Conflict Of Interest
You would like to have a compensation plan designed with your priorities and needs in mind. Your plan may have some unique aspects to it because you want your plan to be different from other plans. It should be designed independently of software with the assumption you can get whatever you want because the compensation plan will be built for the specific needs of your company.
If after your plan has been designed, it may need to be adjusted due to software limitations, that bridge will be crossed then. When it is first designed, the needs of your company should be put first.
Watch the video below to learn more about this topic.
When a direct selling company chooses to have its MLM software provider design its pay plan, you are putting your business at a higher risk for failure.
Is Your Compensation Plan In Good Shape?
Compensation plans should be designed to motivate and reward specific activities. The best way to assess how your compensation plan is doing is to measure it in light of these 12 essential behaviors:
- Personally purchasing your products or services
- Selling to customers (non-participants of the income opportunity)
- Introducing the income opportunity to others (sponsoring/recruiting)
- Building a team
- Training, supporting, and nurturing others
- Becoming a leader
- Personally developing leaders
- Helping other leaders to develop leaders
- Meeting or exceeding minimum activity requirements
- Being promoted to a higher title or rank
- Meeting or exceeding title maintenance requirements
- Staying active and engaged in the business (retention)
Does your plan address them all well? If not, contact the experts at Sylvina Consulting at 503.244.8787.
Have Your Plan Evaluated
You may be surprised to learn that even the largest network marketing and party plan companies discover important facts about their compensation plans when an analysis is performed on the results.
Direct selling companies of all sizes see improvements in sales and recruiting when their compensation plans are improved.
The budget you’ve allocated for field compensation, as a percentage of sales volume, needs to be spent wisely.
To begin, you must ensure that there are early opportunities for new representatives to make enough money to compensate them for their time and effort from selling your products or services and recruiting and training others.
Business builders must be rewarded for building teams. Just as individuals should be measured by their personal sales productivity, the sales volume produced by a team should help to determine the rate of compensation for the business builder.
Leaders should be rewarded for identifying and nurturing potential leaders on their teams, even if the potential leaders are not personally sponsored.
The compensation plan’s title promotion requirements should be set in line with your target goals for the percentage of people you wish to attain them. The higher a representative climbs in title, the more challenging the requirements should be to promote to the next title.
Higher titles can offer larger bonus percentages and/or new bonuses not provided to others.
Each type of commission or bonus should reward at least one of the behaviors listed above. Similarly, each behavior should be rewarded by one or more types of compensation.
For example, Fast Start Bonuses often reward behaviors #1-4 by incentivizing the recruiting of representatives who generate personal sales volume.
Whenever possible, eliminate paying twice for the same behavior.