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Incentive Parameters for Salesmen in Leading FMCG Companies

Essay Topic:

The Fast Moving Consumer Goods (FMCG) industry is one among the fast growing industries with consumers everywhere. Fast Moving consumer goods or consumer packaged goods are products that are sold quickly at relatively low cost. Though the absolute profit made on FMCG products is relatively small, they are generally sold in large quantities, and so the cumulative profit on such products can be substantial.

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Salesmen play a critical role in any FMCG industry; and for that matter in any industry, a salesman’s role is critical.

The efficiency of the product is useless if the salesmen are inefficient. This calls for energetic salesmen whoare efficient. The average qualification of salesmen are limited to schooling. Most of the salesmen are school dropouts. Unlike the well qualified, with these salesmen the demand for ambiance, infrastructure and a conducive work environment are the least preferred. Monetary benefits are the driving force. The monetary benefits include salary, allowance and incentive.

Out of these, only incentive is the most critical and variable factor. The incentive being linked to the salesmen’s performance and the attractive incentive provided by these FMCG giants, is the only reason why most men still stick on to a salesman’s job. The salesmen put in their heart and soul to achieve their targets and thereby get more incentive. At a point, the companies identified that the salesmen are being manipulated either by their company executives or the distributors.

To overcome this, to get closer to the salesmen and to give him a sense of belongingness with the company, FMCG companies started making the incentive structure transparent. And to keep track of the salesmen’s performance, the incentives were linked to parameters that help both the salesmen to work efficiently and the company to progress. Various companies use different incentive parameters. These parameters have evolved into a more structured approach.

Though the names of the parameters and their weight-age differs, they more or less have the same meaning. Working with a few leading FMCG companies, the following incentive parameters for salesmen are the most commonly practiced. Incentive Parameters 1. Perfect Store All the product lines are highlighted in the palmtop against the particular store have to be placed in the store for it to become a perfect store. 2. Perfect Day When all the stores visited in a day are made perfect, the day becomes a perfect day.

The perfect store and perfect day parameters are based on the AC Nielsen survey data. Companies have a tie up with a consulting firm to provide them with data about the stores with regard to their company products 3. Lines Product lines are given as targets depending on the month’s focus product and launch product 4. Must Stock List Must stock list or the MSL compliance is where the salesmen are instructed to compulsorily stock a particular product line at particular stores or all the stores depending on the requirement.

As discussed above, the focus products may or may not accompany the ECO parameter. More than one product can be given as a Focus 6. Effective Coverage Effective coverage ensures both the effective outlet coverage and the effective product line coverage. The effective coverage or ECO parameter may or may not contain a focus product/s depending on the month’s objective 7. Distributor Retail Coverage Plan (DRCP) The DRCP or simply the salesmen beat traveled everyday is a parameter that provides for expanding the number of retail outlets.

Through this specific parameter the company ensures the addition of new outlets and the retention of the older outlets 8. Value Value targets are fixed based on the value of the month in the previous year plus 25% percent growth 9. Lines Product lines are given as targets depending on the month’s focus product and launch product Apart from these, the companies lay more empahsis on communicating these parameters to the salesmen. Gone were the days where salesmen carried notebooks and pen; as the saying goes, “you become obsolete f you are not updated”, the companies have sought to palmtops and smart phones / android phones for taking orders, scheme communications and other related functions. With many companies entering into the market everyday, FMCG industry is becoming a very competitive environment. And with the products having a very limited shelf life, the products have to be sold at the earliest. For sales, it is mandatory for the product to be placed in the outlet. This job falls on the salesmen. And incentives are the key element driving the salesmen. Hence, the companies must constantly evolve new incentive schemes.