Guest post from Direct Selling Symposium partner, compensation plan expert Dan Jensen. Dan is one of the most sought-after compensation plan specialists in the direct selling industry. Having worked with hundreds of successful MLM, Party Plan, and direct selling companies over the last 30 years, his breadth of experience provides immense value to direct sales companies needing a better compensation plan strategy.
The Single Reason for a Direct Selling Compensation Plan Is…Motivation!
Companies need to use compensation plans to motivate people to build a healthy business instead of rewarding short term blasts of incredible performance. Here are the five top behaviors a company needs to motivate through compensation:
- Retail Sales of the product or service: This is where the greatest profit margins will be made, as well as making sure internal sales are not the majority of the business.
- Recruiting: This is the key growth driver for direct sales companies – focus on group building between the entire downline, and make sure there is consistent sponsorship each month.
- Encourage Manager Behavior: Training and motivation of distributors are just a few of the behaviors that will help grow the company.
- Encouraging Leaders: People who train and motivate the managers can be incentivized as well. Compensation plans that encompass the overall performance of the downline managers and groups will encourage better leaders.
- Retaining great employees: Retention should be a part of any compensation plan, as it will ease the burden or recruiting and training new distributors.
Compensation based on consistent and broad performance rather than one time sales will give the company steady earnings growth while rewarding people for doing more than just coasting on their past success.