Boosting Marketing Performance with Individual Pricing

The individual pricing method in the performance appraisal of marketers is to regard all marketers as independent economic entities, market their labor, and find internal reasonable pricing, so as to find a way that allows all parties to satisfactory distribution system. That is to say, based on the value distribution based on the analysis of the internal value chain of the enterprise, on the basis of pricing each economic entity, formulate an indicator system for performance assessment, and disclose the proportion of all assessed items in the overall pricing and the final application of the assessment results. Scope (including salary, position and benefits, etc.), to achieve the purpose of assessment that individuals take the initiative to undertake and actively pay.

In the process of pricing, on the basis that the enterprise meets the basic needs of the individual, the individual can intuitively know what the reward will be for his efforts, and will work hard to get this reward. In the process of finding this kind of internal reasonable pricing, the final agreement is reached through sufficient communication and communication. This agreement is jointly formulated and formulated with the participation of individuals, and will definitely receive the support of all individuals during the implementation process.

This kind of internal pricing operation process is relatively complicated, and it can be carried out by referring to the method of product pricing, including cost-plus pricing, target pricing, reverse pricing, internal discussion pricing and other methods. In the actual application process, it must be considered objectively The actual situation of the enterprise should be fully discussed and a conclusion that everyone can accept. For example, for a company that deals in scarce products, the price of its purchasing staff will be slightly higher, because purchasing becomes difficult, and the price of its sales staff will be slightly lower, because his labor costs are relatively less.

The actual formulation process of the individual pricing method, like other performance appraisal methods, is a top-to-bottom decomposition process: the enterprise formulates the overall goal, and then decomposes it into departments, and the department decomposes it into everyone in the interior. Effectively combine the individual goals with the overall goals of the enterprise to achieve the goal of common development.

The advantage of this method is that it captures the original essence of economic man-economic needs, and makes the effort and return closely linked, fully understand the goals of the enterprise in the process of pricing, and the process of participation enables individuals to obtain more information about the enterprise , enhance the sense of responsibility, will actively cooperate in the implementation process, and performance appraisal will become easy and effective.

The evaluation process of this method is simple and easy to implement, the concept is easy to understand, and the operation cost is low, so it is suitable for most small and medium-sized enterprises.

The disadvantage is that the assessment indicators are relatively simple, and other indicators must be added to assist in the actual application process, otherwise shortsighted behavior or the phenomenon of money first will be formed, which is not conducive to the long-term and stable development of the enterprise.

The following starts with the general situation of Qingdao XX Company, combined with the actual situation of Qingdao XX Company, to introduce the implementation process and effect of its application of the individual pricing method.

Victory in the first battle of performance appraisal

Qingdao XX Company was established in 2000 as a commercial trading company. The company mainly wholesales and retails coal, as well as coal-related products and chemical products. The recent actual business is mainly clean coal, and its coke supply accounts for the top three related enterprises in Qingdao. The main supplier is Xinwen Mining Group. Most of the products are transported to Qingdao by railway, and a small part of the products are transported to Weifang and Zibo by road.

The business process of Qingdao XX company is relatively short, so the organizational structure is relatively simple, please refer to the following figure 1 "Qingdao XX company organizational structure" (click to enlarge):

The duty of the supply department is to coordinate the supply of coal with the relevant departments of the coal mine in accordance with the contract signed by the sales department and the customer on time and in accordance with the quality, and coordinate the railway transportation of coal with the relevant railway departments, or coordinate the automobile transportation with the fleet. Qiyun can use its own company's car, and can also rent other vehicles when needed. It must ensure that the coal required by customers is supplied in a timely and accurate manner. At present, there are 6 staff in this department.

The job responsibility of the sales department is to communicate with customers in a timely manner, to understand the changing needs of customers, to sell the purchased and delivered coal to customers in a timely manner according to the contract, to track the process of products entering the customer's office, including weighing and inspection, And track the process of recovering payment. The company's sales targets are mainly large customers, and there is no need for excessive staffing. At present, there are 6 staff in this department.

The job responsibility of the logistics department is to maximize the use of the company's own vehicles. In addition to satisfying the company's internal transportation, it also takes the initiative to run customers and do external transportation. The vehicles are equipped with corresponding drivers and guards, 4 people per vehicle, and 3 management personnel, for a total of 43 people.

The responsibility of the finance department is to be responsible for the operation of the company's overall capital process, to be responsible for the safety and integrity of the company's overall assets, to establish an accounting system in accordance with relevant national regulations, and to coordinate banking, taxation and other related matters.

Administrative General Department is responsible for company personnel management, performance appraisal, liaison and coordination of other internal and external matters, and other administrative affairs.

It can be seen from the above that the business process of Qingdao XX company is relatively simple and the number of personnel is small, and its performance appraisal system should not be too complicated.

According to the business characteristics of Qingdao XX Company, this article defines the company's marketing personnel as all personnel including purchasing, logistics and sales.

Like most start-up companies, Qingdao XX Company did not formulate detailed assessment measures in its first year of operation. The company had fewer staff, basically fixed jobs, and fixed salary. Due to the small number of personnel, the general manager can understand the work of all marketing employees in detail. If the work is not well done, he will point out and give guidance in time, and if the work is done well, he will praise it in time.

By 2004, the scale of the company gradually expanded and the number of personnel began to increase. Moreover, the supply department and logistics department were working in other places, and the sales department was working in Qingdao. The work of these three departments is interrelated. The irresponsibility of any department personnel will affect the smooth progress of the overall business. At this time, the marketing department has some problems of untimely coordination of internal work and low work efficiency. Despite repeated efforts, there are often some inconsistencies with customers or internal employees. The general manager is too busy dealing with these so-called unexpected events every day, and has no time to take into account the company's strategic planning, which affects the company's overall operational efficiency and development. speed.

At this time, the general manager realized that the management of the marketing department needs to be improved, and it is necessary to conduct performance assessments. It is not possible to work in the same way, and the work results are good or bad. Lead the corporate culture to internal friction. Thus, the first performance appraisal measures began.

The main purpose of this assessment is to establish a budget and control system, with planned indicators as the starting point, and individual performance linked to salary. After a simple calculation, the company decides to use the business volume or the operating tons directly as the quantitative indicator, that is, how many tons of coal must be purchased by the purchasers in each month to complete the task; how many tons of coal must be shipped by the shipping personnel on time , how many tons of coal the salesperson must sell per month.

This kind of assessment uses the simplest results as feedback. The company's marketing staff cancel all fixed wages and calculate it as one yuan per ton of coal. All operating expenses are included in this yuan, including travel expenses, communication expenses, hospitality. At the end of each month, the Finance Department is responsible for calculating the relevant indicators, and the General Administration Department calculates the income of the department according to the indicators, and reports to the General Manager for approval before implementation.

For example, the salesperson plans to sell 20,000 tons of coal in the month, but actually sells 20,000 tons of coal. Their overall remuneration is 20,000 yuan, excluding the monthly travel expenses of 2,000 yuan, communication expenses of 700 yuan, hospitality expenses of 2,600 yuan, Other related expenses are 3,000 yuan, and the remaining 11,700 yuan, according to another complete set of internal assessment system, the internal division of the actual workload, as their labor remuneration.

Logistics and procurement departments also take the same approach. If the plan is not completed or exceeded, the rate of return will be calculated according to the plan completion rate. For example, if 80% of the plan is completed, the commission will be calculated as 1*80%=0.8 yuan per ton. Completion of 120% of the plan, the commission will be calculated at 1*120% = 1.2 yuan per ton, so as to implement the measures that more work will be rewarded, and penalties will be imposed if the failure is completed.

This assessment method has been applied, and marketing staff are very welcome. They are highly motivated, all marketing staff work hard to communicate and coordinate with external customers, and internal staff also actively cooperate with each other to make internal processes more efficient. Everyone has a clear goal and completes as much business as possible as soon as possible. In order to make payment and staffing matters timely and effective, the communication and coordination of employees within the company has also been greatly improved. In the first three months, the effect was very obvious. The company overfulfilled its tasks every month, the overall expense rate dropped, and personal income increased by about 10%. The general manager and all employees felt the benefits of this assessment method.

But the problem soon appeared. First, there was internal comparison among marketers. Different job positions resulted in an objective imbalance of work content. Coal is a basic resource. Under the influence of the country's macro control, it is sometimes in short supply and sometimes in excess. When resources are in short supply, it is more difficult for procurement personnel to work. When railway transportation is tight, it is difficult for shipping personnel to work. When resources are in excess, the work of sales personnel will be very difficult. difficulty. Why are they all assessed by one yuan? In fact, it is still a big pot of rice in disguise.

An enterprise is an organic whole, and all departments need to work together to complete the overall business. For example, if the purchasing staff does not make purchases, the shipping and sales staff will not be able to make performance even if they try hard enough, and the shipping and sales departments will not be able to cash in their income because the purchasing staff is not working hard enough; even if the shipping and sales staff work hard, If internal coordination is not guaranteed and employees have opinions, the overall interests of the company will ultimately be lost.

In this case, the company has to seek new solutions. After selection and comparison of various methods, it is finally found that the individual pricing method is more suitable for the requirements of the current development of the enterprise.

Perfect individual pricing assessment

In order to seek better performance assessment methods, Qingdao XX Company has studied six methods successively. Among them, the employee comparison system, the scale rating table method, and the key event method are too Simple, but nothing in name; behavioral positioning grade evaluation method, target management, 360-degree assessment and other methods, the establishment of the index system is complex, requires a good management system and concept, and requires the assessor to have a high degree of objective and fair attitude, otherwise there may be mistakes. Bias, especially these methods have cumbersome process and operating costs, which are not conducive to the application of results, and cannot meet the requirements of maximizing the company's interests.

In this case, the company took a brainstorming approach and asked each employee to come up with their own solution, and many mentioned concepts like individual pricing. Facts show that most employees are still at a lower level of demand, and Qingdao XX Company is an enterprise with few personnel and simple business, not a labor-intensive production enterprise. How to meet the needs of individuals to the greatest extent in this situation , to mobilize the enthusiasm of employees, thereby improving the efficiency of the enterprise and achieving the requirements of maximizing the company's interests, is the main work of performance appraisal, and it has also become the direct reason for the application of the individual pricing method.

Based on the previous operation experience, Qingdao XX Company decided to implement this performance appraisal method among the company's internal marketing staff.

First, the company discussed with the marketing staff, the respective proportions of the company and the marketing staff in the share, that is, how much the company's resources should be paid back, and how much the staff should receive. With the help of relevant experience data and the actual situation, it was finally decided that the share of the company's resources accounted for 49%, which was acceptable to both parties. Then deduct the time value of funds, at a level slightly higher than the loan interest rate of the same period, the annual interest rate is 10%, and the actual occupied days of the funds are used to calculate the interest and leave it to investors. The remaining part is allocated in the procurement, transportation and sales links.

In the coal industry, resources have been relatively tight recently, and the supply department has to pay more labor, and the work difficulty and workload are higher. The result of internal communication and coordination is that the supply department should receive 45% of the residual income. %, including all expenses of the department, the logistics department pays slightly more labor than the sales department, they get 30%, and the sales department gets the remaining 25%.

Each department accepts such pricing and begins to formulate corresponding quantitative indicators. Performance indicators account for about 70% of the overall proportion, internal organization and coordination indicators account for 20%, and learning and progress account for 10%. , each indicator has clear assessment items. In order to avoid the situation of no performance in some months, the company's monthly salary is only 70% of the overall salary (see Table 1 "Individual Pricing Calculation Method", Table 2 "Individual Pricing" Evaluation Index System of the Law”; click to enlarge).

In the process of actually formulating the assessment system, in order to avoid unfair distribution within the department and the situation that the basic living standard of employees cannot be guaranteed, the company refers to the local salary level, the same industry, the same For the salary situation of the type of work, a set of average reference values of job salaries has been formulated, and the basic salary of all marketing personnel is stipulated, that is, 50% of the average reference value of positions. This part of the salary must be paid to the employees every month. If there is no commission month, it must be withdrawn from the 30% that has been deducted. In the commission month, the 70% of the commission will be guaranteed to pay the basic salary first, and the remaining part will be based on the detailed job evaluation system. distribute. The system includes departmental performance, work attitude and learning ability, completion of delivery items from superiors, maintenance of customer relationships, unexpected situations, etc. Each person's monthly assessment score is 10 points out of 10. The assessment process is first scored by the head of the department, and then the manpower Resource summary verification. The total score of all personnel in the department is used as the base for commission distribution, and then the personal income is calculated according to the individual score. This ensures that the performance appraisal system is complete and complete, and at the same time, the implementation is more thorough.

Because of the small number of staff in the company, the implementation of the individual pricing method is not complicated. According to the above indicator system, after sufficient internal communication, detailed training and explanations were made. The company quickly reached a consensus with employees and began to apply it in practice.

After the application, the company's marketing staff has been greatly improved. They believe that the evaluation system is fair and the process control is reasonable. This performance appraisal method is suitable for the actual situation of the company's current development, and it pays attention to practical results. The pay and return are well documented. The appraisal process is very transparent. Every marketing employee clearly knows the return he will get for his efforts, thereby greatly improving the performance. The enthusiasm and initiative of marketing staff. Moreover, marketing employees all know that they are a part of the company's overall value chain. No single person can achieve the final result. Only by promoting team spirit and internal coordination can the final goal be achieved, thereby enhancing the internal cohesion of the enterprise and improving the enterprise. the purpose of the overall value.

Since individual pricing includes all costs, saving becomes everyone's habit. It turned out that the chief financial officer and the general manager could not effectively identify the authenticity of employee reimbursement problems, which was the most troublesome problem. The personal communication expenses of employees also dropped by 30% in a short period of time. The accommodation should also try to meet the business needs as much as possible. Everyone takes the company's affairs as their own, which truly embodies the spirit of ownership. Companies no longer need to develop documentation to stop employee waste.

In the first two months of implementing this approach, the company's profitability increased by 14% compared to the same period in the previous year, while the income of the marketing staff increased by nearly 20% compared with the same period in the previous year. Earnings for both the company and marketing employees will continue to increase for the foreseeable following months.

It can be seen that the individual pricing method has achieved remarkable results in improving company performance, enhancing cohesion, and mobilizing the enthusiasm and initiative of marketing staff. This method is suitable for the needs of current marketing staff and the requirements of company development. Auxiliary indicators have been added to the overall assessment system of Qingdao XX Company, which realizes a comprehensive assessment of the performance of marketing personnel to a certain extent. At the same time, the performance results can also be used as an objective basis for employees to advance, retreat, and promote. The added budget completion rate indicator makes corporate goals and personal The goals are closely linked, so that the results of performance appraisal are subject to the overall strategy of the company's development.

This article is a contribution from the author. The author works in the audit department of Qingdao Hengda Group Co., Ltd.