Many multilevel compensation plans include a group sales volume requirement. Do you know why group volume is important?
In this post, I will define it, explain how companies use it, and why it matters. Then, you can decide if your compensation plan is measuring it the right way for your company.
What Is Group Volume?
Group volume is the sum of the personal sales volume of a subset of people (a group) in an independent representative’s downline. Usually the independent rep’s personal sales volume is counted in his or her group sales volume.
Three Kinds of Groups
Direct selling companies define groups in one of three ways:
- all downline representatives down to but excluding reps with a specific rank or paid-as rank equal to or above a specific rank and all of their downline reps, with or without temporary exceptions
- all of the reps in a specific number of levels, or qualified levels, of one’s downline
- one’s entire downline
More often than not, a rep is included as a member of his or her group in the compensation plans of network marketing and party plan companies.
How Much Recruiting Do You Want?
By design, group volume requirements can motivate recruiting from group leaders. How much recruiting is motivated depends on the definition of the group.
When a group is defined like in the first definition above, the strongest performers and their downlines will move out of a group when they promote to the rank specified or shortly thereafter. By necessity then, in order to continue meeting the group requirement, group leaders will need to personally recruit more reps and/or to help those still in the group to do the same. This need never disappears.
Companies who define a group as limited by a specific number of levels or qualified levels also motivate recruiting, but much less so because rank promotions don’t remove people from a group. When a group is defined in this way, the perception among many group leaders is that they don’t need to worry so much about recruiting personally, so they do it less.
Very Little Recruiting
Finally, companies who define group volume as all of the personal sales volume of all reps in your downline plus your personal sales volume motivate personal recruiting the least from their group volume requirements. They may motivate recruiting indirectly from other requirements (for example, leg count requirements).
Some direct selling companies want it to be possible for independent representatives to be able to climb the ranks of the compensation plan with only 3 legs, for example. To be able to say this, their compensation plans define group volume as your personal sales volume plus the personal sales volume of one’s entire downline, with perhaps a per leg limitation of 40%, 50%, or 60% to prevent one strong rep from promoting a line of upline reps to higher titles without building multiple strong legs.
Is Group Volume Good For You?
Anything that motivates recruiting is good, as long as it is legal.
Group volume is one of the many important components in a dynamic, compelling and attractive multilevel compensation plan. However you define group volume, be aware that your definition has consequences.