if business is not good, I will give rewards.
Salary design: guaranteed base salary + performance assessment + special incentives + year-end bonus
The design logic for guaranteed base salary and year-end bonus is basically the same as for mature markets, with the difference being performance assessment and special incentives.
Performance assessment: Usually does not exceed 30% of total income, with 2-3 assessment indicators being optimal. Process performance is a management tool given to managers to encourage salespersons to do the prescribed actions, such as sales plans, visit plans, displays, etc. Result performance is to achieve or create performance beyond expectations, and for other enterprise orientations, such as accounts receivable, returns and rejections, active customer numbers, etc., constraints and incremental rewards are made. Process performance assesses whether behavior is in place, while result performance assesses whether results meet goals. Therefore, when designing, whether the data for each indicator is easy to extract and whether the process-based assessment can be implemented are key factors to consider.
Special incentives: These are rewards to encourage salespersons to complete manufacturer tasks, handle company slow-moving products, promote new products, etc., and are a supplement to performance assessment. At this time, in addition to considering the differences in customer channels among different salespersons, it is also necessary to note that the proportion in the overall income of salespersons usually does not exceed 10%; otherwise, if the proportion is too large, commissions and performance assessments will become ineffective.
Summary: Although they are all distributors, different enterprises have different channels, core products, and sales models, and the abilities, responsibilities, and problems of salespersons are also different. Therefore, compensation and performance can only be used for reference, not copied, and must be designed and implemented according to the actual situation of the enterprise!
Distributors operating a business is about operating the organization and managing people. Besides objective factors like timing and location, harmony among people is even more critical. Distributor owners must clearly understand the different compensation methods and their advantages and disadvantages, and flexibly adjust according to their own situation, keeping up with industry and market trends, to better play the guiding role of organizational compensation assessment, thereby working together to seize more favorable market high ground and embark on a healthy and stable development path.