Policies and Procedures are the rules that govern the relationship between a direct selling company and its independent representatives. When fully completed, they comprise about 60 different topics. Needless to say, this relationship is complicated!
In this post, we will tackle one Policies and Procedures topic. That topic is “Sponsor Changes.”
Direct selling companies absolutely need to have a policy on whether they will permit sponsor changes and if they will, under what conditions will they be allowed.
The relationship between an enroller and a new recruit is designed to be permanent, barring voluntary or involuntary deactivation. If A recruits B, B recruits C, C recruits D, and D places an order, through the compensation plan, C, B, and A might each earn bonuses on D’s volume.
What if D decides he doesn’t like C anymore and then D meets F (and likes F, too). D might want to change sponsors. After all, from D’s perspective, what difference does it make if he gets himself a new sponsor?
Well, while due to deactivation a representative could be moved under an upline sponsor in the same line, upline sponsors don’t expect to “lose” active representatives by reason of a sponsor change. They worked hard to recruit those personally enrolled and to teach others to do the same.
Sponsor changes affect more than the representatives requesting the change. That is why companies need to decide how they will respond to requests for sponsor changes.
As a direct selling company, you have a choice as to whether you will permit sponsor changes at all.
You could be firm and say, “Sponsor changes are not permitted under any circumstances”, but perhaps there are some circumstances under which you may wish to allow a sponsor change.
You could be easygoing and say, “Sponsor changes are permitted upon request”, but if you do this, be prepared for angry upline representatives because they don’t want to lose income as a result of your decision to permit a sponsor change. We don’t recommend this approach to anyone.
Or, you could take the middle ground and establish a policy that permits sponsor changes only with the approval of 3 or 5 or perhaps all of the upline distributors who would be impacted financially by a sponsor change. It is important to recognize that this approach is similar to the first approach because in practice rarely will all of the affected representatives agree to let the requesting representative change sponsors. They won’t let the representative “go” because they would be giving up future income for nothing in return.
Many direct selling companies permit sponsor changes if the representative quits and reapplies six months later to rejoin the company under a new sponsor, but without his or her previous downline. This is a hardcore approach. If you want to change sponsors, you must give up your business for six months. Then, you can start over again with a new sponsor. In reality, very few individuals deliberately take this approach.
Like society doesn’t want children to find new parents, direct selling companies don’t want sponsor changes. Now you know why.
More Policies and Procedures
We will be addressing additional P&P topics in future posts, so stay tuned.
If you can’t wait, contact Sylvina Consulting at 503.244.8787 for help with your Policies and Procedures.