DIRECT SELLING COMPENSATION PLANS
How to Know What’s Right for Your Company
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If you’re looking at direct selling compensation plans for your company, you could easily be overwhelmed by all the choices. Here are just some of the common types you’ll hear about:
- Stair Step
- Spill over Binary
How can you know which one is right? The short answer is: you can’t without analyzing your entire business plan. There is no one-size-fits-all solution to direct selling compensation plans. Each type of plan has its own strengths and weaknesses. A plan that is appropriate for a low-priced commodity like deregulated electricity may be quite wrong for a high-end household product. A proprietary nutritional supplement or skin care line may call for yet another solution.
But even the product type alone isn’t enough to decide your plan type. You need to look at the target market, the kind of distributors you’ll attract, your company culture, and the current (ever-changing) trends in the direct selling world.
As you are starting — or growing — your direct selling company, you want to attract many kinds of distributors, from top earners to complete beginners. A very special focus will be high performers from the industry: individuals with a history of successfully building organizations. These MLM pros have many companies to choose from, and when they look at yours they will be comparing you with your competition.
In direct selling, you competition is not just companies that sell a similar product. Any direct selling opportunity could be considered an alternative, because professional distributors are primarily focused on the opportunity, not the product. Direct selling compensation plans are important in this competitive market. Distributors want to know how they will earn money. Issues they look for include:
- How easy is it for new distributors to start earn quickly? (This is important for retaining new recruits)
- What rewards are given for recruiting top-selling distributors?
- How much incentive is there to grow a deep organization?
- Does the plan reward training and leadership?
- Is there scope for building a long-term career?
- Are there additional rewards for top performers?
A well-designed compensation plan will position you strongly in relation to your competition on all these counts and more. That’s why it takes broad and up-to-date knowledge of the industry to craft direct selling compensation plans. This is where Sheffield excels.
How Complex or Simple Should Your Plan Be?
A common misconception is that direct selling compensation plans should be simple. The idea is that a complex plan will confuse and turn off potential distributors.
The confusion here is about the meaning of “complex.” Think of a car. If you’re buying a car for a teenage driver, would you tell the dealer: “I want the engine to be as simple as possible”? Of course not. You might say: “I want the car’s controls to be as simple as possible.” There’s a big difference!
Direct selling compensation plans need to be complex to motivate the right behaviors at different levels of the business. Behaviors change as individuals rise in an organization, and the plan should address that. What must be simple is not the compensation plan itself but the presentation of the plan.
In fact, new distributors especially hardly need to be shown a compensation plan at all. They need to see a game plan: simple instructions that give them three or four actions to repeat until they start earning money. Once the cash comes in, they will be motivated to repeat those steps. Over time, they can learn how the compensation is organized.
CALL US: 480-968-6199
Sheffield: Your Direct Selling Compensation Plan Consultants
The Sheffield Group leads the industry in direct selling compensation plans. Founder Mike Sheffield is a sought-after expert in the field, and his team has gathered some 30 years’ experience gained from launching or advising over 1,000 MLM companies.
Beyond that, the Sheffield Group has capabilities to cover every aspect of your business launch and growth — either with the Sheffield in-house team of consultants or with an unequalled network of specialist experts.
SHEFFIELD’S IN-HOUSE CAPABILITIES
- Concept and Product Review
- Compensation Strategy
- Marketing Strategy
- Sales Pathways
- Product Positioning
- Distributor Recruitment Strategies
- Financial Modeling
- Culture Development
SHEFFIELD’S EXPERT NETWORK
- MLM Software
- Branding and Design
- Website and App Development
- Online Positioning and Marketing
- Social Media
- Executive Recruitment
- MLM Law
Your Next Step
Your next step is clear. Contact the Sheffield Group, the industry’s finest MLM compensation plan consultants. Your first conversation with a Sheffield executive costs nothing, so now is the time to reach out and make an appointment. Simply call us, or click the Message link below.